United Kingdom Internal Market Bill

Jim Shannon Excerpts

Monday 21st September 2020 Commons Chamber

[Mr Walker]

I will give way to the right hon. Gentleman in a moment, because I do intend to refer to some of his comments in my speech, and I will happily take his intervention shortly.

Further measures will be set out in the Finance Bill. These will have the same effect as those already proposed in the UKIM Bill, and will make it clear that no tariffs will be payable on goods moving from Great Britain to Northern Ireland unless those goods are destined for the EU market, or there is a genuine and substantial risk of them ending up there. We will take the necessary powers in the Finance Bill to ensure that this is defined in a reasonable and proportionate way, which ensures that legitimate traders are not penalised, while also resolving the outstanding issues relating to the payment of VAT and excise duty. So we are taking limited and reasonable steps through the legislation to create a legal safety net by taking powers in reserve, whereby Ministers can guarantee the integrity of our United Kingdom and ensure that the Government are always able to deliver on their commitments to the people of Northern Ireland in line with the three-stranded approach of the Belfast/Good Friday agreement.

[Jim Shannon (Strangford) (DUP)]

I declare an interest as a member of the Ulster Farmers Union, which has contacted me, and it says:

“there will be a total amount under the NI protocol that will be a maximum we can give to agriculture in the form of support and there will be a certain percentage that we could give as coupled support.”

It clearly sees that less state aid will be available for Northern Ireland and we will be treated differently from Scotland, Wales and the rest of England. Does the Minister of State agree with that?

[Mr Walker]

I will come in detail to the amendment tabled by the hon. Gentleman’s party later in my speech, but I do recognise that when it comes to state aid, we have made specific agreements under the protocol on goods traded between Northern Ireland and the EU, and we should stick to those in order to ensure the effective functioning of trade north, south, east and west. We are taking steps in the Bill to clarify the state aid elements, and some of those will be to the benefit of businesses in Northern Ireland. I will come back to that point in more detail.

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[Gavin Robinson]

My right hon. Friend is absolutely right, and I mentioned the chilling effect. Arguably, if the UK Government and officialdom in Whitehall had not offered such religious observance to EU regulations over the past 40 years, this country would not have agreed to leave the European Union. We know that of other countries in the European Union, France has, en français, an à la carte approach to which regulations are important and which are not. The religious observance of regulations in this country has caused that chill factor and it is why people built up frustrations and resentment on the application of those regulations over the years. There is a fear that that could happen in this case.

Let us consider the Addison Lee case on state aid application of rules in this country. Addison Lee wanted to use bus lanes in London, but it was told it could not use them. Addison Lee took a case on the state aid implications because it thought the state was unfairly given an advantage over Addison Lee in London. The UK Government’s position was “Catch yourself on! It is a UK-funded public service versus a UK private business, and EU state aid rules do not apply” but the EU resolved that, yes, the rules were engaged because Addison Lee could equally have been owned by representatives from another member state. That is how the question was resolved, and Addison Lee can now use bus lanes. I have no doubt that the far-reaching implications of state aid law would open the opportunity for claims from elsewhere.

[Jim Shannon]

To back up my hon. Friend’s argument, the farming community and businesses across the whole of Northern Ireland have expressed their great concern about the different levels of state aid. They are not only referring to food, because subsidy comes in many forms. My constituents tell me that they are also concerned about being precluded from the tax reliefs available on the mainland, because potentially our competitive ability may be greatly hampered by that discrepancy. Does my hon. Friend agree?

[Gavin Robinson]

I do agree. I know that the Minister went through a number of the amendments we have tabled and said, “Look, there are provisions about direct and non-direct discrimination and those still apply.” However, where a business is competing in a sector for which there are state subventions and subsidies in England, Scotland and Wales but where those same subsidies and subventions are precluded in Northern Ireland, there will be discrimination. There will be an unfair playing field in the economy of this internal market, and that square is not circled in this Bill. There are no satisfactory answers from the Government to say, “If we run with the implication of EU state aid rules in Northern Ireland, and if we support businesses in GB but not in Northern Ireland, how is there not unfair competition? How are there not direct or indirect discriminatory outworkings of the provisions of this arrangement?”

I want to draw the Minister’s attention to a useful document, which I hope he will spend time considering. I refer to the Northern Ireland stakeholder response to the UK’s research and development road map consultation, which considers clearly some of the things the Government could do under clauses 46 and 47 in providing financial support for sectors in Northern Ireland. We hear an awful lot in this Chamber about doubling down on levelling up. We know that research and development support across the UK is hugely uneven, and that the majority of that money goes into the south-east of England, to London and to the east of England, and that Northern Ireland and other regions throughout the UK do not get their fair share.

The stakeholder response is a collaborative piece of work by Belfast City Council, Belfast Harbour, Queen’s University, Ulster University and Catalyst Northern Ireland. It asks that the Government ring-fence R&D support, with a minimum of £250 million per year for Northern Ireland; that they create bespoke arrangements that allow for flexibility of funds for the Northern Ireland economy; that they appoint regional delivery partnerships; and that they are considering an ARPA—advanced research projects agency—for the cyber-security hub in my constituency, our FinTech hub, the advanced and high-end engineering and manufacturing in my constituency, and the aspirations of a digital free port in Belfast. That ARPA opportunity is well worth considering and it is well worth showing that even though we may have an uneven playing field, our Government are serious about doubling down on levelling up and will extend support to Northern Ireland.

I would love to go through a lot of the amendments, but I am conscious that I have gone over my self-imposed timeline, so I will just discuss the importance of amendment 68, which proposes a change to clause 40. It proposes that Northern Ireland Assembly consent would be required for any new arrangements or requirements for goods traded from GB to NI, and new requirements would not come into force unless they were agreed with the consent of the Assembly. It would also provide that:

“No additional official or administrative costs”—

arising from new requirements—

“may be recouped from the private sector.”

The Minister referred to the trader supporter service, and we know that the Government have said that there are going to put £355 million into that service at this stage. Huge questions remain unanswered for businesses in Northern Ireland, which have heard that they have unfettered access to the UK internal market. Some understand that that promise is one way; some understand that that promise is NI to GB. Some do not understand that there are huge constraints on GB to NI trade, because the Government gave that power away in the withdrawal agreement. They passed it to the Joint Committee and therefore they are only half of the equation. We know that the Joint Committee is considering what goods are at risk, but businesses are trying to access goods in the rest of GB and their suppliers are saying, “Are we able to send this to you? Will we be able to sell you these goods? Will we be required to file exit declarations? Will there be a cost for us doing business with you in Northern Ireland, one that we are not prepared to meet or you are not prepared to pay?” If that is the case, it makes a whole nonsense of this internal UK market.

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[Tim Loughton (East Worthing and Shoreham) (Con)]

It is always a joy to come in on the fag end of a debate, when so many people have said everything that needs to be said and we have had a surfeit of lawyers on what is a very legalistic Bill—I am not one, thank goodness.

There is much good in this Bill. It is about the continuity of trade and the integrity of the United Kingdom, the principle of mutual recognition and the principle of non-discrimination of goods within the UK, and there is much practical stuff that, in the absence of an early agreement with the EU, we need to do. However, I have serious reservations about the inclusion of clauses 41 to 45 because of the implications well beyond this Bill, or indeed, well beyond our withdrawal process from the EU. They raise serious question marks about the intent and good name of the United Kingdom in being party to other international agreements.

When a Government Minister at the Dispatch Box states that the UK will be able to break the law, albeit in a “specific and limited way”, parliamentarians should prick up their ears and ask why and how, and demand proper justification from the Government and the Ministers to whom this part of the Bill gives considerable and ongoing powers. When the Government published this Bill in a hurry, that justification, I feel, was just not forthcoming from the Government, and on Second Reading, I therefore could not support the Bill. I would like to support the Government. I would like to support the Bill, but I need more assurances.

Amendment 4, which was put forward by my hon. Friend the Member for Bromley and Chislehurst (Sir Robert Neill) and which forced the hand of the Government with Government amendment 66, certainly helps, although it just gives an additional check without removing the powers reserved to the Government fundamentally. I say this as a concerned Brexiteer, but this is not a question of leave or remain. It has no impact on the UK leaving the EU fully after the end of the transition period on 31 December, but it does have an impact, potentially, on how we carry on our business in the world beyond the EU after 31 December.

I think the EU has behaved disgracefully throughout the negotiation period. It has exploited shamelessly the unique position of Northern Ireland as our land border with the EU but subordinate to the very important status conferred on it by the Good Friday agreement. It has used all sorts of underhand tactics to promote its pet causes, to keep the UK under the control of EU laws and regulations, be that British fisheries or state aid considerations and preventing us from being able to compete fairly, which is all we ask. “Unless you give us what we want, we will impose checks and tariffs between Great Britain and Northern Ireland, and there is nothing you can do to stop it”—runs the subtext of the negotiations.

It has now become clear that the EU is trying to reinterpret the terms of the withdrawal agreement to impose control over internal markets within the UK that no other country would tolerate and none has been required to agree to as part of any other EU trade deal. Of course, as we heard from many hon. Members, the EU is no stranger to breaking international agreements when that suits it, especially as regards the WTO. Has the EU really been negotiating an agreement in good faith, especially when a precedent has already been set of what was possible with a Canada-type deal?

Despite all this, it does not, and should not, mean that we, the United Kingdom, have to follow suit and act badly as well. The United Kingdom has a reputation for upholding the rule of law. The Conservative party has always had as one of its most cherished doctrines the importance of upholding the rule of law, so I share, for once, the concern of many lawyers who are worried that these clauses represent a significant risk of violation of the UK’s international law obligations, including the principle of good faith and sincere co-operation; that the Northern Ireland protocol and associated case law would have a subordinate role dependent on ministerial interpretation; and that this would have potentially a serious impact on the reputation of the UK as a centre for international legal practice and dispute resolution. This would not go down well, given the professed ambition of UK, quite rightly, to be a leader in global trade and a trailblazer for free trade in particular. As the former Attorney General put it, assenting to these proposals

“would amount to nothing more or less than the unilateral abrogation of the treaty obligations to which we pledged our word less than 12 months ago, and which this parliament ratified in February.”

If we do not like what we signed, there is an arbitration process, so finally, I am genuinely bemused about why these clauses have been brought forward now and what they were intended to achieve. There is nothing in the Bill or in the Government amendments about them only being used in extremis, after all those other routes have been exhausted, and that includes the formal arbitration process. If we are going to pre-empt that arbitration process by saying that we will not go to arbitration, why include an arbitration process, and if we do believe in an arbitration process but we will not follow the result if it goes against us, that arbitration process is worthless and pointless.

Why now? Why not when negotiations have not come to a conclusion, if that is the case, despite the severe strain that this move has put on them? Why not nearer 31 December, if it has become clear that a deal has not been reached and the EU is determined to enact our worst-feared scenario? If this is a bargaining tactic, it does not seem to have gone down very well. It has not made negotiations any easier. It has not made a US trade deal any easier. It has not made any other trade deals any easier.

If this really is a bargaining tactic, it is necessary to be able to deliver on it, and there are doubts about whether the Bill can get through the other place. I am afraid that I just do not understand it. I hope that before we vote, Ministers will make everything magically clearer. I may give the Government the benefit of the doubt, but if it comes back for the vote of the Commons—not the Lords, notably—and those questions remain unanswered, I will not be able to support a Bill that retains these clauses unqualified. I hope that the Minister will prove me wrong.

[Jim Shannon]

It is a pleasure to speak on this issue. This is an intricate matter that is not helped by those with little or poor understanding of the Belfast agreement, or indeed of the truth of the troubles and our painful journey, using it as a political soundbite. Seeing Nancy Pelosi, the Speaker of the US House of Representatives, being led by a reporter to outline the consequences of this Bill for US-UK trade relations would have been laughable had it not highlighted the severe misunderstanding that many people are under.

This Bill is not designed to tear up the Belfast agreement; in fact, it is there to recognise that until the will of the people is to be Irish, we are to be considered British, and we are to remain so until a border poll is carried out. That border poll has not been carried out yet. The Belfast agreement underlines the notion of consent; for us to have an absolutely separate rule for state aid and other trade and transport damages the very principle of consent in the Belfast agreement. That is the reason that the Democratic Unionist party have tabled amendments on state aid—yet, for some, the message is not getting through just yet. Clauses 45 to 50 are very clear in their purpose.

The Ulster Farmers Union has also been very clear in relation to the levels of state aid in clause 43. The Republic of Ireland has a responsibility to its constituents to secure the best deals and the best advantages, but let us be clear: it is not our friend. It is at best a friendly rival, and at worst simply a rival with a voice to implement and effect change in Europe, against our voiceless efforts post Brexit. History has shown that when it comes to doing the right thing by refusing to allow criminals to take harbour over the border, it has no desire to help us as a nation. When I have listened to debates in the Dáil, I have never once come to the conclusion that it has our best interests at heart.

That is why my colleagues and I tabled our amendments to ensure that the fears of the Ulster Farmers Union and others are not realised. How, for example, do we allow fair trade for any of our dairy products when the mainland has state aid in place in the form of grants for dairy farmers? The answer is that we simply cannot. That is why we need to change state aid through these clauses tonight. Trade is at the core of our amendments.

Clause 41, which supports the delivery of the UK Government’s commitment to unfettered access for Northern Ireland goods moving from Northern Ireland to Great Britain, does so by precluding new checks, controls or administrative processes on qualifying goods as they move from Northern Ireland to GB. It similarly precludes the use of existing checks, controls or processes being used for the first time, or for a new purpose or to a new extent. That does not show the destruction of the Belfast agreement, but it is necessary for the stability of food supply and state aid. Without it, we will certainly see the destruction of our country.

As the EU sees it, the UK has committed to comply with applicable notification and standstill obligations. That means that the ceiling put on state aid by the EU still applies in Northern Ireland in relation to trade. We will be constrained under the Northern Ireland protocol to a certain level of support for agriculture, only a certain proportion of which can be spent, for instance, on coupled payments. With that in mind, I believe that Northern Ireland could be constrained by these very rules. That is why tonight we wish to support our amendments and the clauses that the Government have put forward. We urge Members to do the same.

[Tom Tugendhat (Tonbridge and Malling) (Con)]

I am delighted to follow my hon. Friend the Member for East Worthing and Shoreham (Tim Loughton) and my right hon. and learned Friend the Member for Kenilworth and Southam (Jeremy Wright), who I very much agreed with.

Today we are talking about the answer that Margaret Thatcher gave to Dean Acheson’s famous question, “What is Britain’s role in the world?” She was right: our national mission is upholding the rule of law. That lesson served her and our nation exceptionally well. It gave moral legitimacy to the courageous defence of British nationals in the Falkland Islands and strength to the treaty that she signed two years later with China to protect British nationals in Hong Kong. Trust in the treaties allowed Margaret Thatcher to start down the road of peace in our own nation and conclude the Anglo-Irish agreement with the then Taoiseach, Garret FitzGerald.