United Kingdom Internal Market Bill

Lord Dunlop Excerpts

Committee stage & Committee: 1st sitting (Hansard) & Committee: 1st sitting (Hansard): House of Lords
Monday 26th October 2020 Lords Chamber

[Baroness Randerson (LD) [V]]

[Inaudible]—needed at all, certainly at this stage. The earlier parts of the Bill, which deal with the establishment of new rules to maintain the internal market now that we have left the EU, have received much less publicity than Part 5. However, these parts are just as constitutionally significant because, under the cover of Brexit, the Government are attempting to slip through the unravelling of devolution. They have claimed that this Bill will increase the powers of the devolved Administrations, which is akin to President Trump claiming that the virus is waning in the USA: the facts demonstrate its falsity, as the clauses in this Bill demonstrate multiple ways in which it undermines current devolved powers.

The UK’s internal market appears to function perfectly well at the moment. The barriers cited by the Government as the reason for this Bill are hypothetical and unlikely to materialise because they are clearly against the interests of the devolved Administrations. There is no clamour to diverge from existing standards set by the EU because they are both high and universally recognised. Therefore, taking the Bill at face value, it seeks to solve a problem that does not exist, but that judgment is rather too kind because the details betray the Government’s real purpose.

Until now, devolution in the UK has functioned under the umbrella of EU legislation. Most of the fundamental devolved powers have operated in that way, and EU regulation has been accepted with noticeably little argument because it operates on such a large scale that there is little perception of party-political bias. The new arrangements set out in this Bill will be very different. Obviously, England will dominate, come what may, but the Government are not content with relying on size alone. This Bill steals all the remaining cards from the devolved nations.

We have a ragged devolution settlement—lopsided, confused, and already under huge strain. Leaving the EU has destabilised it further. Because there is no proper devolution in England, UK Government Ministers are effectively hybrid Ministers. One minute they are acting as Ministers for England and the next they are UK Ministers. Indeed, in some cases, such as agriculture, the Secretary of State is largely just the Minister for England, so it is essential that there is a strong dispute resolution mechanism: there will be problems if that fell back on the Secretary of State alone. This Bill itself will become a protected enactment, which devolved Administrations cannot repeal or modify. However, the UK Parliament will, in practice, be able to override the market access principles when legislating for England. Hence it will have an inherently asymmetrical effect.

Looking at how the market access principles will be enforced, we see a much tighter definition than allowed under EU law. It narrows the territorial scope of devolved legislation, which will no longer be able to apply to all activity within that nation. The Senedd could still vote to ban a wide range of single-use plastic items, for example, but that ban could no longer be applied to products entering Wales from the rest of the UK, nor could it ban sales of those goods. Such a ban would therefore be pretty meaningless. Amendment 4 applies the Government’s own market access principles, but with a framework of respect for the decisions and views of the devolved nations. With all due respect to the noble Baroness, Lady Neville-Rolfe, the UK is not a supermarket. The nations of the UK have individual and proud heritages and identities.

The Government’s regulatory impact assessment recognises that the broad application of the market access principles will limit the ability of the devolved Administrations to introduce distinct approaches to environmental and social policy, which will of course undermine the fundamental purpose of devolution. In the interests of centralisation of power, the Government are attacking innovation. The freedom provided by devolution has encouraged new approaches, such as plastic bag pricing, in Wales and minimum alcohol unit pricing in Scotland and Wales. There is an insidious pattern in many of the controls in the Bill. It allows the status quo to stand in some instances, but removes the right of devolved Administrations to change regulations in the future. This looks like the path to a stagnating economy.

Amendment 4 seeks to strengthen the hand of the devolved Administrations so that their voice can be heard. It replaces the very weak duty to consult with a much stronger principle of consent. That would force the Government to return to a normal approach of partnership and respect. The Bill scythes its way through devolved powers, and the amendment attempts to tackle some of that. The Government have lately reminded me of a drunk in a bar, who swaggers around aggressively challenging the other customers over imagined insults and picking unnecessary fights. This really is an unnecessary fight with the devolved Administrations. Devolution was always incomplete and uneven, and UK identity has been stretched pretty thin recently. Throughout the Bill there is a thread seeking to reverse devolution and recentralise the state, and this Government simply must not be allowed to get away with it.

[Lord Dunlop (Con) [V]]

My Lords, I want to comment on some of the issues raised by the amendment. It is useful in that, so far as this Bill is concerned, it draws attention to—if I may put it this way—the dog that did not bark. The dog in this case is the agreement reached at the Joint Ministerial Committee in October 2017, between the UK Government, the Scottish and Welsh Governments and the senior civil servant representing the Northern Ireland Executive, on the principles to guide the work on common frameworks. There will be an opportunity to debate in more detail how common frameworks intersect with the Bill’s provisions in the next group of amendments, but looking at the JMC principles is a good starting point.

In its report on the Bill, your Lordships’ Constitution Committee, of which I am a member, concluded:

“We consider that adhering to the principles agreed for formulating common frameworks would improve the likelihood of reaching agreement on how to progress the Bill. We are not convinced that the opportunities for managing the UK internal market through the common frameworks have been exhausted”.


The JMC principles embody what can reasonably be assumed to be core UK Government concerns: the effective functioning of the UK internal market; compliance with international obligations; the ability to negotiate, enter into and implement new trade and international agreements; the management of common resources; and cross-border justice and security. They also address those issues likely to be of most concern to the devolved Administrations: respect for the devolution settlements; devolved competence not normally adjusted without consent; and equivalent flexibility for local tailoring of policies as is afforded by current EU rules, as we have heard.

One of the witnesses from whom the Constitution Committee took evidence— Professor Nicola McEwen from Edinburgh University—contrasted the approach adopted for common frameworks, which she characterised as a co-operative and co-owned process, with the provisions of the Bill, which she described as more top-down. It is fair challenge to wonder whether a top-down approach might be necessary because one of the participants in the common frameworks negotiations is often seen as provocative and difficult to deal with, and of course committed to the break-up of the United Kingdom. The introduction this summer in the Scottish Parliament of a second continuity Bill, designed to give Scottish Ministers powers to maintain dynamic alignment with the EU, might well have been seen by the UK Government in this light. However, I would make three observations about this:

First, the Welsh Government, who, unlike the Scottish Government, gave their legislative consent to the European Union (Withdrawal) Act 2018, are a unionist Government but nevertheless as concerned as the Scottish Government about the implications of the internal market Bill for devolution. Secondly, we have now had eight of the statutory quarterly common frameworks reports from the UK Government mandated by the 2018 Act. Each has confirmed that common frameworks are making progress and that the Government have not felt the need to exercise their power to freeze devolved competence to counter any imminent risk of policy or regulatory divergence. Thirdly, even at a time when relations between the UK Government and the Scottish Government are at a low ebb, and the Scottish Government initially insisted that they would withhold legislative consent as a matter of principle for all Brexit-related Bills, the Scottish Government have in recent months recommended legislative consent—albeit with some qualifications—to the Fisheries, Agriculture and Trade Bills.

In conclusion, the amendment in the names of the noble Lords, Lord Fox and Lord Purvis, seeks to inject into the Bill the spirit of the JMC principles—here I am concerned more by its spirit than its precise terms—and to provide a more co-operative intergovernmental architecture for taking forward the UK internal market, which is currently missing from the Bill. I therefore hope that Ministers—despite the challenges, which I do not underestimate—will not give way to pessimism about the governance of the union, nor give up on a collaborative “four nations, one country” approach to protecting free trade within the UK. As such, I hope they will work constructively to address the concerns raised about the Bill during this debate.

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The closer one examines the Bill, the harder it is to understand why it is in any way either helpful or necessary. I look forward to hearing the Minister’s explanation of how the Bill will help to deliver future common frameworks.

[Lord Dunlop (Con) [V]]

My Lords, I support the group of amendments tabled by the noble and learned Lord, Lord Hope. They address a central question: how does this Bill sit alongside the common frameworks process? Common frameworks are the process established to ensure that once the UK has left the EU’s legal orbit, policy and regulatory divergence does not damage the seamless operation of the UK’s domestic market. Unimpeded trade within the UK is something we all agree on.

The common frameworks process was initiated while I was still a Northern Ireland and Scotland Office Minister. The frameworks analysis informing it—the latest iteration of which was published only last month—provides a full assessment of the risk areas arising from EU powers flowing back directly from Brussels to Edinburgh, Cardiff and Belfast. As the noble and learned Lord, Lord Hope, explained, the latest analysis identifies 154 policy areas—115 are deemed to require no further action and 22 require a non-legislative framework, leaving just 18 identified as needing such a legislative framework. Examples in the latest analysis include food standards and labelling, mutual recognition of professional standards, the provision of services, and chemicals and pesticides. As an aside, I am even more confused about the position on pesticides than I was before. When winding up, perhaps the Minister could clarify whether chemicals and pesticides will be a legislative framework. I thought I heard my noble friend Lord Callanan say that it would be a voluntary agreement, from which the devolved Administrations could walk away.

So far as one can tell, this process of common frameworks is making progress—though more slowly than originally intended as a result of Covid. Seven will be in place by the end of the year with a joint commitment from all Governments to deliver the remainder during 2021.

In its detailed report on the Bill, the Constitution Committee concluded:

“The Government has failed to explain why a combination of retained EU law, its existing powers to amend that law, and common frameworks could not provide the certainty required at the end of the transition period to secure an effective internal market.”


When responding to the Second Reading debate, my noble friend Lord True argued that common frameworks are insufficient because they are sector-specific and cannot guarantee the integrity of the entire market. In responding to this debate, I hope that my noble friend will take the opportunity to explain in greater detail the Government’s concerns and the rationale for the approach adopted in the Bill.

There are three specific points that I hope the Minister will address, relating to necessity, urgency and proportionality. First, on necessity, my noble friend Lord True said in his wind-up speech last week:

“The Bill ensures that areas without a common framework will still benefit from the regulatory underpinning and, crucially, market coherence will be provided for issues that fall around, or between, individual sector-focused frameworks.”—[Official Report, 20/10/20; col. 1427.]


I am puzzled by this explanation, as my understanding has always been that the portfolio of legislative and non-legislative frameworks was intended to represent a comprehensive package for managing the identified risks of divergence arising from EU exit. As I have already mentioned, many of the areas identified to be covered by frameworks are cross-cutting, and not simply sectoral, such as public procurement, recognition of professional standards and the provision of services in general. Therefore, can the Minister be more specific in identifying what the issues are that the Government are so concerned about that fall in and around individual sectors, which have not already been identified in the common frameworks analysis?

Secondly, on urgency, I hope the Minister will explain why the Government are legislating in such haste. Yes, this is a major and important piece of economic legislation, but it is also a Bill with significant constitutional implications, not least for the stability of our devolution arrangements and the future of the union. This matters because there are important gaps in the scheme created by this Bill. For example, where in this scheme are the conclusions from the review of intergovernmental relations? When will the review be concluded and published, associated as it is with the work on common frameworks? How will the provisions of the Bill be enforced, and how will disputes between the UK Government and the devolved Administrations be managed?

The timetable for the Bill appears to be predicated on the end of the transition period on 31 December this year, but what is the real risk of regulatory divergence between then and the completion of the common frameworks process in 2021? The House is aware that the European Union (Withdrawal) Act 2018 already confers on Ministers so-called Section 12 powers to freeze devolved competence in relation to EU retained law. It is worth reminding ourselves of its provisions. Ministers can make regulations to restrict the ability of devolved Administrations to change EU retained law for up to two years after our formal exit from the EU. Should they make such regulations, these could remain in force for up to a further five years, so by my reckoning to January 2027. Therefore, on the face of it, there is ample time for the Government to put in place—in co-operation with the devolved Administrations—the necessary protections in the form of common frameworks and the associated intergovernmental architecture to protect the seamless operation of the UK domestic market. In light of the existing legislative protections that are already in place, will the Minister explain the need to legislate on this accelerated timetable, which, as we have heard, has not allowed sufficient time for more than the most cursory consultation? On the subject of consultation, can the Minister confirm whether all the responses to the consultation have been published? If not, will he give a commitment today that they will all be published in full and in short order?

Thirdly, and finally, on proportionality, the Government may be motivated in bringing forward this Bill by Mr Rumsfeld’s famous “unknown unknowns”. Ministers may indeed be confident that a portfolio of common frameworks can do most of the job, but still want to put in place an insurance policy to cater for unforeseen circumstances or to have a mechanism for monitoring the cumulative effects of policy and regulatory differences, which on their own may be entirely harmless. That is fair enough, but if that is so, then is not the scheme in this Bill the wrong way around? Instead of effectively overriding from the outset the practical ability of devolved Administrations to regulate differently to reflect local priorities and to suit local circumstances—and in the process potentially compromising a core benefit of devolution—would it not have been preferable for the Bill to provide a safety net of last resort? Would that not provide a better balancing of the needs of free trade within the UK with the need to respect the roles and responsibilities of the devolved institutions? Would not this create better incentives for all parties to agree sooner rather than later the full package of common frameworks? We all agree with the aims of this Bill. However, I suspect the Government will need to do more to convince the House that the legislative scheme in the Bill is the best way to achieve those aims.

[Baroness Andrews (Lab) [V]]

My Lords, it is a great pleasure to follow the noble Lord, Lord Dunlop, and indeed to agree with much of what he said. I support the amendments in the name of my noble and learned friend Lord Hope.

I should declare an interest as the chair of the Common Frameworks Scrutiny Committee. The House will judge that I have a formidable group of Peers to do the work, and we have heard from some of them this evening. It has been splendid to hear so much exposure given to common frameworks because, as many other noble Lords have said, the Bill is silent on them.

It is a particular pleasure for me personally to support these amendments because they are a model of clarity and common sense. They track the history and purpose of, and the co-operation involved in, the common frameworks in the context of our membership of and exit from Europe, holding firm to the principle and practice of devolution.

The Government are silent on the common frameworks and silent on the years of hard negotiation that has gone into them so far to ensure that the principles that govern them bear fruit. I am surprised at that silence because in everything that the Ministers have said so far—and they have said it informally in communications with us, which we very much welcome—they have insisted that they still support the principles of the common frameworks and their role in stabilising the internal market, yet in effect these clauses drive a stake through them.

As my noble and learned friend Lord Hope said, the common frameworks allow for reconciliation across an enormous range of highly sensitive areas of policy—from the safety of baby milk to protections relating to the location and storage of hazardous waste, to maintaining future emissions trading. It has been a slow and careful process because the dispute mechanisms and the legislative frameworks have to be resilient if the internal market is to work with integrity in the future.

As the noble Lord, Lord Dunlop, said, at Second Reading the Minister defended these clauses in the Bill on the grounds that this matter needs regulatory underpinning, because there are issues that fall around and in between the frameworks. First, as he also said, they are not entirely sector based, but the real puzzle for all of us is where these identifiable gaps are. If there are indeed gaps, could not other frameworks be developed as appropriate? We already have the models in front of us. Therefore, like the noble Lord, Lord Dunlop, I would be very interested if the Minister could now tell us in more detail what these issues are that fall around or between the individual sectors. What is the problem to be solved here?

The best clue that we have is that the Minister has suggested that the Bill is needed in case there are future developments that cut across seamless trade. Again, it is impossible to know what the Government think is likely to happen, why they cannot share that with us and why such developments cannot be accommodated. So far, no Minister and no officials, in formal and informal conversations, has come up with an instance of what this means.

It is the more frustrating because, by definition, the frameworks are dynamic. They will be under regular review—they are work in progress. If there is a push for further divergence, the reconciliation and dispute processes kick in. The union becomes the stronger because it acknowledges that culture, demography, local economics and geography drive diversity. If the Government fear that somehow, and at some point, unacceptable barriers to trade will be erected across the union, surely the frameworks are the solution and not the problem.

The Bill is important. It is also important not to exaggerate, but I believe that these clauses will exact an enormous price if they are not amended, as my noble and learned friend Lord Hope suggests. The mutual recognition principle becomes the default position, no matter what the devolved nations hope to achieve. The Government argue that, for example, we have the highest environmental standards in the world. Indeed, we might, but how can these be upheld in a highly competitive market where cheaper food invites cutting standards? How can each nation continue to drive down salt content in food if a cheaper product with a higher salt content becomes available for sale across the UK?