UK Internal Market: White Paper

Lord Callanan Excerpts

Wednesday 29th July 2020 Lords Chamber

[Baroness Kramer (LD) [V]]

My Lords, I agree, as does my party, that an internal market is vital to our economic future, but we are a country of nations, and even this Government must recognise that any internal market requires building a significant consensus between the UK Government and the devolved Administrations. Will the Government commit to an impartial UK body to deal with compliance and dispute resolution, to ensure that the devolved Administrations’ concerns on trade and regulations are respected? How will this proposed legislation operate with the Northern Ireland protocol? I can see no way that unfettered access, which this Statement contemplates, fits with the technical and administrative processes required as a consequence of the protocol. Will the Minister explain how much of the internal market framework is essentially designed to enhance the Government’s flexibility to make concessions without engagement with the devolved Administrations, in order to achieve trade deals with countries such as the United States?

[The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Callanan) (Con)]

I thank the noble Lord, Lord Stevenson, and the noble Baroness, Lady Kramer, for their questions. I pay tribute to the support that he offered for the principles of this legislation, for which I am grateful. He asked about the timetable. As he is aware, consultation on the White Paper closes on 13 August and we are committed to bringing forward legislative proposals following that when parliamentary time allows—likely to be as soon as possible after the Summer Recess.

The noble Lord asked about the continuing discussions on common frameworks. Indeed, those discussions continue, and our proposals will maintain consistently high standards across the whole UK, promoting co-operation between the UK Parliament and the devolved legislatures. He referred to the Agriculture Bill and the Trade Bill. Those are, of course, separate discussions and separate legislation, but let him be in no doubt that we are committed to high standards across the whole United Kingdom. Under our proposals, the devolved Administrations will continue to have the power to regulate within their areas, and they are going to gain a whole load of new powers when we leave the European Union transition period at the end of this year and will continue to be able to exercise their powers in those areas, as long as they do not discriminate against goods and services from other parts of the country. He also asked about state aid. I cannot give him a timetable for that, but it is under active consideration by the Government at the moment.

The noble Baroness, Lady Kramer, referred to the creation of a UK body. We are indeed suggesting that for consultation in the White Paper but we envisage that such a body will act to monitor the operation of the internal market across the country. We do not envisage it as having compliance powers, and of course dispute resolution is ultimately a matter for the courts.

The noble Baroness also referred to trade deals. Again, that will be subject to separate legislation—a separate Trade Bill is coming before your Lordships. However, I reiterate that our commitment is to the highest possible standards across the whole country, and we have no intention of watering them down.

[The Deputy Speaker (Baroness Henig) (Lab)]

We now come to the 20 minutes allocated for Back-Bench questions. I ask that questions and answers be brief so that I can call the maximum number of speakers.

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

My Lords, can my noble friend say whether an Act of a devolved legislature could set up an internal market in the United Kingdom, and secondly, whether a fair committee structure will advise the United Kingdom Parliament on the views of the devolved Administrations on that subject?

[Lord Callanan]

My noble friend makes an excellent point, as he so often does. These proposals are designed to ensure that devolution can continue to work for everyone while ensuring that seamless trade in the United Kingdom can continue. From 2021, the devolved Administrations will have power over many more issues than they have ever had before as policy areas formerly managed by the EU flow back to them for the first time. Our proposals would do nothing to stop those Administrations introducing rules and regulations for their own businesses operating within their region, as long as those proposals were not applied discriminatorily.

[Lord Bilimoria (CB) [V]]

My Lords, businesses up and down the UK have worked with devolution for over 20 years. Will the Minister confirm that the proposed UK internal market Bill must continue to respect the devolution settlement while providing certainty to firms as powers are returned from the EU to the UK? Will the internal market work to ensure that costs or barriers to doing business between different parts of the UK are not increased, and, learning from the lessons of Covid, when collaboration has worked so well, will there be even greater collaboration between Westminster and the devolved Administrations? To build on what the noble Baroness, Lady Kramer, said, will we ensure a proportionate and independent approach to adjudication that is respected by all Administrations? Preserving the integrity of the internal single market is the economic glue binding our four nations together.

[Lord Callanan]

I agree with the noble Lord that the internal single market is indeed the economic glue that binds the four nations together. I can confirm that we will continue to respect the devolution settlement and indeed, as I said in response to earlier questions, the devolved Administrations are gaining many new powers as we leave the European Union. There is no power grab involved here—in fact, the opposite is the case—and we will continue to want to work as quickly as possible with the devolved nations and legislatures as much as we can.

[Lord McConnell of Glenscorrodale (Lab)]

My Lords, I am grateful to the Minister for his courtesy on the day the White Paper was launched. I hope that over the coming months, we in both Houses of Parliament will apply rigour to the debates on these proposals, because they are absolutely vital, economically as well as politically, for the United Kingdom.

I will ask the Minister two questions. I am impressed with the idea of the market access guarantee, which is the most novel and interesting proposal for the way we work inside the UK since the Fresh Talent visa of 2004. However, I would like to know how that and the subsidy control proposals that will come forward will be overseen. Will the Government consider an independent mechanism for both or either, and if so, would they give an opportunity to the devolved Governments in Edinburgh, Cardiff and Belfast, to nominate individuals to sit on any body that oversaw that independent mechanism for compliance?

[Lord Callanan]

I thank the noble Lord for his support. I was happy to be able to brief him personally on the proposals, because I know he speaks with great authority on this subject. He is right to refer to the market access commitments. It is a simple set of legal principles which guarantees UK businesses access to trade across England, Scotland, Wales and Northern Ireland. They have tremendous benefits for businesses in Scotland and Wales, as well as those in England. The noble Lord is right to say that we are considering setting up a body to monitor the operation of the single market across the United Kingdom. If we proceed with those proposals, I am sure that it will be sensible to have representation from the devolved Administrations.

[Baroness Sheehan (LD) [V]]

My Lords, the national mood is very much to build back better. That starts with the statutory safeguarding of hard-won improvements in food safety, animal welfare and environmental standards, which the Government have steadfastly refused to do recently during the passage of the Agriculture Bill and other Bills through both Houses. Does the Minister therefore accept that proposed measures in this White Paper do nothing to reassure campaigners, let alone the devolved Administrations, that their voices matter, and that mutual recognition looks very much to be a descending one-way street of falling standards?

[Lord Callanan]

I am afraid I cannot agree with the noble Baroness’s point. We are committed to high standards; we had these debates endlessly during the passage of the EU withdrawal legislation, and similar debates are going on during the passage of the Agriculture Bill at the moment. However, we are very proud of the high standards we have in this country and we will not dilute them. This is not about a race to the bottom.

[Baroness Bennett of Manor Castle (GP) [V]]

My Lords, it is a pleasure to follow the noble Baroness, Lady Sheehan, and I very much share her concern about the maintenance of standards. In answering Front-Bench questions, the Minister said that national Administrations will keep their powers as long as they do not discriminate against goods from other parts of the country. Can he tell me how that squares with, for example, the Well-being of Future Generations Act in Wales, which aims to set up higher standards of action, in the operation of the economy, with regard to environmental and other matters, and to Northern Ireland, where European standards will apply?

[Lord Callanan]

These proposals will not affect the ability of the Welsh Government to proceed in those environmental areas if that is a power they already have under the devolution settlement. As I said, we are not removing any of the powers that the devolved legislatures already have. In fact, we are increasing the number of powers that they have, and they can use them to the fullest extent. The only proviso is that they do not discriminate against companies and businesses in other parts of the country.

[Lord Caine (Con)]

My Lords, as a unionist, I welcome the White Paper, which deals with hugely important issues for the whole of our United Kingdom. Will my noble friend confirm that the White Paper demonstrates conclusively that by far the biggest market for Northern Ireland goods and services is here in Great Britain? Does that not underline yet again the huge economic benefits that Northern Ireland gains from being an integral part of our United Kingdom—benefits that could never be replicated under any other constitutional arrangements on offer?

[Lord Callanan]

As he so often is on these matters, my noble friend is exactly right. Some 50% of Northern Ireland’s exports are sold to the rest of the UK, and the figures are even higher for Scotland and Wales. We therefore propose to legislate through this measure by the end of 2020 to guarantee unfettered access for Northern Ireland’s businesses to the whole of the UK internal market, which is so important for it.

[Viscount Waverley (CB) [V]]

My Lords, past innovation led to the first industrial revolution, which, when combined, ensured a global reach creating trade, jobs and prosperity, and thus strengthening the union. Yet in today’s globalised world, how will the Minister balance a strong industrial market without sending a message that we have become insular and inward-looking, which would have a negative impact? In drawing attention to my declaration in the register, I ask: have the Government finalised agreement on the posting of UK-wide public sector projects on the European Tenders Electronic Daily site?

[Lord Callanan]

I am not sure I completely understood what the noble Viscount is getting at. Perhaps I can write him on that matter.

[Lord Taylor of Goss Moor (LD) [V]]

My Lords, the Minister did not answer one of the questions put by my noble friend Lady Kramer; perhaps he can now do so. How is unfettered access compatible with the terms of the Northern Ireland protocol?

[Lord Callanan]

I think it is fairly self-evident that we are committed to having unfettered access for goods from Northern Ireland to the UK single market, and this legislation will help to underpin that.

[Lord Wigley (PC) [V]]

My Lords, clearly, it is important to get a UK single market working effectively, and that is seen by all four nations to be on a fair and transparent basis. However, does the Minister recognise that the acceptability of these proposals will depend on the credibility of any dispute resolution system? If so, will all four nations have an equal voice within such a system?

[Lord Callanan]

I hope there will not be any disputes, but if there are, they will be legal disputes and the correct forum for resolving those is the courts system. We have no intention of setting up an alternative dispute resolution procedure when we have one of the best and most efficient court systems in the world to resolve disputes.

[Lord Wei (Con) [V]]

My Lords, the free ports policy, as part of levelling-up the country, was announced to great fanfare last year. Will the White Paper and the policies within it take account of free ports, and what happens if other Administrations disagree on creating such tax-free zones and zones to promote investment into their parts of our country? How will we co-ordinate such a policy as we take back the powers from Europe that will allow us to move ahead with it?

[Lord Callanan]

The free ports policy is unaffected by this legislation. If the power exists for devolved Administrations to create them, it is unchanged by this legislation.

[Lord Bradshaw (LD) [V]]

I have a simple question, of which I have given the Minister notice. Good public transport is essential to the functioning of the union, but public transport is at present in a very weak condition. This could be remedied by a strong message from government that public transport is safe and, to help keep it that way, you should wear a mask. Also, since the coronavirus, travel patterns have changed, particularly season-ticket journeys, and the overdue fares provision is a key factor for the Government. Can we expect an announcement imminently?

[Lord Callanan]

While that is not the subject of this legislation, I can reassure the noble Lord that the Government’s proposals on the UK internal market will not impact on the transport system between the constituent parts of the UK. I totally accept his wider concerns on the need to revive the public transport industry. I believe he is in correspondence with my ministerial colleague, my noble friend Lady Vere, and I am sure she will respond to him shortly.

[Baroness Uddin (Non-Afl)]

My Lords, the building blocks of a post-Brexit, post-Covid society and country must underpin an absolute commitment to harnessing social justice, strengthening business and an economy driven by action to yield a just and equal society, and it must mitigate any systemic discrimination. White Papers do not reach into communities whose lives are impacted by them when they become policies and legislation. Will the Government ensure that these discussions incorporate other government strategies, including on jobs, employment, healthcare and human rights, take into consideration the new paradigm of inclusive market solutions enshrined with corporate social obligations, and operate businesses and organisations free of institutional bias against minority groups—from the boards to management and at all levels of the workforce? Some 69% of women remain low-paid earners, with Muslim women remaining at the bottom of the ladder of the workforce and management hierarchy. Will the Minister’s department commit to embed and publish a gender equality impact assessment of those policies?

[Lord Callanan]

I accept the concerns that the noble Baroness raises, but the UK’s single market proposals—I am talking about the White Paper—have no impact on any of these matters. I will need to write to her separately with regard to the gender impact survey policy.

[Lord Randall of Uxbridge (Con) [V]]

Can my noble friend tell me what will happen if the measures set out in the White Paper are not put in place?

[Lord Callanan]

My noble friend asks a very good question. Without mutual recognition, different rules on products would increase costs and burdens on businesses and hinder trade within the country. Businesses could face serious problems. To give some examples, a Welsh lamb producer could end up being unable to sell their lamb in Scotland, or Scotch whisky producers could lose access to supply from English barley farmers, putting jobs at risk in both jurisdictions. Our modelling shows that a supermarket operating across the UK could face a tariff-equivalent cost of up to 2.3% if differences in food labelling, product packaging and food hygiene regimes arose in different parts of the country. That is why we think this framework is necessary.

[Lord Mackenzie of Framwellgate (Non-Afl) [V]]

My Lords, can the Minister gaze into his crystal ball and outline the consequences if a newly independent Scotland rejoined the European single market, particularly in relation to the management of a hard border with England?

[Lord Callanan]

The noble Lord is asking the ultimate hypothetical question—on one of those things which I hope will never come about. If this legislation did not exist and Scotland were ever to join another trading regime, that would throw up the possibility of a hard border, which would be crucially damaging for Scottish business. Scotland sells more to the rest of the United Kingdom than it does to the rest of the whole world, so unfettered access to other markets in the United Kingdom is crucial to Scotland economically.

[Baroness Ritchie of Downpatrick (Non-Afl) [V]]

Will the Minister outline how the Government intend to achieve the UK internal market arrangements in the devolved regions, particularly Northern Ireland, which has to continue to operate EU state aid rules in the agricultural sector?

[Lord Callanan]

I can tell the noble Baroness that, for as long as the protocol is in force, mutual recognition and non-discrimination will be adapted for British goods moving to Northern Ireland to account for the relevant goods rules that apply there. The UK Government have committed to delivering unfettered access for Northern Ireland businesses to the whole UK market, and we will enshrine this principle in law, as promised in the New Decade, New Approach agreement. Mutual recognition and non-discrimination will support commitments on unfettered access, ensuring that they form part of a coherent UK-wide system.

On agricultural support, discussion continues in order to find an approach to agriculture that works for all of the UK whereby legislation is not needed. Officials have had positive discussions on all issues in scope of an agricultural support framework, including marketing standards, agricultural support spending, crisis measures—including public intervention and private storage aid—data collection and sharing, and cross-border farms. We expect this close collaboration with all the devolved Administrations to continue over the coming months.