Protocol on Ireland/Northern Ireland: Follow-up Report (European Affairs Committee)

Lord Ahmad of Wimbledon Excerpts

Monday 11th September 2023 Grand Committee

[The Minister of State, Foreign, Commonwealth and Development Office (Lord Ahmad of Wimbledon) (Con)]

My Lords, I join with all noble Lords in recognising the strength of the report and the great diplomacy skills of the noble Lord, Lord Jay. However, that does not surprise me from what I have been informed of the noble Lord as a senior diplomat both in the network and as a former Permanent Under-Secretary to what was the Foreign and Commonwealth Office. It should be no surprise to anyone in your Lordships’ Committee that he has brought all these different strands of thinking together in a very constructive report, to which the Government responded today. I was very keen to ensure that the response preceded our debate when I was advised that I was responding to this particular debate, as it is always good to get up to speed with what the Government have responded to in a timely fashion.

From the outset, I would like to say that this debate again, as the noble Lords, Lord Ponsonby and Lord Bruce, demonstrated, shows that everyone cares. This is not about different positions. Of course, that is important, but the bottom line is that when people take a particular position—I refer to my noble friends from the DUP in particular—they do it with passion and principle, because they care, and it matters.

It may be that I am being slightly starry-eyed about this in general, but when we represent the interests of our people across our united United Kingdom, while we have differing opinions, we do it with the intent that we want to get the best outcome. As someone who has seen the various discussions and debates—indeed, I served alongside my noble friend Lord Frost when he was leading on this negotiation—I know that no negotiation is easy. Every negotiation is a challenge. What we sought to do under the current Prime Minister Rishi Sunak was to reach out to the European Union, as a number of noble Lords have said, to see how we can strengthen our relationship with the EU.

I was taken by the contributions of many noble Lords. The noble Lords, Lord Alderdice, Lord Bew, Lord Dodds, and others have over many years engaged in debates as has my noble friend Lady Foster—I thank her for her best wishes. I recognise the issue of trust and engagement, which the noble Lord, Lord Hain, mentioned, as did the noble Lord, Lord Bruce. The noble Lord, Lord Hain, will know as a former Northern Ireland Secretary that that trust is key. Of course, the United Kingdom is directly engaged with our EU partners, the Republic of Ireland and all parties in Northern Ireland on these issues. I am delighted that we are joined in the Moses Room by my noble friend Lord Caine, who, together with the Secretary of State for Northern Ireland, has been leading on these discussions.

In answer to the question about continuing engagement, that is central to ensuring that the Windsor Framework moves forward positively for all, particularly for those within Northern Ireland. As my noble friends Lord Hannan and Lord Frost and the noble Baroness, Lady Ritchie, recognise, we are now dealing with the Windsor Framework and we need to ensure that we put in all practical efforts to make it work. I am pleased to recall that the Government agreed the Windsor Framework with the EU in February 2023. This led to the second report that is the focus of today’s debate, which was so ably introduced by the noble Lord, Lord Jay.

The noble Lord, Lord Bew, talked of the gritty government response. I was scribbling notes about some of the specifics—my first sheet is evidence of that. I will go over the debate with colleagues from the Cabinet Office and the Northern Ireland Office to ensure that some of the specific questions that were raised by, for example, the noble Baroness, Lady Hoey, are specifically addressed, as I will perhaps not be able to do that in the time that I have today.

The noble Lord, Lord Jay, and the noble Baroness, Lady Ludford, asked about the publication of the consolidated Windsor Framework. I can confirm that the full set of framework legal texts has been online since the deal was announced. It is a series of instruments but they are collected into a single GOV.UK page. We do not plan to consolidate the text further.

The noble Lord, Lord Ponsonby, asked about specific engagement in the run-up to the instruments that will be discussed and debated. I know that the Northern Ireland Office is doing just that. The noble Baroness, Lady Ritchie, also asked about the engagement undertaken with the north-south bodies on the specifics of the framework and what evidence is being collated. I assure her that engagement is being undertaken by the specialist committee and the joint committee, and I am happy to confirm that the new joint UK/EU stakeholder arrangements have already begun operating in this respect, as the framework demonstrated. We expect a regular rhythm and an expanded set of participants, particularly through the specialised committee and the joint committee.

We should recall that the UK Government have long recognised that we need to take account of Northern Ireland’s unique circumstances and to protect all dimensions of the Belfast/Good Friday agreement. The noble Lord, Lord Dodds, underlined the seven tests. Without going into detail on each one, I assure him that they have directly been part and parcel of our engagement and discussions.

However, as the noble Lord, Lord Jay, noted, it became clear that the old protocol did not strike the right balance: Northern Ireland has experienced persistent social, political and economic difficulties arising from its impact. It disrupted the smooth flow of trade between Great Britain and Northern Ireland with unnecessary red tape and bureaucracy. It also threatened Northern Ireland’s place in the UK market, with practical impacts on the availability of goods from Great Britain. Importantly—I remember debating this during the progress of the Northern Ireland Protocol Bill—it contained a democratic deficit, with Northern Ireland’s elected representatives unable to have a proper say on the rules that apply there.

As successive Governments have made clear, the UK’s preference was to find a negotiated solution to these issues. Indeed, I know that anyone who negotiated with the EU did so in good faith to try to find and determine the right outcome and solution. I therefore welcome the committee’s recognition that the Windsor Framework has provided an agreed, consensual basis for progress in Northern Ireland. It is a set of joint UK-EU solutions to move past the difficulties that have arisen in operating the old protocol—more durable than grace periods or any other contingency measure.

If I may make a personal reflection, I sat in some of the early meetings with European Commissioner Šefčovič and the Foreign Secretary and, as I have often said at the Dispatch Box, the tone determined the substance. Anyone who has been involved in a negotiation will know how important it is not just to achieve the right substance but to strike the right tone in the engagement.

The Windsor Framework marked a new chapter in our positive, constructive relationship with the EU, as partners. Just last week, we announced a bespoke new agreement with the EU on Horizon Europe. The noble Earl, Lord Kinnoull, has been a strong advocate of that. It was good to have some really good news, waking up to Radio 4 hearing many people talking about the positives of what had been achieved in our discussions with our European partners.

The Windsor Framework also resolves the issues with the original protocol, by fundamentally amending its texts and provisions to restore the smooth flow of trade, uphold Northern Ireland’s integral place in the United Kingdom and address the democratic deficit. Although I have heard very clearly the concerns of my noble friends in the DUP, in the Government’s view, the framework addresses the underlying issues that contributed to the social, political and economic instability in Northern Ireland as a result of the old protocol. It provides a fundamentally different basis for critical internal UK trade, seeking to streamline processes, lift unnecessary prohibitions—although I note the specific concerns raised by the noble Baroness, Lady Hoey—and provide a durable, sustainable basis for the future.

The noble Baroness, Lady O’Loan, raised the issue of VAT and excise. The Windsor Framework provides the UK Government with significant new powers to set VAT and excise rates and structures in Northern Ireland. These powers have already been used to remove EU limits on zero and reduced VAT rates in Northern Ireland. This allowed us to introduce VAT reliefs on the installation of energy-saving materials on 1 May. In August this year, comprehensive reforms to alcohol duty were introduced for all venues across the UK, including new standardised rates of excise duty. They were unequivocally incompatible with the old protocol.

The Windsor Framework also establishes the enhanced co-ordination mechanism for VAT and excise. This is jointly led by UK and EU experts and is working to secure additional flexibilities in this respect. The issues of resources and expertise were raised. The Government will ensure that this is suitably and appropriately addressed and resourced.

We have been working intensively since the deal was agreed to give effect to all the changes and processes, but I fully accept that this engagement needs to continue. Our debate today will be an important element in informing some of the Government’s thinking. However, to deliver the full range of benefits, we need to see a Northern Ireland Executive and Assembly up and running, so that they can play their part in overseeing these new arrangements. The noble Lord, Lord Weir, and the noble Baroness, Lady O’Loan—indeed most, if not all, noble Lords—agree with the principle that the representatives of Northern Ireland need to be a part of this.

Many references were made to the Stormont brake. My personal view on this is simple: let us get the Executive up and running. If there are challenges which arise based on principle, we will see the effectiveness of the Stormont brake, if and when required, in its practice. Our priority now is to do exactly that and to get what the people of Northern Ireland want: a functioning Executive.

The noble Lord, Lord Jay, the noble Earl, Lord Kinnoull, and the noble Baroness, Lady O’Loan, also raised the issue of a database on regulatory divergence. As to monitoring and managing divergence, government departments will of course continue to work together to log and analyse information, identify issues and, where necessary, raise those directly with our EU partners in the joint fora. We will continue to focus on that as part of our policy decision-making in government. We will also continue to explore how to contextualise divergence matters as they arise. We note the good work being done in this space by various think tanks as well.

On the framework, there have been challenges—again, they have repeated in this debate. However, the 2023 report asserts some conclusions that I must disagree with, which are—as was noted by the noble Lord, Lord Bew, and as the Government have outlined in our response—factually incorrect. Most importantly, the Government do not agree with the assessment that the framework is more burdensome or divisive than the grace period arrangements that preceded it. The previous set of grace periods and fixes were no more than temporary arrangements that were the subject of dispute, including in legal proceedings initiated by the EU. They relied wholly on the application of EU standards and did not cover all aspects of trade. There were, for example, no substantive easements for customs trade. Moreover, comparison, if attempted, does not stand up. The Government’s written response provides a detailed account of this but if there are further questions from the noble Lord, Lord Jay, or indeed from other noble Lords, we will of course be pleased to answer them specifically. However, I will give a few brief examples of how the previous arrangements pale in comparison to the framework’s green lane arrangements.

Previously, even under the grace periods, full international customs processes applied for all truckloads, even where goods were staying in Northern Ireland. The Windsor Framework replaces those processes with a system based on the sharing of ordinary commercial information. Previously, all food moving into Northern Ireland had to meet EU standards, which had already led to supermarkets withdrawing some products. The Windsor Framework means that UK food and drink public health standards apply to products moving in the green lane. As I think the noble Lord, Lord Hain, said, the green lane also allows more trade to benefit than was the case under the grace periods. From 30 September 2023, the new UK internal market scheme will expand the range of businesses able to benefit from the new arrangements and will protect internal UK movements from burdensome customs processes. For example, and as identified in the report, the turnover threshold for businesses involved in commercial processing has quadrupled to £2 million. There are various other areas but, in the interests of the few other points that I would like to cover, I will cover the specifics of any outstanding questions in a letter to allow for a full response to be given.

As an aside, I note that the report rightly sets out the importance of the effective functioning of the UK’s internal market, which I know all noble Lords will value and which is imperative. However, the report also takes issue with the fact that retailers in Great Britain can access the green lane. In that respect, the Government make no apologies for the important benefits secured in the Windsor Framework, which allow for smoother trade from Great Britain to Northern Ireland.

Moreover, beyond the core green lane arrangements, the framework as a whole delivers a substantial improvement. Previously, all changes to EU rules on goods applied automatically in Northern Ireland, with no say at all for Stormont. The Windsor Framework provides the Stormont brake and, as I alluded to earlier, we feel that we now need the Assembly up and running to allow for that to be tested if necessary.

Previously, the European Medicines Agency had full control over all new UK cancer drugs and other innovative medicines in Northern Ireland. The Windsor Framework removes any role for that agency in this sphere and puts UK authorities in full control instead.

Previously, EU rules applied by the old protocol precluded UK-wide VAT changes. Under the framework, we have already introduced legislation to bring Northern Ireland into line with the rest of the UK on, for instance, second-hand cars, energy-saving materials, such as solar panels, and alcohol duty.

In addition, previously, the Government were bound to collect “equivalent information” to an export declaration for every single movement of goods from Northern Ireland to Great Britain. The Windsor Framework removes that onerous burden and confirms the Government’s commitment to ensuring unfettered access for Northern Ireland goods to the whole UK market.

For these reasons and more, the Government are unequivocal in their view, as has been noted by several noble Lords in their contributions, that the framework is the right way forward. The noble Baroness, Lady Hoey, raised some issues on tagging livestock, border checks and duty free. She is right to raise some of the practical questions in this respect. Again, in the interest of time, and with her permission, I will write to her and circulate that letter to all noble Lords.

The noble Lord, Lord Jay, the noble Baroness, Lady Hoey, and others raised veterinary medicines. The Windsor Framework agreement has safeguarded the supplies of such medicines from Great Britain to Northern Ireland to the end of 2025. During this extension to the grace period, there will be no changes to the existing requirements on the supply of such medicines to Northern Ireland, and businesses should continue operating as they have done to date. While the extension is welcome, the Government’s position remains clear: there needs to be a long-term and permanent solution which maintains the uninterrupted flow of such medicines into Northern Ireland from Great Britain on which so many people and businesses rely. I can share with noble Lords that the Government are currently engaging extensively with industry and welcome the potential solutions put forward by key stakeholders in this respect.

The noble Lord, Lord Dodds, mentioned the seven tests that have been set out. I assure him that we focus on these particularly. I know that my colleagues in the Northern Ireland Office, in particular my noble friend Lord Caine, are very much focused on discussions and ensuring that there is the right deal for Northern Ireland.

The noble Lord, Lord Verdirame, also raised important issues about specific aspects of the Stormont brake. I think he mentioned Article 13.3a. I will write to him on some of the technical issues that he raised.

The noble Baroness, Lady Ritchie, asked about the insufficient public guidance on apportioning the amount of trade due to travel to the Republic of Ireland. I know that she has been in pursuit of this issue for a long time. I am reassured that colleagues in HMRC will respond to her in the near future.

The noble Baroness, Lady Ludford, raised a number of issues, including one on which I suppose I should declare an interest: the movement of halal and kosher meat. These goods are eligible to benefit from the new Northern Ireland retail movement scheme, which scraps costly individual vet-signed certification. Basically, we will now have a single general certificate per consignment.

There are a number of other questions that, in the time I have, I have not been able to respond to, but I assure noble Lords that the Government’s focus is on effectively implementing this basic framework to ensure that Northern Ireland’s citizens and businesses can take full advantage of the benefits it offers. In a few short weeks, the first phase of the green lane arrangements will be switched on. Our new schemes will provide a greatly expanded range of Northern Ireland traders with access to the facilitations agreed under the framework. Burdens will be lifted and checks will be reduced. Of course, when this happens, practical points will surface that we will seek to address.

The Government will continue to engage with stakeholders directly and to produce further guidance to ensure that there is clarity on these improved arrangements and how they operate. In parallel, we will also make full use of the wider freedoms provided by the framework, some of which I have already listed, to support Northern Ireland stakeholders. We will continue to urge all Northern Ireland parties to restore the Northern Ireland Executive and Assembly. As noble Lords, including the noble Lord, Lord Bruce, have said, in our view—it is a shared view—it is crucial that we have a functioning Executive at the earliest opportunity. The Government stand ready to engage with all parties in support of this.