United Kingdom Internal Market Bill

Lord Fox Excerpts

2nd reading & 2nd reading (Hansard)
Tuesday 20th October 2020 Lords Chamber

[Lord Judge]

At end to insert “but that this House regrets that Part 5 of the bill contains provisions which, if enacted, would undermine the rule of law and damage the reputation of the United Kingdom.

Relevant documents: 14th Report from the EU Select Committee, 24th and 26th Reports from the Delegated Powers Committee, 17th Report from the Constitution Committee.

[Lord Fox (LD)]

My Lords, yesterday we heard some remarkable speeches, not least from the two debutants: the noble Baroness, Lady Hayman of Ullock, and the noble Lord, Lord Sarfraz. Over eight hours we heard the Bill broken down into three areas of serious concern: its illegality, its threat to the union, and its structural limitations. The analysis of the noble and learned Lord, Lord Judge, backed up by many other legal Peers, was clear: this Bill establishes a position whereby the United Kingdom breaks international law.

The counterarguments were less numerous, and they were weak. On the one hand, they said that this is an anti-Brexit rearguard action—something easily dismissed by taking note of the powerful speeches of the noble Lords, Lord Howard of Lympne and Lord Lamont of Lerwick, neither of whom is publicly gripped by pro-EU sentiment. The other line taken was that because other countries have broken the law, we can too. It is the cry of the playground: “They started it!” My noble friend Lord Thomas and others demonstrated that that argument is neither here nor there.

This Bill transcends legal affront—and here we should thank the most reverend Primate the Archbishop of Canterbury, who, in his speech, set out a moral case against this part of the Bill. As he put it:

“Our reputation as a nation, our profoundly good and powerful influence and example … will suffer great harm if law-breaking is pursued”.—[Official Report, 19/10/20; cols. 1293-4.]


That point was backed up by the noble and gallant Lord, Lord Stirrup:

“The Government exercise authority through the law; if they undermine respect for the law, they undermine both themselves and the stability of our society”.—[Official Report, 19/10/20; col. 1348.]


It is fair to say that the noble and gallant Lord knows a thing or two about the importance of moral courage.

This is not an academic argument. If we needed to be reminded how this Bill can affect the lives of people on the island of Ireland, my noble friend Lord Alderdice, speaking from his vast experience, set out what is at stake, and as my noble friend Lady Suttie said:

“The Northern Ireland protocol, which is far from perfect, is none the less a carefully constructed compromise to try to maintain peace and stability on the island of Ireland and to protect the Good Friday/Belfast agreement”.—[Official Report, 19/10/20; col. 1315.]


Quite.

Among yesterday’s speeches came a quite remarkable intervention from the noble Lord, Lord Barwell—a man with a unique window on this process. He recalled how, in a meeting with EU officials, Theresa May asked why the Northern Ireland backstop had to be set out in such operational detail. She was told:

“‘Because, bluntly, we do not think you will be there for much longer and we do not trust what is going to follow in terms of living up to any commitments’”.—[Official Report, 19/10/20; col. 1359.]


So, far from sending the EU a stern message about the UK’s resolve, the Bill simply confirms its suspicions about our trustworthiness—or rather, our lack of it.

Moving on to devolution, the noble Lord, Lord Callanan, asserted:

“These powers are not designed to take powers from the devolved Administrations”.—[Official Report, 19/10/20; col. 1284.]


My noble and learned friend Lord Wallace of Tankerness and my noble friends Lord Bruce of Bennachie and Lord German and others made it clear that the reality is something quite different. The Bill pulls back power to Westminster at the expense of the devolution settlement. Many Peers, such as my noble friend Lady Humphreys, pointed to the glaring absence of any reference to the common framework in the Bill.

For its part, the Constitution Committee is not convinced that opportunities for managing the UK internal market through the common framework process have been exhausted—and neither am I. By abstracting the internal market from these frameworks and pushing ahead unilaterally against opposition from devolved authorities, the UK Government are putting the common frameworks at risk. I have to ask: is that what Her Majesty’s Government want? That is what it looks like.

In light of progress being made with the common frameworks, my noble friend Lord Newby questioned, with considerable support, whether the Bill is needed at all. However, in his speech, the noble Lord, Lord Callanan, claimed:

“Without the Bill a Welsh lamb producer … could end up unable to sell their lamb as easily … Scotch whisky producers could lose access to supply from English barley farmers”.—[Official Report, 19/10/20; col. 1282.]


My noble friend Lord Purvis asked some specific questions regarding whisky. I would like to ask: what possible grounds are there to support the Welsh lamb claim?

Further, the noble Lord, Lord Callanan, also said that the Bill

“will allow professionals such as doctors and nurses, qualified in one of the UK nations, to work in any other”.—[Official Report, 19/10/20; col. 1283.]

If by this the Minister is saying that, without the Bill, English doctors will not be able to practise in Wales, I challenge him; if not, what is he saying? I think these comments are entirely baseless and I ask the noble Lord, Lord True, either to demonstrate that they are rooted in fact or to withdraw them.

The third element of the Bill is the role of the CMA as the home for an office for the internal market. As ever, I listened to my noble friend Lady Bowles on such issues. The Committee stage will see significant debate on this.

It will come as no surprise that noble Lords on these Benches will support the amendment in the name of the noble and learned Lord, Lord Judge, but as my noble friend Lord Newby made clear, it cannot stop there. This was backed by a strident call to arms from the noble Lord, Lord Butler. He and others made it clear that your Lordships have to be prepared to stand by the splendid speeches that we heard yesterday when we get to the sharp end of this Bill. In that regard, your Lordships’ House should be indebted to my noble friend Lord McNally for outlining the outcome of the Cunningham conventions. As he explained, we should not be inhibited in standing up to the Government.

The conclusions that I draw from yesterday’s debate are: the illegality of this Bill must be removed; Clauses 44, 45 and 47 should be excised and the Henry VIII clauses removed; the role of the common frameworks as the prime mover in a single market must be reinstated; and consensus must be sought on the principles of the Bill where the market is managed and disputes are dealt with. Finally, if there needs to be an office for the internal market, it needs a different governance structure from that proposed.

We all know that this Bill is illegal, flouts important constitutional issues and threatens devolution. More than that, we know that it has already eroded trust in our institutions and is damaging the reputation of this country, which promotes the rule of law. Finally, and perhaps most insidiously, we know that any law that seeks to permit the Executive to break laws is morally wrong.

United Kingdom Internal Market Bill

Lord Fox Excerpts

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

[Lord Naseby (Con)]

My Lords, it is worth reminding ourselves that we are talking about the Committee stage of an internal market Bill. I frankly do not see the relevance of the part of Amendment 1 which talks about the environment. We do of course have environmental laws. They are ever being strengthened and are an important part of our society. What they are not is anything specifically to do with an internal market.

We turn to look at consumers. I am a marketing man by profession. After university, having read economics, I joined the Reckitt and Colman Group as a marketing executive and later a marketing manager, in the UK, India and what is now Sri Lanka. I understand marketing. Marketing is about more than just the consumer. It is about those elements of a market that are all working within it. A whole host of bodies is working there. I share the view of my noble friend Lady Noakes. While the UK was in the EU, which I voted to stay in, we had all sorts of restrictions, some of which were very adverse to industry and commerce in this country—not all by a long way, but some were. We want an internal market where people who manufacture, sell, distribute, research and devise new products can succeed. We want that market there, without the stranglehold of having to agree with half a dozen other nations. That is absolutely key. It is not a simple matter of just worrying about the consumer. I think it was the noble Baroness who opened who spoke about driving competition to the lowest level.

Competition is very healthy but, of course, there must be safeguards. That is why in the Bill there is this new body, the office for the internal market, working alongside the CMA. I criticised the CMA at Second Reading and I believe those criticisms were valid. I want to see this office for the internal market really have teeth and really be able to operate. Reflecting on Second Reading, frankly, it is not right in the Bill to just have a review after five years. We have enough evidence in modern society to recognise that things move much more quickly these days than they ever used to. I put it to the Minister that Her Majesty’s Government should consider a three-year review of that body.

On Amendment 2, it is already part of our public law, so why does it have to be written here—if that is right? It comes later, under Part 5, but we cannot have a situation whereby all parts of the UK can have their own minor arguments on whatever product or service it may be. Then we would end up with everybody having a different viewpoint. That does not seem to me at all sensible. My plea to the Minister is that this is a very exciting time if you are a UK manufacturer, trader, in financial services, in hospitality, in the professions, a retailers or wholesaler, or an online trader. Certainly, in my former constituency of Northampton, they look forward to this internal market.

[Lord Fox (LD)]

My Lords, if the Ministers shepherding this Bill expected an easy ride, this gives a taste of things to come. It serves a purpose in setting the scene, and a lot of arguments and debates will come in other groups as we go through this process. I shall not labour those points. An overriding sense I got from my noble friend Lord Purvis is that the question everybody wants to know the answer to is: why have Her Majesty’s Government decided to turn away from a process of managing markets that has been extremely successful? It was successful before we joined the European Union and successful afterwards. This is the overriding question that hangs over this whole debate.

On Amendments 1 and 112, if ever we needed convincing that things such as the environment need to be written into the Bill, the speech by the noble Lord, Lord Naseby, convinced me that they do. This is because we cannot take things for granted. Governments come and Governments go, but the law stays, and we need to be sure that our public policy is being directed properly. I uncharacteristically find myself somewhat agreeing with the noble Baroness, Lady Noakes: we have to be careful not to constrain the nature of this Bill. We need to find a way to write in issues such as those of the consumer and the environment. I would add some of the points made by my noble friend Lady Bowles and food safety to that. We need to ensure that there is an assessment of the success of this internal market in some of those areas, including the environment, the effect on consumers, the effect on jobs, et cetera. I share the view of my noble friend Lady Bowles that perhaps more work is needed, but the issue is live and very important. I thank the proposers of the amendment.

Turning to Amendment 2, I do not think proportionality pops up anywhere in other amendments. We had a brief discussion of this extremely important subject from various speakers. I take my lead on this from the noble and learned Lord, Lord Hope, who understands the law, and my noble friend Lady Bowles, who knows a thing or two about regulation. If they are concerned about proportionality, so are we on these Benches. The Government need to find a way of writing that issue into the Bill.

On public procurement, we need to understand what the Government mean by what they seek to do in this legislation. The issue highlighted by my noble friend Lord Purvis is live and real: how will this legislation affect those issues? It is a probing amendment, but for it to work we need answers.

We have started. There are issues we shall return to, but proportionality and public procurement are two on which I hope the Minister will respond at length.

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

My Lords, let me open by thanking noble Lords for their contributions at Second Reading last week. Again, the contributions have demonstrated the tremendous breadth of expertise in this House. This is indeed a crucial piece of legislation. In this respect, I agree with the noble Lord, Lord Fox, and I look forward to providing the scrutiny it deserves and that I am sure it will receive from noble Lords, beginning today and in the days and weeks ahead.

Let me reassure, and to some extent disagree with, my noble friend Lord Cormack, which will not come as a surprise to him. We are not riding roughshod over the devolution settlements. The devolved Administrations will acquire dozens of new powers that they have not exercised before once we leave the EU transition period. The Bill is about ensuring that those powers are exercised in a non-discriminatory manner, but they will acquire new powers and new responsibilities. Before I address the specifics of Amendments 1, 2, 59 and 112, which we are discussing in this first group, I want to remind to noble Lords of why we need this Bill and the context of Part 1.

By opening with the purpose of the Bill, I hope to explain why these four amendments, which seek to alter the Bill’s core principles, are not necessary. The Bill aims to allow the continuing smooth functioning of our UK internal market at the end of the transition period. As we set out in the White Paper, and as I explained at Second Reading, the Bill will establish a market access commitment by enshrining mutual recognition and non-discrimination in law. Part 1 concerns itself with delivering this market access commitment for goods. The principle of mutual recognition is that goods and services from one part of the UK will continue to be recognised across the country. This will ensure the devolved Administrations will benefit from their additional powers and freedoms outside the EU. As the transition period ends, they will gain increased powers, as I said to my noble friend Lord Cormack, to set their own rules and standards across a wide range of policy areas within their competence. At the same time, it provides firm assurance to our businesses that their goods can continue to flow freely throughout the United Kingdom. Non-discrimination ensures that there is continued equal opportunity for companies to trade in the UK, regardless of where in the UK the business is based.

I say to the noble Lord, Lord Empey, that the measures in the Bill will also ensure that Northern Ireland qualifying goods benefit from the market access commitment and receive mutual recognition in the rest of the UK. The Bill will also affirm the principle that those goods are not subject to checks, controls or administrative processes as they move from Northern Ireland to Great Britain. I hope that I can reassure the noble Lord on that point. This means we will fulfil our commitment to legislate for unfettered access, as we promised to the people and businesses of Northern Ireland. This will ensure that businesses and citizens in the United Kingdom can continue to trade freely across the four nations.

With this context in mind, I turn to Amendments 1 and 112 together. These seek respectively to limit the purpose of Part 1 and the Office for the Internal Market’s statutory objective to the protection of the environment and consumer interests. Now, it goes without saying that the protection of the environment and consumers is hugely important, and something that we as a Government are already committed to. The UK, as I never tire of repeating, has some of the highest standards in the world, and we will continue to improve these ahead of others. We remain committed to being at the forefront of environmental protection and a leader in setting ambitious targets to prevent damage to our natural world, building on our already strong environmental record. For example, we have set out a range of new policies in the Environment Bill that are designed to drive up environmental standards in line with the UK’s priorities.

The statutory objective of the Competition and Markets Authority—acting as the Office for the Internal Market—ensures that the office is able to effectively operate as the monitoring body for the internal market, and that there is no confusion between the pre-existing powers of the CMA and those newly conferred on it as the OIM. Distinct objectives will prevent any operationally problematic blurring of functions.

As my noble friend Lady Noakes observed, the office will operate for the benefit of all those with an interest in a smooth-functioning internal market, whether that be regulators, businesses, professionals, the four legislatures or indeed consumers. Explicitly narrowing its focus to consumers would be to the detriment of all the others that I have listed.

Moreover, the functions set out in Part 4 of the Bill clearly establish that the office will consider the economic impacts of regulatory measures on the internal market. Although some of these will of course be environmental protection measures, it will not be authorised to opine on the extent to which these measures safeguard the environment, because this would risk duplicating the role of existing public bodies with a purely environmental focus. As such, given how much the Government are already doing in the area of consumer and environmental protection, I consider that these amendments, which seek to change the purpose of the Bill, are unnecessary, and I hope that I have been able to persuade my noble friend Lady McIntosh and the noble Baroness, Lady Hayter, to withdraw Amendment 1 and not move Amendment 112.

Amendment 2 aims to introduce the principles of proportionality and subsidiarity into the Bill as additional market access principles. These are European law principles. We have now left the EU and are free to organise our internal market in a way that is better suited to the UK’s unique constitutional arrangements and common-law systems. I agree with my noble friend Lady Noakes that the market access principles will protect seamless trade and jobs across all four corners of the United Kingdom following the end of the transition period in December 2020. They have been designed for the UK’s specific devolution arrangements and legal approach, and they already take account of the need for reasonableness and respect for devolution. In contrast, the proposed amendment would muddy the waters with EU concepts that in our view are ill-fitting in the UK. For these reasons, the Government cannot accept this amendment and I hope that noble Lords will not move it.

Amendment 59, on which there was considerable discussion, seeks to disapply the market access principles from the public procurement rules. I assure the noble Baroness, Lady Hayter, and the noble Lords, Lord Purvis and Lord Fox, that the principles proposed in the Bill will not typically operate in the area of public procurement, and indeed that we intend to legislate separately in this area via a wider package of procurement reform, on which we will shortly consult. The market access principles are not relevant to procurement as they are about how business is regulated. The procurement rules cover how public authorities carry out their procurement function. We believe that the risk of divergence can be effectively managed through a combination of close devolved Administration engagement and use of the common frameworks, and we are working to develop a concordat on expected public procurement practices and policies between the four UK nations.

--- Later in debate ---

Moved by

[Lord Fox]

4: Clause 1, leave out Clause 1 and insert the following new Clause—
“Purposes of Parts 1, 2, 3 and 4
(1) Parts 1, 2, 3 and 4 promote the continued functioning of the internal market for goods (see Part 1) and services (see Part 2), including the recognition of professional and other qualifications (see Part 3), in the United Kingdom by establishing the United Kingdom market access principles.(2) The United Kingdom market access principles are—(a) the mutual recognition principle for goods and services, and(b) the non-discrimination principle for goods and services.(3) Those principles have no direct legal effect except as provided by Parts 1, 2, 3 and 4, and only to the extent that they have been agreed in a memorandum of understanding by—(a) the Secretary of State,(b) the Welsh Ministers,(c) the Scottish Ministers, and(d) a Northern Ireland department.(4) The Secretary of State must lay before Parliament the memorandum of understanding, which must also set out—(a) how the agreed policy frameworks on the functioning of the internal market in the United Kingdom will operate,(b) any agreed exclusions from the market access principles,(c) proposals for the establishment of a council or councils, comprising representatives of the Secretary of State, the Welsh Ministers, the Scottish Ministers, and a Northern Ireland department to oversee the operation of agreed policy frameworks and the functioning of the internal market in the United Kingdom, and(d) proposals for the establishment of an agreed dispute resolution mechanism relating to the internal market in the United Kingdom for any disputes among the Secretary of State, the Welsh Ministers, the Scottish Ministers, and a Northern Ireland department.(5) A statutory instrument containing regulations under section 56(3) may not appoint a day for the commencement of Parts 1, 2, 3 or 4 until the requirement in subsection (4) is met.”

[Lord Fox (LD)]

My Lords, as I said in winding up at Second Reading, the eight hours of speeches broke the Bill down into three areas of serious concern: its illegality, its threat to the union, and its structural contradictions. As the noble Baroness, Lady Hayter, said, even if Part 5 is removed one way or another, there will still be great dangers lurking within the Bill. This amendment focuses squarely on putting the threat to devolution on ice.

The Minister was right when he said that the devolved authorities get new powers through the Bill, but these new powers are heavily constrained—more so than they were before when there was EU flexibility. We have heard some of this debate already. More importantly, both Ministers have omitted to mention that, at the same time, the Government are taking significant powers away. These losses are far more significant than any notional gains. This has already been correctly characterised by the devolved authorities as rolling back the devolution settlements.

The Governments of Wales and Scotland need only look over their respective borders to see how the UK Gossvernment are treating their regions and cities—where there is only piecemeal devolution—to conclude that taking power back to the centre is not an accident; it is a pattern of behaviour. As an aside, this is not a unique pattern of behaviour. My Scottish friends tell me that the Scottish Government are very enthusiastic about centralising power away from their local councils.

Returning to the Bill, we should not worry when it comes to Westminster’s reputation in Scotland. I read in the press that Michael Gove is heading up a new unit to tackle the secessionist movement in Scotland. What could go wrong there? Perhaps a better way of dealing with the unpopularity of Westminster is to deal with the central devolution issue in the Bill.

There are many later amendments concerning parts of the problem with the Bill. This amendment seeks to deal with it all in one go, taking it head on. It is driven by a central principle which we on these Benches share. We do not believe that it is only the UK Government or this Parliament that should dictate how the future internal market should work. It has to be a collaborative effort between Westminster, Edinburgh, Cardiff and Belfast. To achieve this, Parts 1 to 4 of the Bill need to be rewritten by consensus, not imposed, which is why this amendment seeks to halt the progress of Parts 1 to 4 until a joint process has created the future market structure. In essence, it will put on ice the Bill’s implementation until agreement is reached on the operation of the internal market frameworks.

In order to do this, the amendment rewrites the purpose of the Bill. What stays is the promotion of the continued functioning of the internal market for goods, in Part 1, and services, in Part 2. It includes the recognition of professional and other qualifications in the UK—in Part 3—by establishing the UK market access principles, including, as now, the mutual recognition and non-discrimination principles for goods and services. It adds the important rider that those principles have to be agreed in a memorandum by the Secretary of State, the Welsh and Scottish Ministers and a Northern Ireland department. This memorandum would cover how the agreed policy frameworks on the functioning of the internal market in the United Kingdom would operate and any agreed exclusions from market access principles. It would establish a council or councils, comprising representatives of the Secretary of State, the Welsh and Scottish Ministers and a Northern Ireland department to oversee the operation of the agreed policy frameworks and the functioning of the internal market in the United Kingdom. The current Joint Ministerial Council would need to be strengthened to achieve this objective.

The amendment would also establish an agreed dispute resolution mechanism, relating to the internal market of the United Kingdom. It requires the Secretary of State to lay this memorandum before Parliament. In short, this amendment makes the Government do what it should already have done. Amendment 4 requires them to consult and reach agreement with the devolved nations of the United Kingdom. By pausing and putting this on ice, Her Majesty’s Government can then create the consensus that is needed. It can also address the holes in the Bill, including the role of the common frameworks, which will be discussed in much more detail later, and it can put in place a process of dispute resolution. The deliberate absence of detail around dispute resolution can be viewed with great suspicion by those who are so minded. It seems that in the end, the Westminster-based UK Minister will decide disputes if the Bill remains unamended.

Why should the Government agree to this amendment? The first reason is due process. I met the noble Lord, Lord Callanan, on Friday. His key anxiety was about discipline and time in order to get through all this. If he were to accept this amendment, he would, at a stroke, remove large portions of the subsequent debate up to, but not including, Part 5 of this Bill. He would then meet his time objectives. Much more seriously, by accepting this amendment, the Government could step back from a truly appalling act of political vandalism. To say that this Bill drives a coach and horses through devolution is not hyperbole. This cynical approach to the balance of powers established between Westminster and Scotland, Wales and Northern Ireland, is calling down issues that, once started, will not easily be halted. This amendment seeks to avert this disaster, creating a role for the devolved authorities, including the operation of the internal market frameworks, robust dispute resolution, agreed exclusions from market access principles and representation for all four nations on oversight councils. I beg to move.

[Baroness Neville-Rolfe (Con) [V]]

My Lords, I refer to my interests in the register as this is the first time I have had the honour of speaking in Committee. Amendment 4 introduces an expanded purpose for the Bill. The noble Lord, Lord Fox, has explained the rationale for his wide-ranging proposal. I can understand his wish to refer to services at this introductory point in the Bill, given that they comprise over 80% of GDP, and to professional and other qualifications, harmony on which is so important to the UK’s single market.

I accept that the changes to subsections (1) and (2) merit consideration. However, I am very uneasy about the proposed new subsections (3) and (4). I fear that they make this a wrecking clause. They give the devolved Administrations a veto over the way internal market arrangements will work, in addition to the substantial powers and money that they have already been given in the various devolution settlements and EU exit Bills. This is a recipe for the politics of national resentment, chaos and delay, at a time when we need rapid agreement on the new order so that the country can move forward and make the EU exit work, difficult though this may be.

Resources are already massively redistributed out of London and the south-east to other parts of the UK, with Scotland alone having a fiscal deficit of £15 billion—namely, a subsidy from richer England—according to a recent article by David Gauke, who served in the Treasury for seven years. We do not want yet another stand-off at this moment in time with the devolved nations, able to hold things up. There has been quite enough of such delay in the exit negotiation process, now more than four years long, I remind noble Lords.

Where I have more sympathy with the noble Lords, Lord Fox and Lord Purvis of Tweed, is on the fact that we need clarity now, before the Bill takes effect. Perhaps I can explain why by way of analogy.

When I was at Tesco, one of the key reasons for success was a clear understanding of who had responsibility for what and a readiness to accept the rules for the greater good. Procurement was done centrally by buyers, who could work with the supply chain, such as British food producers, understand their needs, strengths and innovations, agree a reasonable deal and ship goods to the stores in line with customer demand. When it came to other areas, such as who to hire as employees and how to schedule their hours, that was locally determined. The key was that everyone knew and accepted the division of labour because it contributed to the success of the whole. There was no council where everyone could waste hour after hour arguing the toss, as appears to be proposed in this amendment.

Let us have clear divisions and let us decide them now, not leave them for a great fight over a memorandum of understanding or yet more devolved government bodies backed up by dispute resolution. That is just an invitation to politically motivated folk to stop the country adjusting to the new norms and getting ahead with economic recovery and international ambition.

The proposals in the Bill are a good start, and, as noble Lords can see, I am uneasy about this particular amendment. I served for nearly three years as the single market Minister in the EU and for years as a British official negotiating in Brussels and Luxembourg, and the truth is that, subject to some minor subsidiarity, internal market rules for goods were set at the EU level in the interests of the efficient functioning of the market. By analogy, rules for the UK single market should be set at the UK level. EU services were less streamlined, but we all recognised that and wanted to bring about improvement, which was one of the main objectives of the UK presidency in 2017, but that never happened. I look forward to hearing from my noble friend the Minister, but I will take a lot of convincing that subsections (3) and (4) make sense.

--- Later in debate ---

[Lord Callanan (Con)]

The purpose of the office for the internal market is to provide advice, reports and monitoring to all four Governments and legislatures. It will have no direct role in dispute resolution, which will be a matter for the Joint Ministerial Committee to discuss.

[Lord Fox (LD)]

My Lords, I apologise to the Deputy Chairman of Committees for having jumped in so soon. I thank all noble Lords for their contributions; the subsequent questions were worth waiting for, so I am glad that I did not plough on.

This has been an interesting debate; however many more hours we will have in Committee, it has uncovered above all else how half-baked—how completely undercooked—this Bill is. It is not worked through. The point of this amendment was to highlight, and give the Government, an opportunity to step back and admit that there are so many open questions and so many issues. I feel sorry for the Minister—I rarely do, but on this occasion I do—because he is having to respond to things that have not been properly locked down in this legislation. So I will look at Hansard, but it is quite clear that, one way or another, we will have to come back on Report to these absolutely central issues. Having said that, I beg leave to withdraw Amendment 4.

Amendment 4 withdrawn.

United Kingdom Internal Market Bill

Lord Fox Excerpts

Committee stage & Committee: 2nd sitting (Hansard) & Committee: 2nd sitting (Hansard): House of Lords
Wednesday 28th October 2020 Lords Chamber

[Lord Liddle (Lab)]

My Lords, this is a very interesting debate to join. It is a pleasure to welcome the noble Lord, Lord Callanan, to his place, as it were, once again defending an extremely complex and difficult piece of legislation. I hope he will give pretty comprehensive answers to the points raised by my noble friend Lord Rooker, the noble and learned Lord, Lord Hope of Craighead, and the noble Lords, Lord Purvis and Lord Inglewood, because they all had great merit.

I spoke at Second Reading but was not able to attend the first day of Committee because of commitments in Cumbria. In all the furore about the unconstitutional and completely unacceptable clauses of the Bill, the Government have got away with the rest of it, which may not be unconstitutional but is certainly unacceptable. Therefore, this House should expose it to very critical scrutiny.

We need clarification—this is where my noble friend Lady Hayter’s amendment is so important—in very simple and clear language of what the Government mean by mutual recognition and how this will work out. The idea of mutual recognition was an important foundational principle in the history of the European Union and the single market, but only because mutual recognition without anything else is a weapon that results in a race to the bottom. In the single market White Paper put forward by Jacques Delors in the early 1980s, the whole point was that you had to have common standards and harmonisation in a list of certain areas—I think there were 300—to go alongside the principle of mutual recognition.

I have two points to make on this. First, on the position of the devolved authorities and the nations of Britain, do the Government recognise that an essential principle of devolution is that diversity and experimentation are good things, and that it is therefore important that in a devolved settlement the devolved nations should be able to experiment with setting standards in the areas of public health, environment and consumers? This is part of the point of devolution. It is not something the UK Government should seek to prevent. It is very important that the Government make clear their support for the principle of devolution and diversity.

My second general point is the one to which the noble and learned Lord, Lord Hope, drew attention in his support for my noble friend Lady Hayter’s probing amendment: why do the Government include in their general principle this business of goods being imported into the United Kingdom? Does this essentially tell the devolved Administrations that, in any trade agreement that the UK Government negotiate, they will have no say over the standard of goods coming into the UK and would have to accept them whatever they thought about their compatibility with their own aspirations to set standards? That seems to me a fundamental point that needs an answer. This legislation is deeply complex, but we need clarity from the Government on fundamental points.

[Lord Fox (LD)]

My Lords, this has been a relatively short debate in terms of the Bill so far, but it has raised some fundamental issues which beg some quite deep and considered answers from the Minister.

When the noble Lord, Lord Inglewood, brought up Cumbrian cattle-driving and we had the noble Lord, Lord Liddle, to follow, I felt we might have had quite a long discussion around that, although we did not. The noble Lord, Lord Inglewood, in characterising Defra as an English department, brought out the Janus face Secretaries of State have in being not only Secretary of State for the United Kingdom but in most cases also Secretary of State for England. Herein lie some of our problems and uncertainties.

The noble Baroness, Lady Hayter, set out and explained very well the issues surrounding mutual recognition. In the noble Lord, Lord Rooker, this House has the benefit of someone with fantastic knowledge and it is important to listen to him. Animal feed is an important area, although it is not always clear. If I may beg your Lordships’ indulgence for a short anecdote, in the mid-1970s our farm was subject to one of the small outbreaks of anthrax, which is very rare—I found the animal that died of it, and it was not a pretty sight. We were put into quarantine—something like lockdown—and it was tracked down to the importation of cheap beans from India. That is why the control of animal food in this country is really important.

In terms of animal feed on the island of Ireland, I was struck that the Government have already exempted the electricity market there—the Minister and I debated this on a statutory instrument—from the overall UK market. They have done that because of the integrated nature of electricity on the island of Ireland; it is an entirely sensible move, of which we approve. It seems to me that animal feed is very similarly integrated and would benefit from a similar island-of-Ireland-wide process. The Minister might like to think about that going forward.

As usual, the noble Baroness, Lady McIntosh, asked a series of excellent and important questions. We need answers to them to understand the objectives of the Bill.

In Amendment 21, the noble Baroness, Lady Finlay, seeks what I think many of us seek to do: to look at this, as somebody mentioned, through the other end of the telescope. This is turning things upside down. Why do we not start with the common frameworks and what is currently working around the devolved authorities and legislate only what needs to be done to create the market we all want? My noble friend Lord German’s twin-track, two-road approach is a very good example. Where is the gap? How do these twin tracks come together? There is no explanation anywhere of how the common frameworks and the Bill are supposed to work together. The only conclusion I can draw is that the common frameworks are allowed somehow to dwindle, because the Government seem to be putting an enormous amount of energy into the Bill.

As usual, the noble Baroness, Lady Noakes, is right: we need to facilitate trade and make it as frictionless as possible across the UK. It is a shame we cannot make it frictionless across the whole of the European Union. The fact is, we have devolution, and the internal market Bill must respect that. At present, it seems that it does not. The noble and learned Lord, Lord Hope, made this point very ably.

As usual, my noble friend Lord Purvis came up with a series of important questions, including Scotch whisky-based ones. He came up with the revelation that there is a complete and absolute internal contradiction in the Bill. The Government brought forward an amendment that causes the following to happen: if England decided to set up its own approval system and started approving active chemicals banned in the EU, Scotland could refuse them. Conversely, Scotland could presumably go further than the EU ban and ban substances which England approved. That is the Government’s position, based on an amendment they brought to the Commons. However, he Minister has said that we must stop this happening, and that the Bill will do that. Something is not right, and the Minister needs to explain what is wrong.

The telling point made by my noble friend Lord Purvis and other noble Lords, including the noble Baroness, Lady McIntosh, is that without clear definitions, it will not be the Government causing the race to the bottom—it will be companies taking this to the courts. That is why we expect from the Minister a very detailed answer to these important questions.

[Lord Falconer of Thoroton (Lab)]

I strongly endorse what has been said by the noble Lord, Lord Fox. This is an incredibly important and rich debate in which detailed answers are required. It has been a very powerful debate because it has identified a range of problems, both of principle and detail, suggesting that either the Bill has not been properly thought out—subject to what the Minister says in answer—or that there are fundamental problems with it.

I strongly echo what was said by the noble Lord, Lord Inglewood, and endorse what the noble Baroness, Lady Noakes, said—we want frictionless trade as much as possible. I do not know about the noble Baroness, but my experience of business is that if every five minutes one is in the courts trying to work out what is allowed and what is not, that is the classic recipe for a lack of certainty. This Bill, as said so accurately by the noble Lord, Lord Purvis, is creating a whole range of private rights not to be discriminated against, to be treated the same in one place as another. Unless the Bill is clear and has a practical impact, it will be an absolute goldmine for lawyers. It is therefore critical there is confidence this has been properly thought through and the principles work. I am dubious— I am not talking about Part 5 but about the internal market provisions.

We had a very important debate on Amendment 7 about imports, tabled by my noble friend Lady Hayter. My noble friend and the noble and learned Lord, Lord Hope, asked why the devolved Assemblies or Parliaments are excluded from having any voice on what is imported. We were treated by my noble friend Lord Rooker and the noble Lord, Lord Inglewood, to an explanation of all the drawbacks of including food and animal foodstuffs in the arrangements. They gave a devastating series of reasons why these are wrong. Could we have detailed answers for the point made by the former chair of the Food Standards Agency? I ask the Minister to convince us if he can that my noble friend was wrong and the Government are right in the way they have approached this.

The amendments which were very powerfully introduced by the noble Baroness, Lady McIntosh, indicated legal issue after legal issue. I draw attention to two where an answer is important. First, how do the measures already in place apply, and why are they better than the common frameworks approach? Secondly, what is meant by substantive change, rather than significant change? That feels like an issue that could be litigated over for a long period of time.

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Moved by

[Lord Fox]

12: Clause 3, page 3, line 25, leave out subsection (8)
Member’s explanatory statement
This amendment would remove the Secretary of State’s regulation-making power, as recommended by the Delegated Powers and Regulatory Reform Committee in its 24th Report.

[Lord Fox (LD)]

My Lords, in moving Amendment 12, I will also speak to Amendments 27, 38, 46, 72, 97 and 160 in my name. These amendments would remove the Bill’s regulation-making power, which is fully in line with the recommendations of the Delegated Powers and Regulatory Reform Committee. Its report is a comprehensive review of these issues; your Lordships will be pleased to hear that I will therefore not reiterate them at length. Later, we will hear the wise words of my noble friend Lord Thomas of Gresford, who will describe that your Lordships’ House is approaching a watershed on this issue. He is of course right; this train has been coming down the tracks for some time.

A while ago, the noble and learned Lord, Lord Judge, gave a lecture at King’s College London entitled “Ceding Power to the Executive: The Resurrection of Henry VIII”. He made the stark point that parliamentary sovereignty is the antithesis of executive sovereignty. The two concepts are mutually contradictory. The democratic process is not meant to give—and our constitutional arrangements are not meant to provide us with—executive sovereignty. The burden of the noble and learned Lord’s argument was that Henry VIII powers, although paradoxically conferred upon the Executive by none other than Parliament, are an affront to parliamentary sovereignty. That lecture was held in 2016. Since then, we have seen an acceleration of the erosion of parliamentary sovereignty through these means.

As the House of Lords Constitution Committee put it in its report of the Strathclyde review some five years ago:

“Delegated powers in primary legislation have increasingly been drafted in broad and poorly-defined language that has permitted successive governments to use delegated legislation to address issues of policy and principle, rather than points of an administrative or technical nature.”


This Bill pushes that envelope yet further. The Delegated Powers and Regulatory Reform Committee was clear. It described some of the powers in that report as either “extraordinary” or “unprecedented”. To justify these extraordinary and unprecedented powers, the Government cite the need for legislation to evolve. The possibility of unknown unknowns required a yet unknowable legislative response and a yearning for law-making speed. None of these justifications is extraordinary and none of them is unprecedented.

I beg to move.

[Baroness Andrews (Lab)]

My Lords, the amendments in my name in this group are for the most part identical to those of the noble Lord, Lord Fox, although in some cases they are wider in their supplementary implications. It goes without saying that I agree with everything he said—and everything that I suspect the noble Lord, Lord Thomas of Gresford, is about to say—about the whole range of excessive and inappropriate delegations. Of course, my amendments follow the advice of the DPRRC; I declare an interest as a member of that committee.

I will make a few general points about what the Government are trying to do in these clauses and how they have justified them. I speak for myself but I suspect that I also speak for many members of the committee —certainly for our distinguished chair—when I say that we have reached a point of almost total exasperation with the Bill. The DPRRC was set up in 1992 to monitor and control the excesses of executive power and the temptation for Ministers and officials to try to avoid parliamentary interference and take inappropriate powers. So it is hardly new, but in recent years, we have been sorely tested— not least on the limits of our vocabulary. Indeed, the DPRRC has described these powers as “extraordinary” and “unprecedented”.

We have seen the increasing use of skeleton Bills and statutory instruments not for the delivery of policy but for the design of policy and for carrying the principles of legislation within the secondary framework. Most recently, we have seen mounting evidence of a Government that will go to endless lengths to avoid scrutiny. This Bill is in a class of its own because of the sheer volume and significance of the Henry VIII powers. Of the 12 delegated powers in the Bill, seven are Henry VIII powers, allowing Ministers to amend or repeal significant provisions of the Bill itself, as well as other primary and secondary legislation. We used to protest when only one Henry VIII power turned up in a Bill.

It sets a different tone, too, because the delegated powers memorandum, in its attempt to justify why these powers to expedite the mutual recognition principle and the non-discriminatory principle are necessary, does not even bother to try to find a convincing justification for the powers taken. In the clauses relating to my Amendments 13, 28, 39 and 47, for example, the explanations for using statutory instruments to amend Acts of Parliament cite the need for speed and flexibility to respond to unforeseen developments—the known unknowns and so on—respond to stakeholders and provide certainty. These are profoundly lazy and threadbare arguments, and Ministers and officials know that. I consider that contempt of Parliament. Secondary legislation does not guarantee speed, flexibility or certainty. Primary legislation, as we know from dealing with the pandemic, can be introduced at the speed of light and amended. Indeed, the Government have conceded in their own arguments that the Secretary of State is not required to declare that the making of regulations is required as a matter of urgency, so urgency is a false trail too.

This disingenuous use of language offered in the memorandum in regard to Clause 6(5) is a case in point. It argues that Ministers need to be able to respond swiftly to future-proof the operation of these principles so that they can be changed as and when Ministers decide that it is necessary. The DPRRC dismisses this as an attempt to completely rewrite the non-discrimination principle. When the Government argue that there is no way that they can change the definition of legitimate aims attached to the non-discrimination principles in Clause 8 other than by secondary legislation, they seem to have completely forgotten that such a thing as primary legislation exists. Indeed, in Schedule 2, for example, the assumption is that only secondary legislation is fit for purpose when it comes to making future amendments.

The powers that my amendments seek to remove are described by the DPRRC as inappropriate and ones that should be removed; the Constitution Committee endorses that. “Inappropriate” may seem rather feeble in the parliamentary lexicon; in fact, it could not be more powerful. Among other synonyms, it means unseemly, unbecoming, lacking in propriety, ill-judged and out of order. Nowhere are those and many other epithets more appropriate than what these clauses have to say about the devolution settlement. For in Clauses 3(10) and 6(7), in relation to mutual recognition and non-discrimination —the two main pillars of market access—there is the explicit instruction that, before making regulations, the Secretary of State must consult the Ministers of the devolved assemblies. The Government are required not to seek consent but merely to consult, so they

“can act without the need to introduce new primary legislation or to obtain the consent of the devolved administrations (the Minister being only under a duty to consult) even though the proper functioning of the internal market is essential to all the administrations of the UK.”

That is a direct quote from the DPRRC.

That most eloquently brings us to the fracture at the heart of the Bill, and to the reason for taking these inappropriate powers which removes them from the full attention of Parliament. It comes back to what the Government insist is the purpose of the Bill—to secure, despite the promise and the purpose of common frameworks, that the internal market will need a new regulatory structure flexible enough to meet the unforeseen demands in the future, notwithstanding that they cannot tell us what those demands are likely to be or explain how they are going to prevent lower common standards permitted by law in this Bill, or why the common frameworks are not sufficient in themselves to prevent that, or why the Bill cannot be amended in such a way as to ensure a tight fit between the common frameworks and the common purposes of the Bill. These inappropriate powers are seen as necessary to expedite what might happen in the future, notwithstanding the impact on the devolved nations or the devolved settlements, the role of Parliament, the balance of powers expressed in appropriate legislation or the integrity of the process itself.

There is a great deal at stake in this Bill, as has been said many times already in the process of the Bill. They are grave matters, and they have been drawn to the attention of this House by the two most senior scrutiny committees. I hope the Minister will find he can agree with me that these powers are offensive as well as unnecessary, and that they will be removed.

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I can reassure the noble Lord, Lord Fox, that the power in Clause 43(8) is only intended to be used as part of our phased approach to delivering qualifying status for unfettered access. As such, it would be expected to be exercised alongside any change to the definition of qualifying Northern Ireland goods. However, in order to ensure that there is appropriate flexibility as regards the sequencing and approach to further legislation, the powers are not formally linked in the Bill. Therefore, I am sure that the noble Lord will feel able to withdraw his amendment.

[Lord Fox (LD)]

My Lords, as I suspected, the speakers who came after me made a far more powerful case for these amendments than I could have managed. The noble Baroness, Lady Andrews, expressed the exasperation of her committee, and I think we could all feel that exasperation coming through in her speech. In reiterating the report of the Delegated Powers Committee, she gave a powerful and devasting critique of the measures that are sought here.

Similarly, the noble and learned Lord, Lord Hope, highlighted the absence of a purpose for these powers—and I will return to the Minister’s response in a minute. My noble friend Lord Thomas was right to characterise this as an issue between Parliament and the Executive, not between the Lords and the Commons. I am also grateful to the noble Baroness, Lady Hayter, who very clearly made the point that there is seriously bad stuff in this Bill beyond Part 5—if I may paraphrase her thus.

The noble Baronesses, Lady Ritchie and Lady McIntosh, and others shared my position on why the Government might be taking on these powers. I was worried that perhaps the noble Lord, Lord Liddle, was going to be kind to the Government for a moment, but I am happy to say that he, too, shares our view that these powers are being accrued in order to do things, not least to the Northern Ireland situation, that should not be done.

In defending the Bill, the Minister not only sorted out the Tudor family tree but put forward a very detailed response, and he and his team should be thanked for the comprehensive nature of that. If noble Lords will excuse me, I will boil most of his reply down to saying, “We might need to change stuff but we’re not sure why”. That is true for every piece of legislation that ever came before your Lordships’ House, so it is not, in itself, a justification. Further, if the Government need to change the number of things that are on the list, they do not need these levels of powers in order to do that kind of amendment.

Furthermore, your Lordships have talked at length about the value of common frameworks. The noble and learned Lord, Lord Hope, talked about these frameworks being a living process which embraces change—the very sort of change that the Minister is seeking to gain through these draconian powers. So, if the noble Lord is worried about future unknown unknowns, I commend to him and his Government the common framework process. That is what it is there for.

So we have had a preliminary debate, and I sense a lot of unity across the Floor. In a vague moment of upset, I am grateful to the noble Baroness, Lady Hayter, for raising the coalition Government’s bringing forward of secondary legislation of this nature. It came in the Public Bodies Bill. On listening to the response, the coalition Government withdrew that measure and it did not go forward in the legislation. That is precisely what we are asking Her Majesty’s Government to do here. I cannot help thinking that there is sufficient consensus to take this forward to Report, and we will be talking with fellow speakers. In the meantime, I beg leave to withdraw the amendment.

Amendment 12 withdrawn.

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[The Deputy Chairman of Committees (Baroness Pitkeathley) (Lab)]

The noble Lord, Lord Liddle, has scratched, so I now call the noble Lord, Lord Fox.

[Lord Fox (LD)]

My Lords, this is a short and vaguely surreal debate. I caught my mind wandering to the “League of Gentlemen” with the slogan “Local goods for local people”—but not even they attempted to define “hypothetical” local goods. Indeed, neither have the Government, because there is no explanation in the non-explanatory Explanatory Memorandum which sits at the back. We are indebted again to the eagle-eyed lawyers of Scotland for finding this issue. The question is simple: what is a “hypothetical good”, why are you using this word and who on earth decides what is a good and what is a hypothetical good?

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[Lord Fox (LD)]

My Lords, my name is on Amendments 33, 34, 50, 55, 56, 60, 80 and 95 but, to be honest, all these amendments are trying to cover similar ground in slightly different ways. I suggest that they are trying to meet the gap that the noble Lord, Lord Anderson, in his exceptional speech, characterised —in my words, not his—as the paucity of ambition that lies within the Bill. He also effectively highlighted some of the inconsistencies that crop up throughout it.

Amendment 50 seeks to add a range of additional conditions around the aim of legislation, and Amendment 51 does much the same. The noble Lords, Lord Young and Lord Faulkner, talked specifically about public health, animal welfare came up with the noble Baroness, Lady Hayman, and my noble friend Lord Teverson and the noble Baroness, Lady Boycott, and other noble Lords, spoke very powerfully about climate change.

The last two speakers, and in particular the noble Lord, Lord Whitty, in a way characterised where I had got to; the penny had dropped. I will use slightly different language. I am slow; after 15 hours of Committee I think I am getting there. The problem is that Her Majesty’s Government may hate devolution, or they may want to grab hold of the money and spend it in Scotland—those might be by-products of the Bill. The fundamental philosophy and thinking from the Government’s position, however, is that the only way to have to have a properly ordered internal market is, essentially, for everything to be the same. With non-discrimination and mutual recognition, in the end that is what you will get.

Your Lordships’ House, with the exception of the noble Baroness, Lady Noakes— who very ably put once again the minority view, which is actually the government view—has taken a diverse approach and believes that there can be an ordered internal market that is not the same, but diverse. That is what the common frameworks are there to do. A number of noble Lords raised my noble friend Lord German’s twin highways and questioned how they will ever come together. The answer is that they do not because the Bill rides over the diversity that the common frameworks will deliver. Why are the two things happening together? One can speculate. One started three years ago with a different Government who probably had a different philosophy, and killing it is probably harder than letting it die.

I know that the Minister has been assailed with examples. He has had chlorinated chicken, whisky, all sorts of things—he even brought in hypothetical biscuits. I will give him an example that is the other way round. It is of where the devolved authorities could do things to England. England, very wisely, has banned the household burning of coal. Wales and Scotland have not. If I lived in Herefordshire all the time, I could nip over the border to Harry Tuffins, which is just the other side of Offa’s Dyke, buy a bag of coal, take it home and burn it on my fire in Leominster. So far, so good.

Within the terms of the Bill, I could—[Interruption.] Minister, you will have your chance. If I were heckling you, I suspect I would be told to sit down; I look forward to the debate. If I was a businessperson living in Leominster, I could go to Wales and import that coal. If the Minister tried to stop me, I would go to law and use this Bill to assert my right to sell that coal in England. Whether or not I won we would see, but all those things will be happening all the time. Because of the non-legislative common framework that it is covered by, where does it sit in law beside the iron-clad rules of non-discrimination and mutual recognition?

[Lord Stevenson of Balmacara (Lab) [V]]

My Lords, this has been a very good and wide-ranging debate—one of the best we have had so far on the Bill. We have heard several notable speeches and some new voices. I look forward to reading their speeches in Hansard and learning from them. The main focus has been the necessary tension between the wish to have unfettered frictionless trade in our internal market and the wish to preserve our existing high standards. This was well expressed by my noble friend Lady Hayman.

My amendments cover this ground. Amendment 35, which I am delighted is also signed by the noble Lord, Lord Anderson of Ipswich, and the noble Baroness, Lady Jones of Moulsecoomb, tries to expand the legitimate aims to include some of the standards to which I have already referred. Amendment 51 expands that and provides for a slightly wider context within which legislative aims are discussed and slightly expanded. It also comes back to the basics: standards of activity within which trading takes place and where we have rightly set high standards that are enjoyed by our consumers.

Amendment 57 deals with conditions excluded by market principles and amends the schedule only as consequential to earlier amendments, I think. Amendment 58 deals with an issue raised by the noble Lord, Lord Anderson of Ipswich, in his very good speech in which he quoted Peter Oliver, who pointed out that some of the restraints that are allowed within the Bill are very limited indeed. Our amendment tries to expand that to make sure that it is not restricted just to basic considerations.

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[The Deputy Chairman of Committees (Lord Alderdice) (LD)]

I have received a request to speak after the Minister from the noble Lord, Lord Fox.

[Lord Fox (LD)]

I sometimes wonder whether the Minister sustains himself through the long periods of Committee by imagining himself throwing off the yoke of hideous EU conformity. In fact, nothing could be further from the truth. How does the noble Lord explain all the examples of diversity across the four nations of the United Kingdom if there is this conformity? How can his comment that the market has worked very well for 20 years stand up, if this conformity was so bad? Indeed, the 2020 assessment by the Government of the frameworks says that they will maintain, as a minimum, equivalent flexibility for tailoring policies to the specific needs of each territory, as afforded by the current EU rules. The Government clearly recognise the flexibility in the current EU rules.

I commend the Minister for getting through that lengthy statement without once mentioning the words “common frameworks”. There is still no explanation of how the common frameworks inform the Government’s view today of the internal market. Will he please answer that question?

[Lord Callanan (Con)]

I thought my comments might provoke a reaction from the noble Lord. Of course, there are EU common standards in many areas as well as EU minimum standards in many areas, and it is possible for Administrations to go further than those minimum standards in many areas, as he will know from his knowledge of EU affairs.

I have said a number of times that we are committed to the work on frameworks and will take it forward, but we were looking for frameworks in something like 38 different areas. So far, we have managed to agree frameworks in two of them. In terms of the frameworks that have been approved by the ministerial committee, I think those numbers are correct; I will write to the noble Lord if they are not. We are committed to taking forward that work on common frameworks, but we believe that this legislation provides an underpinning to that work. We do not believe that they are mutually exclusive; indeed, we think that they complement each other.

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[Lord Purvis of Tweed (LD)]

My Lords, I will be brief because of the hour. It would be churlish not to welcome amendments that have the purpose of clarification within this legislation. I just say to the Minister, “Don’t stop here. Keep them coming”. We will certainly welcome further government amendments to add more clarification to the legislation.

I am glad the noble Baroness, Lady Neville-Rolfe, mentioned the point about languages, as an example of something that the Minister did not respond to in the previous group. If certain elements are set down as part of the regulatory requirement—such as language capability, for example, or other characteristics that would have been permitted under the current legitimate aims but are not allowed under the new legitimate aims—what is the status of those? Would that be considered as putting providers at a disadvantage under Clause 20(2)(b)?

My second point was that, under Clause (20)(2)(c), the regulatory requirement has no effect. I note that I do not think there has been a sufficient answer to the question in an earlier group about what “no effect” actually means when it comes to a regulatory requirement. It has no effect if it has “an adverse market effect”. I wonder if the Minister could outline in clear terms what the test for that adverse market effect would be. Where and how would it be judged, and who would judge it? What would the test for that be, given that, as the noble and learned Lord, Lord Falconer, and my noble friend Lord fox said, this is likely to be tested in court because of the lack of clarity?

My final point is this. Given that service providers for higher education are not considered to be public bodies—and this was not answered in the previous group—and higher education is not considered to be within a legitimate aim, if a higher education provider outside Scotland were seeking to deliver services, the higher education system within Scotland would not be able to restrict it on the basis of the indirect discrimination element. If the Minister could state whether that would be the case, I would be grateful.

[Lord Fox (LD)]

My Lords, the Minister will be pleased to hear that I have got very little to add.

On the question of an adverse market effect, there are also questions around adverse to whom and adverse to what. Is it merely the price and the amount of choice, which is what the Minister appears to fall back on every time the market is described, or is there a wider adversity that comes into this?

[Lord Stevenson of Balmacara (Lab) [V]]

My Lords, like other speakers, I welcome the idea that this is a clarification of the language currently used in the Bill. However, like the noble Baroness, Lady Neville-Rolfe, I wonder whether what we have got is in fact any clearer, or makes us any more clear about what we are supposed to be doing with this part of the Bill.

The language is, in places, incredibly archaic and obscure. There seems to be no recognition of the digital world. Services provided through the internet are not going to be provided locally; they are not going to be provided “in a region” and there are not going to be local service providers, and yet there seems no reference to them or how they are to be treated. Even if that were not that case—even if we were not living in the virtual world—the idea that somehow a service provider has a relevant connection to a part of the United Kingdom if it has a registered office seems to ignore hundreds of years of the use of brass plates outside solicitors’ offices which provide registered offices but no services, no people, no contribution and no economic effect. Where is all this heading?

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Moved by

[Lord Fox]

102A: Before Clause 22, insert the following new Clause—
“Purpose of Part 3
This Part consolidates existing law relating to the mutual recognition of professional qualifications within the United Kingdom.”Member’s explanatory statement
This amendment is to probe the legal basis for introducing the provisions in this part, and whether they are covered in existing UK law.

[Lord Fox (LD)]

My Lords, Amendment 102A is a probing amendment to probe the legal basis for the introduction of the provisions in this part and whether they are covered by existing law.

It is a human trait to disregard history that happened before we were born. Most of what we have been describing as previous law and previous regulation has centred on EU law and devolution settlements. However, in their Command Paper, the Government hark back much further than that to the 1700s and the Act of Union. In their July paper, the Government stated that

“the Internal Market has been enshrined in British law for over three centuries”

on the basis of the Acts of Union. I will spare noble Lords the lengthy history lesson, but within this document it says:

“For centuries, the UK Internal Market has been the bedrock of our shared prosperity ever since 1707 when the Acts of Union formally united England and Wales with Scotland.”


The reason we were talking about the General Teaching Council for Scotland regulating Scottish teachers was because that Act of Union specifically carved out education as a Scottish prerogative. That particular activity of regulating Scottish teachers is a direct result of the Act of Union. It has nothing to do with devolution and nothing to do with the European Union.

Quite simply, I am asking for clarification: where does the Act of Union sit within this scheme of things? And where does previous law, made as a result of that Act of Union over the centuries that have followed, but before all these other bits of history we have been talking about, sit? It is not a philosophical question; it is real, because the example I have just given is real. I am sure there are many others for clever people to uncover.

Therefore, I would like to have some sense of the Government’s position, which appears somewhat ambivalent towards the Act of Union. They mention it in the Command Paper but, in a sense, disregard it thereafter. With that in mind, I beg to move Amendment 102A.

[Baroness Finlay of Llandaff (CB) [V]]

My Lords, Amendment 104 is almost identical to Amendment 6, which we debated on Monday, and Amendment 69, which I moved only a few hours ago. Those two amendments related, respectively, to goods in Part 1 and services in Part 2. This amendment, in the case of “recognition of professional qualifications”, seeks to make the application of the market access principles subordinate to the common frameworks process. In other words, the market access principles can be applied to professional qualifications only in the event that it proves impossible, by consensus, for the four Governments to agree a common framework.

Amendment 105 is consequential, simply moving the time point at which the mutual recognition principle would start to apply. While Part 3 is arguably more niche and therefore less damaging than the two parts that precede it, it is even more complex. I do not understand the exceptions that it suggests or the manner in which these could legitimately be handled.

Clause 24, for example, provides that the automatic mutual recognition of qualifications does not apply where a process of individual assessment is available but only in so far as the process conforms to four different principles. This includes the following principle in subsection (4)(c):

“to the extent that the applicant cannot, on application of the principles set out in paragraphs (a) and (b), demonstrate the necessary knowledge and skills to the satisfaction of the regulatory body, the applicant should (subject to subsection (5)) have an opportunity to do so by way of a test or assessment the demands of which are proportionate to the deficiency”.

However, this is subject to a further condition:

“The process may, without contravening the principle set out in subsection (4)(c), allow the regulatory body in a case to which this subsection applies to decline the application without the applicant first being offered a test or assessment as described in that principle.”


I am not a lawyer, and I will happily defer to any noble and learned Member who can enlighten me, but this appears to me to say that you have to give an individual the opportunity to prove that they possess the attributes necessary to do the job through a process of individual assessment, but you are nevertheless allowed to decline an application without first offering the individual a test.

Although I am not a lawyer, I am assured by those who are that this whole part is, to put it crudely, somewhat of a licence for the legal profession to print money and tie up regulators in litigation that could last years. Perhaps unsurprisingly, only one of the professions that is specifically exempted from this whole part is the legal profession. I am sorry; I know that sounds cynical, but I do find this very difficult to understand. I genuinely believe that, in trying to ensure that the mutual access principles can apply only to the recognition of qualifications when it is truly needed, I am trying to rescue the Government from themselves.

I shall give some examples of where this part of the Bill could prove damaging to the rights of devolved Governments, or indeed to those of the UK Government. Let us suppose that a more enlightened Westminster Government want to make a level 3 qualification in nutrition a requirement of registration as a nursery nurse in an effort to reduce childhood obesity. Presumably a qualified nursery nurse from Northern Ireland, where such a course was not a requirement, would still be able to apply for registration in England. Would this be automatic? Would they have to undertake a test? Could they be refused even without being given the right to take a test, as Clause 22(5) seems to permit? I would really appreciate some clarification.

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[Baroness Scott of Bybrook (Con)]

My Lords, I do not intend to have a debate on the union tonight, but I am sure it will come up later in the Bill. However, I reiterate to the noble Lord, Lord Fox, what I said on, I think, the group before last: the General Teaching Council for Scotland will still be able to set the standards in Scotland, as it does now, and will control who can teach in Scotland. That goes back to Scotland having control over its own education system. Similarly, the noble Lord, Lord German, brought up the Welsh language. If Welsh language requirements were introduced in respect of a profession in any other way—for example, by bringing in requirements for ongoing training—it could come under the equal treatment provisions of the Bill. As such, it would be possible for the regulator to impose Welsh language requirements on professionals qualified outside Wales if equally required of professionals qualifying in Wales. So there is an equality here.

I turn to the amendments in the group, which test and attempt to change the way in which professions would be in scope of Part 3. The purpose of the professional qualification provisions in the internal market Bill is to ensure that professionals can, in most cases, access their profession in all parts of the UK, by ensuring that there is an overarching system for recognition. It is important to ensure that, regardless of future policy changes, UK-qualified professionals will be able to practise across the whole of the UK. Divergence in professional regulation between the four nations of the UK should not increase barriers for professionals living and working in different parts of the UK.

The noble Lord, Lord Fox, has sought, with his Amendment 102A, to understand whether these provisions are covered in existing UK law. Currently, while recognition of professional qualifications between the four nations can and does occur, there is no overarching framework that ensures that it happens consistently. The Bill will create this overarching framework to guarantee that recognition of qualifications between the four nations of the UK will be possible, and that barriers to access will be minimised, so that professionals are not unduly limited in where they may work.

To that end, I must oppose the process that Amendments 104 and 105 seek to establish for bringing professions within scope of the internal market provisions. The Government’s approach ensures that nearly all professions are in scope and that barriers do not emerge. In contrast with the Government’s proposals, Amendment 104 lays out a bureaucratic process for adding professions. Amendment 105 builds on Amendment 104 and seeks to ensure that only professions that are specified in regulations are caught by automatic recognition. Ultimately, these amendments would result in delays and uncertainty, preventing barriers in the internal market being addressed. This would be to the detriment of all UK professionals.

I assure noble Lords that the Government acknowledge the importance of working with each devolved authority on the implementation of this Bill and will continue to do so, as they have done throughout this process. Clause 25 already ensures that existing divergence in professional qualification requirements across the UK is outside the scope of automatic recognition, until further changes are made. This means that there are no immediate changes for relevant authorities to make in respect of access to professions.

We must ensure the smooth functioning of the internal market for professionals. I therefore hope that the noble Lord will withdraw his amendment.

[Lord Fox (LD)]

I thank the noble Baroness for her answer. I heard the answer she gave two groups ago, which is why I did not repeat the question; I actually asked a different question, about the status of the Act of Union. It was not I who brought it up, but the Government in their Command Paper. It having been brought up, it would be quite helpful to understand how the Government see it fitting into all this. It is a perfectly reasonable question and I hope that, perhaps in writing, I could have a perfectly reasonable answer.

The market the noble Baroness described in the Government’s eyes appears to need fixing. What is broken in professional services that this Bill is seeking to mend? If this Government had a reputation for overwhelming competence, and an ability to really get hold of things and make them better, perhaps I might understand what it is about. There are many things that this Government could focus their laser attention on; mending something that is not broken is not one of them. That said, I beg leave to withdraw the amendment.

Amendment 102A withdrawn.

United Kingdom Internal Market Bill

Lord Fox Excerpts

Committee stage & Committee: 3rd sitting (Hansard) & Committee: 3rd sitting (Hansard): House of Lords
Monday 2nd November 2020 Lords Chamber

[The Deputy Chairman of Committees (Lord Alderdice) (LD)]

I have also received a request from the noble Lord, Lord Purvis of Tweed, but I first call the noble Lord, Lord Fox.

[Lord Fox (LD)]

My Lords, with all due respect to the Minister, I am sure he understands how unsatisfactory that answer was. My noble friend Lord Thomas of Gresford talked about the gobbledegook of future-proofing, and this is gobbledegook. First, could the Minister tell your Lordships’ House what past examples lead the Government today to this conclusion? Secondly, why is there a problem with bringing any future issues to the Government and your Lordships’ House bespoke in the event that the Minister proves correct and something turns up? To seek to produce a Bill that covers all of the unknown unknowns that are going to happen in the history of time seems overambitious.

[Lord Callanan (Con)]

I think we are just going to have to differ on this one. We do not want to be returning to the House to create unnecessary difficulties and disagreements in the future; we want to ensure that, before any of these difficulties arise, we have put in place, as in the rest of the Bill, a framework that covers the whole of the United Kingdom to regulate how we will manage and control these issues in the future. That is all we are seeking to do. I understand the points that noble Lords are making. There are differently regulated professions in some parts of the UK already; we accept that and that the status quo is there, but we think that, in future, these things are best regulated on a UK-wide basis, and we want no new barriers to trade to emerge.

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[The Deputy Chairman of Committees (Lord Alderdice) (LD)]

I have received a request to speak after the Minister from the noble Lord, Lord Fox.

[Lord Fox (LD)]

My Lords, I am grateful for the Minister’s response. In her speech, the noble Baroness, Lady Bowles, asked some very specific questions, particularly in the stand part bit of her speech. I listened hard but I could not hear any answers to them, so perhaps the Minister could review her speech and write a letter, promptly, making sure that I and the noble Baroness, Lady Hayter, get a copy.

[Lord Foulkes of Cumnock (Lab Co-op)]

Hear, hear.

--- Later in debate ---

[The Duke of Montrose (Con) [V]]

My Lords, I support my noble and learned friend Lord Mackay of Clashfern on this group of amendments, particularly Amendment 114. Having the correct dispute resolution mechanism is extremely important. If the Government can find a better one than what has been suggested, I would be interested in the Minister giving us a clue as to what it might be.

The Government have found that the Scottish Administration object to the Bill, particularly the internal market element. My noble and learned friend has drawn on many years of legal and parliamentary experience in trying to find a way for the devolved Administrations to have a forum for formal comment on the arrangements for reinforcing the single market and any SIs.

The Joint Ministerial Council on EU Negotiations has already received wide acceptance in its role of setting up the conditions for negotiating market frameworks. I declare my family interest, which is in a livestock farm in Scotland and in the Scottish agricultural industry. As the noble and learned Lord, Lord Morris, pointed out, the industry as a whole in Wales and Northern Ireland is desperate to see a properly functioning single market across the UK, let alone within the EU. It finds the framework concept so far very reassuring, but it appears that the Scottish Government are looking for more.

I have a reason to declare an interest of another kind in this whole process, in that the dukedom that I represent in your Lordships’ House derives from the role that my six-times-great-grandfather played in promoting the negotiations for the Act of Union. This of course was a desire to get a single UK market at that time, as there were so many areas where Scotland had previously had no way of gaining benefit. The settlement that they agreed left Scotland with much lesser constitutional powers than currently exist; none the less, they were determined that certain characteristics of Scottish life should remain, and they do so to this day. Therefore, I have always watched these developments with care.

Several of your Lordships were here when we debated the Scotland Bill, sometimes quite late into the night. At that time, it seemed incredible that all the items necessary for the administration of the UK could be defined in a schedule, with Scotland having jurisdiction over everything else. We were assured that this was not a worry, because Westminster always retained the final say. Noble Lords—my noble friend the Minister is probably conscious of it too—may remember, during the progress of the Scotland Bill in 1998, a slightly bad-tempered evening in Committee, which was asked to begin sitting at 6 pm and spent some time on the future relationship between Westminster and the new Administration. I was never quite sure if this was a formally prepared answer, but when trying to bring the argument to a head, Lord Sewel uttered the familiar words:

“Clause 27 makes it clear that the devolution of legislative competence to the Scottish parliament does not affect the ability of Westminster to legislate for Scotland even in relation to devolved matters … However, as happened in Northern Ireland earlier in the century, we would expect a convention to be established that Westminster would not normally legislate with regard to devolved matters in Scotland without the consent of the Scottish parliament. If problems do arise the solution is for the Scottish executive and the United Kingdom Government to resolve the matter through political dialogue. That is what differences between mature parliaments and Executives will be concerned with.”—[Official Report, 21/7/98; col. 791.]

This is where we find ourselves today. Any formal reiteration of this power always recognises the full content of this text, but the element that receives much more exposure—to the point where people begin to think that it is the only part of the legislation—is the need for legislative consent Motions whenever uncertainty arises. The encouragement to progress to political dialogue is most certainly relevant to where we are at the present time. In the present circumstances, it would not be ideal for the Government simply to implement UK legislation. Perhaps the Minister can tell the House what stage discussions with the Scottish Government have reached? It seems to me that these amendments are suggesting a form in which the Government’s proposals can be formally conveyed, with a chance that the final positions of both sides can be opened for scrutiny.

[Lord Fox (LD)]

My Lords, I am grateful for the quality of this relatively short debate on a really important issue. In his speech, the noble and learned Lord, Lord Morris, emphasised the need to avoid a threat to the devolution settlement. When the noble and learned Lord, Lord Mackay of Clashfern, stirs, and tables amendments, it is important for us all to listen. Clearly, he is very concerned about the route that this Bill is taking, as is the noble Duke, the Duke of Montrose, who articulated strong reasons for a consultative and consensus approach to regulating the internal market of the United Kingdom. I am also grateful to him for bringing up again the Act of Union, because this is a live treaty; it still exists and reflects on the issue which we are discussing. We should always remember that.

The noble and learned Lord, Lord Mackay, talked about the need for the devolved authorities, or the Joint Ministerial Committee, to be involved in the nitty-gritty of the market. My noble friend Lord Purvis of Tweed set out the dangers and the discontinuities within the current state of the Bill that make that process impossible. Therefore, it is important for the Minister to explain how this will work, because there are so many missing pieces in a jigsaw puzzle which, frankly, still does not have a picture, and which make it very difficult for us to understand what the Government are seeking to achieve and why.

My noble friend Lord Purvis asked many questions and he raised the issue of triggering disputes. The issue of when a dispute is triggered is central, as is the one which has surfaced in many different debates: the mechanism for resolving disputes. The noble and learned Lord, Lord Mackay of Clashfern, suggested one way; perhaps the Minister can comment on that.

My noble friend Lady Humphreys and other noble Lords have pointed out that the JMC, and its variety of committees, seem to have stalled, not because of any lack of faith from the devolved authorities but because of the Prime Minister not convening a meeting of the Joint Ministerial Committee (Plenary). Can the Minister explain the delay and say when the next meeting will occur? My noble friend Lord Purvis also raised the important question of structure. Where does this all fit in with the JMC’s current operations?

It is the Government who have sought to drag the CMA out of its current area of reserved issues and focus it on devolved issues. I say to the noble Lord, Lord Naseby, that it is not this amendment, but the Government, that have decided to do that. They are pulling the Office for the Internal Market into an as yet undefined dispute role. It is very clear, as the noble and learned Lord, Lord Mackay, set out, that if advice and reports are being submitted, then the JMC must be party to the same information that the UK Government are getting. It is also clear that we have no real idea of the Government’s intention for the operation of this Bill.

[Lord Falconer of Thoroton (Lab)]

These are important amendments that reveal yet another problem in the Bill. First, they deal with the role of the CMA, which under this Bill is intended to monitor and give advice on the working of the internal market. As I understand the way that Section 30 envisages that the CMA will operate, it will authorise an Office for the Internal Market task group to set up groups to look at particular issues. The amendment tabled by the noble and learned Lord, Lord Mackay of Clashfern, seeks to ensure that, before such a task force is set up, there is confidence that the appointment of the task force, the terms of the task force and what it is doing have broad buy-in from all the relevant parts of the United Kingdom. Can the Minister explain how, without the amendment tabled by the noble and learned Lord, Lord Mackay of Clashfern, this was currently going to be achieved?

For example, the CMA’s parent department is the business department, which is a UK government department. The CMA has a number of board members and panel members; how many of them at the moment have experience of Scottish, Welsh or Northern Irish business issues? As the Bill makes clear, the CMA will be appointing a task force where there is a difference between one part of the United Kingdom and another regarding regulatory or statutory requirements. On what basis do the Government envisage these task groups being appointed and set up? Is there any objection to adopting the noble and learned Lord’s suggestion of how to ensure that you get all the other parts of the country involved, as opposed to only BEIS or the CMA? If not, can the Minister put forward an alternative suggestion?

--- Later in debate ---

[The Deputy Chairman of Committees (Lord Lexden) (Con)]

I have received requests to speak after the Minister from the noble Lords, Lord Fox and Lord Purvis of Tweed. I call the noble Lord, Lord Fox, first.

[Lord Fox (LD)]

I appreciate the Minister’s reply on the important points put forward. Whether the amendments of the noble and learned Lord, Lord Mackay, are adopted or there is some other form of regulating the relationship between the UK Government and the devolved authorities, does the Minister agree that there can be a smooth-running internal market only if there is trust between the UK Government and the devolved authorities? Could the Minister say what the Government’s assessment is of the effect on that trust of publishing the Bill?

[Lord True (Con)]

My Lords, I strongly agree on the principle of trust between all parties in a negotiation. It is not always there in every negotiation, but this is more than a negotiation; it is a relationship. It is a life together, which we all wish to carry forward as the four nations and peoples of these islands. Standing at this Dispatch Box, I have sought to assure the House of the Government’s total commitment to proceeding with trust and respect. That has to come from every Government and institution in the United Kingdom. I go no further than that. I do not believe that seeking to set out a common approach to the management of the UK internal market in the UK Parliament, to which all four nations of this kingdom send representatives, should in any way undermine trust.

--- Later in debate ---

[Baroness McIntosh of Pickering (Con) [V]]

My Lords, I am grateful to the noble Lord, Lord Stevenson, for introducing these two amendments and giving us the opportunity to probe the very heart of the functioning of the OIM in terms of its independence. Can my noble friend the Minister say how the Government will ensure that this body will be independent? My noble friend will be aware of my concerns and those of others that the Government have got into the habit recently of creating such public corporate bodies and then trying to direct how they operate. Recent examples are, as the noble Baroness Jones of Moulsecoomb, just alluded to, the Trade and Agriculture Commission, which falls within the Department for International Trade, which basically does not provide any resources to those who serve on the commission and, even more recently, the Office for Environmental Protection which, apparently, is to be appointed by and subsumed within Defra. So that is my main concern here, and there is much to commend in Amendment 115 as to how the body corporate is to be set up.

Furthermore, the noble Lord, Lord Stevenson, asks in subsection 2(2) of Amendment 131 for consultation with the devolved Administrations. I would prefer it if went further, as the noble Baroness, Lady Hayter, requested: consent for such appointments should be sought from the devolved Administrations. Presumably, if the Government were to adopt the terms of this amendment, it would be the OIM that would ensure the level playing field, which I imagine is the Government’s intention. However, if it was not the OIM, can the Minister explain which body would, as in subsection 3(2),

“rule that any distortive or harmful subsidies are illegal and should be repaid”,

and, as in subsection 3(4),

“recommend to the Secretary of State changes to the test for a harmful subsidy, the scope of exemptions, and time limits on approvals”?

There should be a body to ensure levelling-up, not just of the regions but between the four nations. I hope that the Government are taking a consistent approach here, in their position on the European Union and their position on state aid between the four nations of the United Kingdom internal market. It would not behove the Government to be seen to be parti pris on their position on competition and state aid in this regard.

I share the concerns expressed by the noble Lord, Lord Purvis, and others, in the previous debate, regarding responses not always being published. I am having great difficulty, and perhaps the Minister can point me in the right direction, but rather than a summary of the responses, it would be enormously helpful if the Government published the responses to the consultation regarding this amendment in full, and preferably before the next stage of the Bill. That would enable us to form our own view of who said what in response to the consultation.

With those few remarks, I would like to put the key questions to the Minister: how do the Government intend to ensure the independence of the OIM, and how do they intend to carry the devolved Administrations with them in this regard?

[Lord Fox (LD)]

My Lords, so far there have been four groups of amendments dealing with the CMA and the OIM, and three different Ministers fielding. That perhaps summarises the fragmented nature of this Bill and the unjoined-up nature of what we are seeking to achieve. In those four groups, and this group, amendments have sought, in a sense, to correct and improve this Bill, but there is no point, because this Bill is beyond that stage. Other speakers have sought to probe and get information from the Government, and there has been no point to that either, because the Government have not answered questions. Despite extremely well directed, forensic analysis and questioning, the Government have ducked, dived and shrugged.

In addition to supporting the request made by the noble Baroness, Lady McIntosh of Pickering, for the consultation to be published, I would like this Minister, who is before us for the first time in this debate, to answer the questions on this group, and to undertake, on behalf of the other Ministers, to answer all the questions that the last four groups have presented, because they are all extremely important to understanding what on earth the Government intend to do.

--- Later in debate ---

[Lord Fox (LD)]

My Lords, my name is on this amendment, and I am pleased to support it and to follow the very clear explanation that we have just heard.

I speak briefly to subsections (3) and (4) of the proposed new clause. The former calls for the report to deal with

“indirect or cumulative effects … distortion of competition or trade”

and, as I am sure that the noble Baroness, Lady Hayter, would be pleased to hear were she still here

“impacts on prices, the quality of goods and services or choice for consumers”

then moves on to consider

“the health and safety of humans, animals and plants … standards of environmental protection”

and other issues that have come forward.

This is another way of trying to do many of the same things that have come through the variety of amendments that your Lordships have heard over the course of the last three days in Committee. All the Ministers have all talked about level playing fields, and the purpose of this legislation is to create a level playing field. We all subscribe to that. The purpose of subsection (4) is to create an informational level playing field, to ensure that all the Governments are receiving the same information and create some transparency so that the outside world—indeed, the companies involved and the people involved—also receives that information.

I am sure that the Minister will stand up in a few minutes and give us very good reasons why this amendment should be withdrawn, but before he does, can he undertake to ensure that the level playing field applies not only to the commercial and trading issues, but also to the information that all the players receive when these decisions are being taken?

[Lord Stevenson of Balmacara (Lab) [V]]

My Lords, it will be interesting to hear how the Minister responds to this request, which has been well described as a bit of a coda. On the other hand, it also contains teeth, which would be there to be used, if someone wished to. It is important to get this right and understand, if it is rejected, why it is. I look forward to that.

Ministers know that we on the Labour side think that the common frameworks are at the centre of the managed divergence that we want to see and allow to happen across the devolved Administrations. It is important that the process continues and that is at the centre of the Bill, because it is not at the moment; it is hardly mentioned, except in passing. If that is the case, we look for some additional reassurance from the Minister that the powers that might be available to the Government, when they feel the common frameworks are not working, are not used too early or vicariously just to show the devolved Administrations who is in charge. As we were reminded by the noble Lord, Lord Dunlop, on day one, the Government already have powers to deal with any default they feel is present in the common frameworks. The questions raised by this amendment are important, and I look forward to hearing the Minister’s response.

United Kingdom Internal Market Bill

Lord Fox Excerpts

Committee stage & Committee: 4th sitting (Hansard) & Committee: 4th sitting (Hansard): House of Lords
Wednesday 4th November 2020 Lords Chamber

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

My Lords, I am very pleased to support these amendments, the first in the name of the noble Baroness, Lady McIntosh of Pickering, and the other two in the name of the noble Baroness, Lady Bowles. In relation to the amendment on legal privilege, I note that the Lords Constitution Committee report on the UK internal market Bill says:

“We welcome the confirmation by the Lord Chancellor that information protected by legal professional privilege will not be required to be disclosed to the Competition and Markets Authority under the information-gathering powers in clause 38.”


Can the Minister provide any further detail from the Lord Chancellor in relation to this particular issue? Can he say how and when the Government will bring amendments on Report dealing with this specific request to allow protection for clients in respect of the information-gathering powers?

In relation to the two amendments in the name of the noble Baroness, Lady Bowles, I would say that the last thing we need, particularly with Brexit hitting so many businesses and with the impact of Covid and the lockdown, are any more limits to business or on businesses. They have already suffered considerably, particularly the small businesses of sole traders or freelancers.

I think simply of the Northern Ireland situation, where the majority of businesses are small and, combined with the impact of Covid, many could close, resulting in loss of jobs and trading. There are some 148,300 small and medium-sized enterprises in Northern Ireland out of a total population of 1.8 million. This is the fewest of any UK region, as recorded in September of this year.

Another worrying factor is that research by Ulster Bank, a subsidiary of NatWest, shows that any hope of a V-shaped recovery in Northern Ireland has been snuffed out with Covid. I can understand and agree with the sentiments conveyed by the noble Baroness, Lady Bowles, that we do not want to see any further limits on businesses. In that regard, can the Minister advise noble Lords on what discussions he and his colleagues in BEIS have had with the devolved regions regarding these measures in the UK internal market Bill? Maybe he will surprise us and illustrate that there has been quite a bit of discussion.

[Lord Fox (LD)]

My Lords, I support Amendments 150 and 156, and indeed broadly support Amendment 149. My noble friend Lady Bowles, in characterising the information-gathering powers that are attempted to be brought in through this Bill, ably described the wide, broad remit that is being given to the CMA. I fully support and share her case, which was well put, as to why we should be concerned about this.

This is not just a burden on small businesses. Like the noble Baroness, Lady Neville-Rolfe, I have experienced the sharp end of a market study. It is a lot of work. This Bill envisages more than that for all businesses. No such undertaking should be given lightly without understanding what it will do—particularly, as many speakers have said—for smaller and medium-sized businesses. There should be limits.

More broadly, as prefaced by my noble friend Lady Bowles, during the debate on Clause 31, my noble friends and others raised the potential for universities to be dragged into the ambit of the CMA and the OIM—not least because of the different tuition fee regimes that exist within our nations. As we all know, this is a devolved responsibility. Despite their efforts, Ministers did not satisfactorily explain how this would happen, including in the letter.

We now turn to Clause 38, which, once again, broadens the powers of the CMA and enables it to be involved in these matters. The powers which are envisioned, though extensive and with little or no restraint, further stoke the fears harboured by Scottish universities. It could work the other way around. It could be the English university fee policy that is being challenged. This power is wider, with very few limitations.

I wish to probe the potential role of the office for the internal market under Part 4 of the Bill in relation to tuition fees. According to Universities Scotland’s brief, the powers in the Bill could

“give the OIM/Competition and Markets Authority (CMA) the power to investigate and reach a view on whether differential student fees represent a distortion of the new UK internal market. Regardless of the non-binding nature of the reports and advice of the OIM/CMA, it would have to be taken seriously by Parliament (Holyrood or Westminster). This could introduce new and greater basis for individual challenges to the variable fee regime within the UK, brought by individuals who feel they are discriminated against. … If this understanding is correct, this would apply in both directions, with possible challenges brought by Scottish domiciled students/individuals who consider the fee policy as administered by universities in England to discriminate against their options.”

That is one example of the consequences of this Bill. Will the Minister tell your Lordships’ House whether it is intended or unintended? If it is intended, why do Her Majesty’s Government see fit to mess with this devolved responsibility? If it is unintended, can the Minister acknowledge the issues that pervade this Bill?

In the Minister’s letter to my noble friend Lord Purvis of Tweed, which I hope has been placed in the Library, the Government accept that there are issues about university services. It highlights the power to amend exclusions after the Bill is enacted. This should be clarified by a government amendment before Report, not afterwards.

There are many other examples. In the short time we have had to examine this Bill, we have uncovered anomalies, irregularities and mistakes not just in relation to universities but in the food, alcohol and energy sectors. The noble Baroness, Lady McIntosh, also raised queries about the legal profession. In the spirit of whack-a-mole, I can add more, such as the water industry. Powers under Clauses 31 and 38 could mean that the CMA could be asked by an investor in an English water service company to investigate, let us say, the mutual Welsh Water company. Water is to be considered as a UK market, where it was not before. Once a case is opened, who knows where it will end up? Is this accidental or deliberate?

At the same time as the Government accrue these badly-defined powers to the new OIM and CMA, corporate lawyers on behalf of big businesses headquartered in the UK and beyond are sharpening their pencils. As the Government seek to regulate on a UK-wide basis services that until now have managed very well without Her Majesty’s Government’s help, consumer lawyers are looking into their practice development strategies and preparing to sell litigation ideas to future clients. As the noble and learned Lord, Lord Falconer, put it, this will be “a lawyer’s paradise”. At its heart is the Government’s decision to sideline the flexibility of the common frameworks and pursue the central ambition of trying to create a rigid one-size-fits-all regulatory structure to deliver a one-size-fits-all United Kingdom. The persistent and obvious flaws in this Bill demonstrate that this one-size-fits-all approach is impossible, even if it were desirable, which it is not.

[Lord Stevenson of Balmacara (Lab) [V]]

My Lords, this debate has raised some interesting and important issues. I have listened with care to all the speakers and particularly to the contribution of the noble Baroness, Lady McIntosh, based on information provided by the Scottish Law Commission, whose help I also acknowledge. I look forward to the Minister’s response. The noble Baroness, Lady Bowles of Berkhamsted, raised a number of issues to which I wish to return. Other speakers have made small but important points on SMEs and the role of Northern Ireland.

The noble Lord, Lord Fox, picked up on the recent letter from Ministers about university fees, particularly in Scotland, and questioned whether this could constitute indirect discrimination. This was also raised in an earlier group. Like the noble Lord, I wonder why this could not be better dealt with by the common frameworks approach. This should be applied to all aspects of managed divergence, in relation not just to goods but also to services and the regulation of professions. We will return to this on Report.

In respect of the amendments tabled by the noble Baroness, Lady Bowles of Berkhamsted, the powers included in Clauses 38,39 and 40 are quite extensive and detailed. Do they go beyond the existing powers of the CMA? Are they new because of the responsibilities that will accrue to the CMA or the office for the internal market under this Bill? Or do they simply repeat existing powers reframed in some way to suit the new circumstances? I would appreciate the Minister’s response. As other speakers have said, this additional activity is very detailed and gives specific examples of what can and cannot be done and how it is to operate. Does this not play to the concerns raised by the noble Baroness, Lady Noakes, in an earlier amendment that asking the CMA to extend its focus and the range of its work might blur the good work it does at the moment? Does the Minister accept that there might be a problem here?

--- Later in debate ---

[Lord Fox (LD)]

I much appreciate the Minister’s answer. The questions I asked about university tuition fees were in the light of having read his letter, which my noble friend Lord Purvis made available to me—there is no need to send it to me. In it the Minister states that,

“we are aware of the questions raised in relation to university services and how they may interact with the Bill”,

which is good. The letter continues:

“We have the power to amend the exclusions Schedule and will keep the area of higher education under close review.”


It therefore seems that the Government are planning to do that after Report. My point is that it would be a boon to our process on the Bill if the Government were to consult before Report and come back with something that I am sure, given what the Minister said, would merely fulfil their ambition for the Bill while settling concerns in the university sector.

[Lord Callanan (Con)]

I thought that I had put the matter to rest by writing the letter to the noble Lord, Lord Purvis, on which the noble Lord, Lord Fox, has commented. In our view, there is no doubt that the regulation of tuition fees is outside the scope of the Bill and, therefore, beyond the scope of the office for the internal market’s functions. But as the letter to him confirmed, we will keep the matter under review and not hesitate to take action if there is a problem, which we do not believe exists.

--- Later in debate ---

[Baroness Neville-Rolfe (Con)]

My Lords, this Committee is nearing its end, apart from Part 5. I support the noble Baroness, Lady Bowles, in her forensic efforts to probe the purpose of Clauses 38 to 40. I welcome my noble friend Lord Tyrie to today’s debate. Although I do not agree with him on fines or general powers, he makes a very good point about digital information. I am sorry he was not here for the debate on where the OIM sits. As he says, that is something we hope to debate again on Report.

On the plus side, these clauses give a great deal of detail. I usually complain to the Minister that EU exit Bills fail to do just that and leave too much to regulations. On the minus side, these are extremely strong powers of enforcement with very high penalties—for example, fixed fines of up to £30,000 would make many a small company bankrupt. There is no due diligence defence that I can see or provision allowing a reasonable excuse. The CMA can use its own discretion to decide whether a request for information has been complied with and can impose a financial penalty if it thinks there has been obstruction or delay. Such powers are fiercer than those of the police. The Minister will be able to tell us whether the CMA has those powers in relation to competition law and perhaps explain in each case why they are justified in the internal market Bill which, as many have said, is a little different from competition law.

Moreover, we do not know to which regulations these various measures and penalties will apply. Can the Minister kindly take us through some examples of their proposed use? He may have done this elsewhere; if so, I am sorry if I missed that. Perhaps more importantly, could he lay some sample regulations for us to review before Report, as his predecessor did so helpfully on the Bill relating to nuclear issues on EU exit?

I worry that both Houses of Parliament have been distracted by unease with Part 5 of the Bill into agreeing wide-ranging, open-ended and burdensome powers in these clauses and, for the first time, on services, the beating heart of the economies in all four nations of the UK. All this has been relatively lightly scrutinised despite our efforts, and experience shows that some nasty surprises might be in store. I am keen to work with others to minimise those while generally supporting the Bill’s direction of travel.

[Lord Fox (LD)]

My Lords, once again this has been a short but important debate. I congratulate noble Lords on speaking on this. Once again, I find myself in complete agreement with the noble Baroness, Lady Neville-Rolfe, and my noble friend Lady Bowles. It was good to hear from the noble Lord, Lord Tyrie, whose experience is important.

During her speech, my noble friend Lady Bowles sought to characterise the difference between getting information from potential recalcitrants—people who are suspected of or known to have distorted the market—and getting information from people to create a picture of a market. I hope the noble Lord, Lord Tyrie, will not mind me saying that the sort of language used about needing more sanctions and similar issues is coming from the mindset of dealing with recalcitrants. That is where the experience of the CMA has lain to date. There is a real concern that in creating this new role the culture of having to fight to get what you need is transferred into this second activity, and that is not appropriate.

I was interested to hear the point of the noble Lord, Lord Tyrie, about Clause 28 and looking again at the positioning of the OIM and CMA. I would be very keen to hear what he has to say.

[Lord Tyrie (Non-Afl)]

My Lords—

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[Lord Tyrie (Non-Afl)]

May I not respond? What a shame.

[Lord Fox (LD)]

Perhaps the noble Lord can put his point in writing, or speak after the Minister if it is a question to him.

Enormous care is needed, at the very least, but it is not clear in the Bill where that care is and how careful the Bill is; it seems quite careless. We come back to whether the Bill is deliberately underwritten or accidentally underwritten because there was not enough time. There is plenty of scope for the Minister to answer the questions set out by my noble friend Lady Bowles, the noble Baroness, Lady Neville-Rolfe, and the noble Lord, Lord Tyrie, and to nail how this will work, what it is for and how small and medium-sized businesses in particular will be protected from an overzealous information-gathering process.

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[The Deputy Chairman of Committees (Baroness Henig) (Lab)]

I have had a request to speak after the Minister from the noble Lord, Lord Fox.

[Lord Fox (LD)]

My Lords, I thank the Minister for his answer. I have two questions. First, does the Minister understand the difference between a voluntary activity and a voluntary activity where there are potential fines? It is the difference between cleaning the house voluntarily and cleaning the house knowing that I could have my tea withdrawn if I did not. There is a very big difference. That needs to be understood in terms of the culture of the way in which this information is sought. Does the Minister understand that difference?

Secondly, my noble friend Lady Bowles asked a series of questions about what is permissible as a reason for not delivering information. There was a huge multiple choice question and an overarching question. I think that the Minister dodged—sorry, I withdraw that word. The Minister did not answer any of those points. They were an important element of my noble friend’s questions so will he address them, perhaps generally today and more specifically, bearing in mind the very specific questions that she asked, in one of his letters?

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

My Lords, I support the new clause in the name of the noble Baroness, Lady Hayter of Kentish Town. As she said, it would insert into the CMA’s powers a clear and specific reference to the need, in the new internal market and the regulation of takeovers, to promote research, development and innovation in new and existing industries and enterprises, and to act in the interests of UK public policy.

We already know that the CMA has a number of responsibilities, including protecting consumers from unfair trading practices, investigating mergers between organisations to prevent a reduction in competition and taking enforcement action in relation to anti-competitive practices by businesses and individuals. It will have more burdens as a result of the Internal Market Bill. Put simply, it will be responsible for strengthening business competition and preventing and reducing anti-competitive practices. 

The new clause seeks to nail down the role by referring to promoting research, development and innovation in new and existing enterprises. It would also assist with business development and innovation and in so doing, help to encourage overseas investment with job creation and sustainability—central facets of UK economic policy. It could also help to steady the market.

The Institute for Government has already stated that there is a clear gap in the Government’s plans for how governance of the internal market will function at a political level, and it is not clear how disputes concerning the functioning of the internal market will be managed. It is therefore important that this power be inserted to ensure greater protections where there may be hostile takeovers.

In devolved Northern Ireland, companies are generally small. However, the agri-food sector would sit under the new dispensation via the Northern Ireland protocol. There have been takeovers by companies based in the Republic of Ireland, so how would that fare if there were problems with the competition elements in the internal market Bill? The new clause in the name of the noble Baroness might assist in this regard.

The Institute for Government also notes that the office for the internal market within the CMA has very limited powers and, in many cases, can choose not to exercise them. It is worth noting that it can also request specific documents from any individual, business or public body to support its functions. Although it will be able to impose certain financial penalties, it will not be able to request any information that a business, individual or public authority would not be compelled to reveal in court, hence this new clause, on the need to promote the better operation and improvement of the UK internal market.

I therefore have no hesitation in supporting the new clause. It would promote much-needed research, development and innovation in new and existing industries and enterprises, and pump-prime UK public policy on the economy and finance in particular.

[Lord Fox (LD)]

My Lords, at the outset I should say that, because of my past but discontinued interests, I will not be speaking to the specifics of the example that the noble Baroness, Lady Hayter, brought up; rather, I will speak generally on this issue.

I speak to support the spirit of this amendment. It is a shame that the noble Lord, Lord Tyrie, is not still here because I would have welcomed his view on this issue. As the noble Baroness, Lady Neville-Rolfe, said, there are examples of Secretaries of State who wanted to do more but were constrained, and Cadbury is a good example of that.

However, after two dozen or more hours in Committee, I find myself at last coming to agree with something that the noble Lord, Lord Naseby, said, and that is that this issue goes wider than simply the nature of the Bill. The noble Baroness, Lady Neville-Rolfe, said the same thing. It is an important issue, so we should be thankful that the noble Baroness, Lady Hayter, has brought it up. It is clearly inadequate; the Secretary of State needs a better armoury to assess the public interest and deal with what will undoubtedly be, as the noble Lord, Lord Naseby, said, a flood of potential acquisitions and hostile takeovers.

This may not be the right Bill to be doing it in, but it is a big issue. That said, it also opens up the question of how the new office for the internal market relates to the Secretary of State and the CMA when it is dealing with a hostile takeover that the Secretary of State has called in. As the Bill stands now, allowing for the fact that the Minister may not accept the amendment, how do the Government envision the interactivity between the office for the internal market, the CMA and a hostile takeover bid that the Secretary of State has called in? Who does what, and where?

[Lord Callanan (Con)]

I thank the noble Baroness, Lady Hayter, for her amendment. I understand her concerns but, as I am sure she is aware, the internal market Bill is concerned with protecting the flow of goods and services across the UK after the end of the transition period. It is not concerned with the general merger regime, nor with Ministers’ powers to intervene in mergers. Noble Lords should be aware that they will have the opportunity to debate these matters further in the Government’s forthcoming national security and investment Bill.

United Kingdom Internal Market Bill

Lord Fox Excerpts

Committee stage & Committee: 5th sitting (Hansard) & Committee: 5th sitting (Hansard): House of Lords
Monday 9th November 2020 Lords Chamber

These clauses may make us uneasy; they may propose powers that unnerve us or cause us to feel distaste. They also remind everyone involved in the Brexit trade negotiations, on all sides, just how high the stakes are and what is and is not acceptable to Her Majesty’s Government. As I said, I am a stout defender of the Good Friday agreement. I also fervently hope and believe that the Brexit trade talks will bear fruit in the best interests of the United Kingdom and our many friends who remain within the European Union. It is my clear understanding that this has been the approach taken consistently with this Bill by my noble friend the Minister and his colleagues. At this moment of historic significance, they need our steadfast support. If we in this House withhold that support, I fear we may be playing with fire.

[Lord Fox (LD)]

My Lords, it is a great honour to be speaking towards the end of this long debate, in which so many distinguished, wise and opinionated speakers have held forth. This debate complements the one we heard at Second Reading, which ended with an overwhelmingly large regret vote. Today, we have heard the legal reasons for objecting to Part 5 of the Bill. They were set out clearly by the noble and learned Lord, Lord Judge, and have been supported by legal Peers and others across the Floor. We also heard speeches explaining the effects of this Bill across the island of Ireland; I was particularly moved by the words of the noble and right reverend Lord, Lord Eames.

I am going to look elsewhere and focus on the politics, my subtitle being: “What were the Government thinking when they drafted this Bill?” It is a rhetorical question as I do not expect the Minister to answer. In today’s media round, Ministers were sent out to plug No. 10’s messages, one of which was that this Bill gives legal certainty. Well, it is certainly illegal but, as we heard very eloquently from the noble Lord, Lord, Carlile, the only certainty it brings is that the UK cannot be trusted.

We heard at Second Reading how little faith the EU had in the Prime Minister even before he climbed over and clawed past his predecessor to become Prime Minister. This Bill now confirms the European Union’s view and cements its distrust of the negotiation process. Does the Minister suppose this distrust has made sealing a UK-EU trade deal easier or harder? If it were going to help, we would, I suggest, have seen some movement by now; yet we still do not have anything that even this shameless Government can dress up and brand as a deal.

As we have heard, there is now a seismic shift across the Atlantic where the ground is getting very shaky for the PM. He is losing his perilous foothold and scrambling around as the UK slips down the future President’s to-do list. We should not be surprised. A law-breaking Government might have impressed President Trump but, when there is an Irish-American President in waiting, this Bill is not a good look. George Eustice, sent out this morning to shield the Prime Minister, was quick to say that if Joe Biden had read the Bill, and not just reports of the Bill, everything would be all right. This is patronising. It is patronising to the future President of the United States, a man who has always taken a very close interest in Irish issues, and it is not only patronising but wrong. When the President-elect read this Bill, he saw what we see: a direct undermining of the Good Friday/Belfast agreement.

In political terms, this Bill threatens the EU and US free trade deals—the Government’s two stated paramount trade objectives—and it threatens the stability in Ireland, one of the great political achievements in my lifetime. It is not just bad law; it is absolutely terrible politics.

In a few minutes, I expect the Minister to mount a defence. He will claim that Part 5 of the Bill is vital, which my noble friend Lord Newby dealt with very eloquently. I doubt that the Minister will repeat the Northern Ireland Secretary Brandon Lewis’s statement that this Bill will break the law because—and I am sorry to Members opposite, all of whom appear to be non-lawyers pronouncing on the law—it is the Government’s settled position that this breaks the law. In this regard, I am happy—or unhappy—to say that the Government are right: Part 5 allows the Executive to break the law, when they choose and without restraint. That is why the whole of Part 5 comprises a legal affront, which is a huge political mistake.

The Committee will shortly be asked whether we want Clause 42 to stand part of the Bill. Noble Lords on these Benches will be voting “Not content” when that question is put, and we will continue to vote “Not content” when each clause is put forward. It is wrong and we are not content that the Government should bring the whole country into disrepute, not content that we should cede political leverage in the world at large, and not content with the wider implications of Part 5, not least on the island of Ireland.

[Lord Falconer of Thoroton (Lab)]

It is a pleasure to follow the noble Lord, Lord Fox, who has been a tower of strength throughout the course of this very complicated Bill. I join other noble Lords to express my deep sorrow at the untimely death of Rabbi Lord Sacks, who made a very major contribution to thought, spirituality and life in this House.

The noble Lords, Lord Howard of Lympne, Lord Empey and Lord Pannick, the noble and learned Lords, Lord Clarke of Nottingham, Lord Mackay of Clashfern and Lord Judge, the noble Baronesses, Lady Ritchie of Downpatrick and Lady Bennett, all Labour’s Members, all the Lib Dems, the noble and right reverend Lord, Lord Eames, the noble and gallant Lord, Lord Stirrup, the right reverend Prelate the Bishop of Leeds and the most reverend Primate the Archbishop of Canterbury constitute, by any standards, a pretty broad church—broader than you normally see in this House. Sadly, none of them is Marcus Rashford and therefore guaranteed to get a U-turn. Nevertheless, they are a powerful group and all say the same thing: first, pull back from making the United Kingdom an international law-breaker; and secondly, do not threaten to break the Northern Ireland protocol, which ensures an open border on the island of Ireland and promotes peace through the Good Friday agreement.

Today, tomorrow and in the weeks, months and years to come, the United Kingdom will depend on our international relations with the United States of America, the European Union and the rest of the world for security and trade, to fight the climate emergency, to co-ordinate the search for and distribution of a vaccine, to fight this and future pandemics and to co-ordinate the world’s response to the massive economic downturn we are in. We will need international agreements to do it. It is hard to imagine an act more damaging to the United Kingdom’s national interest than to place the UK beyond the pale of law-abiding nations, which is what the Government wish to do.

I strongly urge the Government to take the lifeline that the House of Lords is offering and accept that these law-breaking clauses were a mistake. The Government should say that these clauses will never again see the light of day. Please think about what the Government are embarking on with these clauses. If a free trade agreement and a settlement of the Northern Irish protocol issues are reached, then these clauses would never be needed. Suppose the Government do not reach agreement on free trade and the operational actions of the Northern Ireland protocol. If these clauses were ever used, they would guarantee, as President-elect Biden has said, that the United Kingdom would go to the bottom of the pecking order in Europe with the United States of America.

We have gone from popular United Kingdom to Billy No Mates in 10 weeks from 8 September as a result of the publication of this Bill. What is the justification for this disastrous proposal? Three have been given in the course of this debate. First, the noble Baronesses, Lady Hoey and Lady Fox, and the noble Lords, Lord Dodds, Lord McCrea, Lord Lilley, Lord Moylan, Lord Shinkwin and Lord Morrow, all gave variations on an argument that the Northern Irish protocol is a bad deal and they wished it to be renegotiated.

I respect those who did not like the Northern Irish protocol but it was entered into by the House of Commons with its eyes open. The House understood that the effect of the protocol was that to secure an open border, goods coming from Great Britain to Northern Ireland had to be checked to ensure that they complied with the single market regulations. Only in that way could the Republic of Ireland be sure that goods coming through the border would comply with the rules of the single market and you would not need a border as a result.

People may not like that. They may think that the checks that take place between Great Britain and Northern Ireland are inimical to the idea of Great Britain and Northern Ireland staying together, but that was the choice that the Parliament of this country made. A number of noble Lords said that democracy and parliamentary sovereignty justify this, conveniently forgetting that it was parliamentary sovereignty that led to the United Kingdom signing up to these international agreements. It was this Parliament that decided it and any call to parliamentary sovereignty is so misguided.

The second proposition advanced is that democracy demands that we allow this agreement, the Northern Irish protocol, to be broken. We are lucky to have in the House of Lords people who tell us how democracy should be interpreted. The December 2019 general election involved the winners, the Tory party, saying, “Agree to the withdrawal agreement and let us get Brexit done.” The country agreed to that. It agreed to the agreement that currently exists, not one that is about to be changed. The imprecations that we should be entitled, as a matter of parliamentary sovereignty or democracy, to change the agreement are very misguided.

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[Lord Fox (LD)]

My Lords, I express my sympathy and support for the amendments set out by the noble Baroness, Lady Rawlings. She makes a good point, and she has my support as a science graduate.

I oppose Clause 50 standing part of the Bill. It carries my name, alongside those of the noble and learned Lord, Lord Thomas, the noble Lord, Lord Stevenson, and the noble Baroness, Lady Finlay. The speeches given by the noble and learned Lord, Lord Thomas, and the noble Baroness, Lady Finlay, set out the issue. I have long wondered what the key drivers of this Bill are. We have had a debate around one of the areas, but the shared prosperity fund, which we have talked about before, and economic state aid, are key elements of the Bill, perhaps hidden in plain sight. We are now nearing the end of Committee, but we will return to this quite fundamentally on Report.

The noble Baroness, Lady Finlay, asked why the Government would reserve these powers, and then answered her own question: these are powers that the Government want for themselves. These are powers which they want to take away from the devolved Administrations; clearly, they would not be in the Bill otherwise. The Minister can shake his head, but if that is not the case, I am happy to hear why the Bill is written in this way.

The noble and learned Lord, Lord Thomas, asked a lot of very important questions on this point. I will ask a few more, and, given the lateness of the hour and the number of questions, will excuse the Minister if he writes rather than answering them tonight. However, we would like the answers in good time for Report, so that we can react to them. Around the frameworks, which the noble and learned Lord, Lord Thomas, raised, is state aid still an outstanding issue where no agreement has been reached, as it was in the last update? If it is still outstanding with no agreement, what are the stumbling blocks? What is stopping agreement and, overall, is this intended to become a legislative framework, or will this Bill and the proposed regulations simply impose a system, rather than continue with the frameworks process?

The frameworks agreement says that they will replicate existing flexibilities. Will this still be the case, or have the Government walked away from this commitment? Will the devolved Administrations still administer economic state aid? It was clear from what the noble and learned Lord, Lord Thomas, said, that he believes that they will not. Can the Minister clear up how that will be shared out, because the devolved Administrations have developed the in-depth knowledge of their areas to be able to do this properly. It would be very damaging to lose that expertise when the United Kingdom needs, more than anything, to invest effectively in growth. Finally, will de minimis levels without notification continue? One reading of the Bill is that even de minimis levels could breach the market access principles. Can the Minister confirm that?

There are too many uncertainties in this. That is why noble Lords have talked about not allowing Clause 50 to stand part of the Bill. On Report, we will have to look very closely at how this is done. It will help tremendously on Report if the Government and the Minister, today or in a written response, give a very clear picture of how they see the different cogs in this system working, how they will work together and how there will be a form of democratic and devolved Administration oversight for what is happening. If there is not, this will, I am afraid, be another bone of contention .

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[The Deputy Chairman of Committees (Lord Alderdice) (LD)]

I have received a request to speak after the Minister from the noble Lord, Lord Fox.

[Lord Fox (LD)]

With every answer, there come more questions, I am afraid. The Minister sought to explain that the devolved authorities will still be able to spend the money—I think those were the words that he used—but I am interested to know to which money he is referring. How in future will they get their hands on the money? Will there be a competitive bidding process? Is it part of the formula? Is that the money that he is talking about? Perhaps he could outline what he means by “the money”, because it is not entirely clear to me. He is looking at me as though I am being slightly stupid and I shall be very happy to be educated by him in writing rather than verbally.

[Lord Callanan (Con)]

I certainly did not intend to imply that at all and I apologise if the noble Lord got that impression. I was talking about the existing block grants that the devolved Administrations have. It is their existing spending power—the money that they spend at the moment. They will continue to make decisions about their devolved spending on subsidies, as they do at the moment—how much, to whom and for what—within any future UK-wide subsidy control regime if, following consultation, the Government and Parliament decide that we want to legislate in this space. I hope that I have resolved the noble Lord’s question; if not, I will certainly write to him.

United Kingdom Internal Market Bill

Lord Fox Excerpts

Report stage & Report stage (Hansard): House of Lords & Report: 1st sitting & Report: 1st sitting: House of Lords
Wednesday 18th November 2020 Lords Chamber

[Baroness Noakes (Con)]

My Lords, I start by saying how much I agree with what a number of noble Lords have said about the nature of debate in this sterile House, and I hope that we can certainly move on. I think it is important to say that because, as noble Lords might expect, I am not going to be saying much else which will find favour with other noble Lords who have spoken in this debate.

I respect the concerns about protecting the powers of the devolved Administrations which lie behind the amendments in this group, but I believe that these amendments would not be helpful in the context of the internal market and might well be very harmful. There is no exact correlation between what the common frameworks cover and the UK’s internal market covered by the Bill. Indeed, the functioning of the internal market is only one of six objectives of the common frameworks programme. Not every common framework will have a UK internal market dimension, and not every aspect of the UK internal market is included in the common frameworks programme.

So if Amendment 1 is agreed to, we will have uncertainty from day one about which bits of the common frameworks would override the market access principles. Uncertainty kills businesses. Uncertainty might be resolved only by the courts, and that could take five, maybe 10, years to bring to conclusion. Businesses cannot in general cope with timeframes of that nature, and that is especially true in today’s lockdown-harmed business environment.

The common frameworks are by their very nature detailed and specific. They are practical solutions to well-defined problems, such as compliance with international obligations. They do, however, have two big weaknesses. First, they have no guiding star, or no guiding principle, and they cannot, by their nature, cope with future change. By contrast, the internal market enshrined in the Bill is based on the overarching and enduring principles of market access, namely, mutual recognition and non-discrimination.

I am very clear that businesses want the Government to deliver an internal market which has as few barriers to trade as possible. They do not want to have to master thousands of pages of common frameworks, which may or may not impact the internal market, just to do business 10 miles away if that is over one of the UK’s internal borders. I have to say to the noble Baroness, Lady Randerson, that I have never even heard of the Aldersgate Group she referred to as representing business opinion, and I do not believe it represents the opinion of the whole business community.

In Committee, I urged noble Lords to consider the provisions of the Bill through the lens of businesses and individuals who will be trying to live, work and trade within the United Kingdom—that is what the Bill is about. By viewing the Bill through the lens of what the devolved Administrations think they might lose in terms of devolved competence, I believe that they may end up inflicting acts of self-harm on the people and businesses in their own territories.

I remind noble Lords of the high degree of dependence of the devolved nations on trade with other parts of the United Kingdom. This is an issue for Scottish businesses and residents, Welsh businesses and residents and Northern Ireland businesses and residents. It is important but not such a big issue for English businesses and residents. If trade is made more difficult, the result, as night follows day, will be higher cost and less choice for consumers. At a time of economic stress, that does not seem a sensible route to follow.

I have heard many arguments of principle adduced by the supporters of the amendments, but I have heard less about the practical issues. We heard about Scottish concerns on minimum alcohol pricing, but that was debunked in Committee. I believe that building regulations are a new red herring that has been introduced and will not conflict with the Bill. The Bill does not outlaw every variation within the UK, as some have tried to suggest. More importantly, I am still waiting to hear what will make life better for the businesses and residents of the devolved nations if the amendments are passed.

More than 90% of UK small and medium-sized enterprises, and nearly 60% of large businesses, trade only within the UK. That is the scale of the issues we are facing with the amendments. I hope that noble Lords will not jeopardise the aims of an internal market which works for the whole of the United Kingdom by pressing the amendments.

[Lord Fox (LD)]

My Lords, the noble Baroness, Lady Noakes, is right: I found cause to agree with her opening statement, as I did with the noble Lords, Lord Foulkes and Lord Cormack, and others. The need to have proper debate—not least to allow the noble Lord, Lord Foulkes, to go back to his heckling—would add to the debate.

Congratulations should go to the proposers of the amendments and to the noble and learned Lord, Lord Falconer and my noble friend Lord Newby, who have managed to create a debate which gives your Lordships a proper choice. That choice centres around the words “mutual respect”, because the Bill as it stands, unamended, is disrespectful to the devolved authorities and to the process of devolution. The amendment gives your Lordships a chance to build that respect back into the Bill.

On many occasions, Ministers have freely used the word “complement” and expressed the view that the common frameworks complement the process devised by the Bill. Unless those common frameworks can be built into the Bill, and unless the Minister can explicitly explain how they complement, there is no complementary process; there is replacement, which I believe is sought by the Bill. The noble Lord, Lord Naseby, spoke of the common frameworks as if they were some Bolshevik plot. I remind him that they were the policies of a Conservative Government whom he probably supported and voted for at some point in the recent past.

The amendments give an opportunity to put respect back into the Bill, but there is also a practical element to them. We should remember, as we were reminded by, I believe, the noble and learned Lord, Lord Mackay, that trade and the internal market are flexible: they move, they change. The common frameworks are designed to be a flexible, living document. As many Peers have pointed out, they are also there to manage divergence. The common frameworks are there to manage divergence and, as we have heard from a number of speakers, not least my noble friend Lady Randerson, that divergence delivers innovation, progress and better things for this country.

My noble and learned friend Lord Wallace brought up something very important. In the words of the Minister, the Bill seeks to do that which the common frameworks do not do. The common frameworks do that which is being transferred from the European Union. Therefore, the Bill is trying to do more than was being transferred from the European Union. This is a zero-sum game. Where is that power coming from? It is being reserved by the Government from what was previously devolved. My noble and learned friend showed that that is the clear plan that sits underneath the Bill.

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[The Deputy Speaker (Baroness Garden of Frognal) (LD)]

I am sorry. I call the noble Lord, Lord Fox.

[Lord Fox (LD)]

My Lords, I apologise for creating such a fuss, and I thank the Whip for intervening on my behalf.

The Minister has made a lot of the need to future-proof this Bill. Indeed, part of the justification of the last debate was around future-proofing. My noble friend Lady Suttie made a very clear case on where future digressions in conditions between Northern Ireland and the rest of the United Kingdom could create issues. Does the Minister not admit that this is a problem and concede that Amendment 24 is a way round that problem becoming difficult in future?

United Kingdom Internal Market Bill

Lord Fox Excerpts

Report stage & Report: 2nd sitting (Hansard) & Report: 2nd sitting (Hansard): House of Lords
Monday 23rd November 2020 Lords Chamber

[Baroness Neville-Rolfe (Con)]

My Lords, I thank my noble friend Lord Callanan for his amendments, which, as many have said, represent a real readiness to listen. The changes all seem very sensible, especially the proposal for the CMA to lay an annual plan before Parliament and before the devolved legislatures. Perhaps a similar procedure could be derived in relation to the common frameworks, over which there has been so much grief and debate. In my experience, when things go well, such reports become routine and are not even debated, but they are a good way of keeping the Executive —public servants, any boards involved and the Ministers they serve—objective, efficient and thoughtful.

However, I am afraid that I do not support Amendment 54. Board members of the CMA should not be “representative” of a territorial interest in the way this would inevitably turn out. The interests of the four nations should be taken into account in coming up with a balanced, objective board, but this is not the right way to do it. My noble friend Lady Noakes summarised the balance issues very well from her own wide experience. The amendment would also jeopardise the very objectivity and pursuit of the public interest which is vital to a better CMA.

By the way, Tesco’s head office is not in London; that was a bad example for the noble Baroness, Lady Randerson, to choose. At least in my time, we had a very high degree of sensitivity to Welsh issues, sold more Welsh food elsewhere in the UK than anybody else, and indeed from time to time had Welsh individuals of great independence sitting on the board.

[Lord Fox (LD)]

That is just proof that you can take the Peer out of Tesco but not Tesco out of the Peer.

My noble friend Lady Randerson hinted that she thought the Minister might be developing emotional intelligence—or perhaps we will see signs of that later. However, I think that most of your Lordships have welcomed the government amendments in this group. They are showing movement in the right direction and are an improvement on what you would expect those of us on these Benches to condemn as a deeply flawed Bill.

My noble friends Lady Bowles and Lord Bruce both made the point about where the OIM is and its presence in the CMA. We are not debating that in this group, although we will be some other time. However, Amendment 54 and consequential Amendment 59 should be seen as the safety belt in the event that the OIM remains within the CMA.

The noble Lord, Lord Naseby, made a powerful speech against Amendment 54. I did not see him in his seat when the noble and learned Lord, Lord Thomas of Cwmgiedd, was giving his strong endorsement of his amendment. He may have been oscillating somewhere between virtual and physical; if he was, I apologise. In his speech, the noble and learned Lord, Lord Thomas, put forward a very important point. The CMA is getting considerably more powers as a result of the Bill. The point he did not make but inferred is that those powers move from being reserved powers to those that step into the realm of devolved powers—there can be no doubt about that.

There is therefore a significant change in the nature of the task that the CMA is overseeing. The Government may say it is too much trouble to change the nature of the governance of the CMA, but its focus is changing from reserved issues to those which cover devolved matters, so that change should be reflected in its governance.

My noble friend Lord Bruce talked about unintended rather than intended consequences. The Government need to create a board that can reduce the number of unknown unknowns that it encounters. Amendment 54 is a perfectly reasonable amendment, which would make sure that there are people on the board who understand the nature of the markets in the devolved countries.

To take the point made by the noble Baroness, Lady Noakes, one would hope that the careful construction of a board would understand the need for that. I have to tell your Lordships—and perhaps the principles of my noble friend Lady Bowles could be passed to some Cabinet members—that the construction of boards and organisations over the course of the last 12 months has been nothing like a careful assembly of the right people. It has been a gathering of friends and known people to do the bidding of the Secretary of State. Therefore, it is right for the opposition to be very suspicious about the future board of the CMA, which will have this extraordinarily bumped-up role. That is the reason for Amendment 54 and also for consequential Amendment 59.

The noble Baroness, Lady Noakes, is correct. In a sensible world, what she suggests would happen. However, we cannot trust that to go forward, and trust is going to be very important with regard to the devolved authorities and how they work with the CMA if, indeed, the office for the internal market is located within it.

The noble Lord, Lord Wigley, the noble Baroness, Lady Finlay, and my noble friend Lady Randerson gave wise advice: rather than politicise the CMA, this is helping to inoculate it from political suspicions. That is why, if the noble and learned Lord, Lord Thomas, seeks to put it to the House, we Liberal Democrats will support Amendment 54.

[Baroness Hayter of Kentish Town (Lab)]

I join others in thanking the Minister for some significant moves in the amendments that he has introduced today. As others have said, it is testament to his having listened. He sometimes thinks that means “listened at length”, but he listened, considered and responded, and we welcome all the changes. I am particularly pleased about the acknowledgement in the amendments of the interests of consumers in the mapping out of the new internal market. The House will be pleased about the recognition of the need for experience across the kingdom in the appointment of the OIM panel and the need to seek the consent of the devolved authorities to such appointments.

Similarly, we welcome, perhaps unsurprisingly, the new requirement for the CMA to lay its key documents before all four legislatures. It is possible that they already do it, albeit perhaps as a courtesy rather than a legal requirement. We also strongly welcome Amendments 56 and 57, which require devolved authorities to give their consent within a month to appointments to the OIM panel. We like that—consent within a month; we have heard it before. We pinched the idea from the Minister’s words, but it is a good one. As we proposed in our amendments, if the Government proceed with an appointment despite consent not being forthcoming, they will have to explain why they are doing so. Therefore, we will not move Amendment 59.

However, the Minister will not be surprised to hear that, although we welcome these changes, we would like to nudge them a little further. On Wednesday, as others have said, we will seek to move the OIM out of the CMA. Just in case it remains in the CMA, it is vital, as the noble and learned Lord, Lord Thomas of Cwmgiedd, and others have said, that the CMA, in accepting this new role, amends its structure to accommodate the change. It is impossible to think of any other national organisation, when its remit changes, not revisiting its governance and appointments. It should not just continue with business as usual when taking on a whole new responsibility.

Indeed, although we welcome Amendments 56 and 57, we were surprised that they did not apply to the CMA as well as to the OIM panel. For an overarching body with a purview of the development of the new internal market architecture, not having to feel the pulse of, understand and have input from the constituent parts is a little odd, to say the least. For all its board members to be appointed by just one of the four Governments is particularly hard to understand, because it is a body covering the competences of all four Governments. If it was covering only the reserve competences, one could understand, but it will cover powers that affect the area of all four Governments.

As was said by, I think, the noble Baroness, Lady Noakes, if you are appointed by one place you somehow feel like a representative from it. I must say something about other boards and committees that I have sat on. It may not be a board of this nature, but the National Consumer Council included someone from the Northern Ireland Consumer Council, as I think it was called, someone from the Welsh Consumer Council and someone from the Scottish Consumer Council, but once they got on the board, they had responsibility to it as a board member. Just because we brought in someone with different responsibilities, it did not suddenly make them a representative. Similarly, the chairs of the different sub-committees of the Financial Reporting Council sat on the board. They came with that experience but, once they sat on the whole-council board, their responsibilities included that.

It is slightly hard to say that just because people are appointed by different Governments, they are then answerable only to them. Given that they would be appointed by only one Government, and given that people are saying that if you are appointed by the Welsh Government, you are then a representative of the Welsh Government, surely if you are appointed by the UK Government you also are not independent. It does not quite make sense to me.

We will shortly vote on Amendment 54 in the name of the noble and learned Lord, Lord Thomas. The Opposition will be happy to support it, to ensure that the CMA really does act on behalf of the whole of the United Kingdom.

United Kingdom Internal Market Bill

Lord Fox Excerpts

Report stage & Report: 3rd sitting (Hansard) & Report: 3rd sitting (Hansard): House of Lords
Wednesday 25th November 2020 Lords Chamber

[The Deputy Speaker (Lord Lexden) (Con)]

My Lords, the next speaker on the list, the noble Lord, Lord Flight, has withdrawn, so I call the noble Lord, Lord Fox.

[Lord Fox (LD)]

My Lords, many noble Lords have railed against the virtual process, but the serendipitous arrival of the noble Lord, Lord Rooker, is perhaps justification for having a virtual Parliament after all.

I thank the Minister and other speakers in this short debate. I should like to put this issue into context. Back in the day, when I worked in the real world, in many cases the sort of inquiry that we are talking about would have come across my desk. I worked for large international corporate companies and, even for us, it was difficult to find the resources to respond to some of these requests. So this is a real problem and Amendment 62A seeks to address a real issue that will genuinely cross the desks of small businesses in this country.

The Minister tried to corral these requests, saying that they would occur only when the office for the internal market needed credible and accurate information. Well, I trust that it always needs credible and accurate information, so that is no restriction on the office. He also talked about the word “proportionate”. I should correct the noble Lord, Lord Liddle: the Minister did not use the word “voluntary”. He said “proportionate”. This is not a voluntary process but a compulsory one, as it stands in the Bill. That is the problem. And proportionate to whom? Is it proportionate to the desire of the office for the internal market to get credible and accurate information, or proportionate to the fact that five, six or seven people occupy an important part of the market but do not necessarily have the resources to respond to these requests?

The Minister also said that only in a small number of cases did he expect that a formal information notice would be required. Well, that is where some of the clarification can come. What are the circumstances around which a formal information notice would be required? How do we ring-fence it and make sure that we understand what “proportionate” means in the context of this discussion? The Minister also said that leaving out, or giving this exemption to, small businesses would set a terrible precedent. However, my sense is that precedents have already been set in other Acts. I cannot remember exactly, but I think that the Corporate Insolvency and Governance Act has carve-outs for small businesses, and there are many other Acts in which small businesses already have carve-outs. So the precedent already exists; it is just a question of which precedent one chooses to select.

The nub of the problem is that the Minister said that the powers were carved out of the existing powers of the CMA. However, just as the noble Baroness, Lady Noakes, said, the powers are used for an entirely different purpose—to investigate and identify potential irregularities and law-breaking. That is not the nature of what we are saying.

When I entered this debate, I expected, for once, to be on the same side of the argument as the noble Baroness, Lady Noakes, and the noble Lord, Lord Naseby, and that proved the case. The noble Baroness, Lady Noakes, gave a very powerful and detailed explanation about why the Minister should be serious about this issue. It is absolutely true that the Trade Bill has taken a different route; it acknowledges that this information is essential but has gone down the route of gathering it voluntarily. If the Minister is in the business of precedence, perhaps that would be a better precedent for him to take.

It seems bizarre that a Conservative Government would push this level of red tape on the small, enterprising and innovative businesses of this country. It seems strange that we should be the flag carriers of this case, rather than the Minister, and it was important to hear the noble Baroness, Lady Noakes, pick this up.

My noble friend Lady Bowles talked about the possibility of something being agreed for Third Reading. I am no expert in body language, but I saw a faint shaking of the head cross the Minister’s personage when my noble friend mentioned the idea of some sort of negotiation or compromise being reached in time for Third Reading. In light of what the Minister has heard, not just from this side of the House but from his staunchest supporters throughout the Bill, making serious and important comments about this issue, I ask that, whatever decision he comes to, he makes it very clear verbally. We are in a hybrid House, and not all of us can benefit from the subtle nuances of the Minister’s demeanour in working out whether he will or will not be negotiating at Third Reading. Can the Minister be clear about his intentions between now and Third Reading, then we can be clear about whether to vote in support of this amendment?

--- Later in debate ---

The noble Lord, Lord Wigley, talked about “the bad old days before devolution”. Does he remember that less than 25% of the electorate of Wales supported even the limited degree of devolution at that time? The noble Lord’s Amendment 67 seems to me to be aggressively nationalistic. The noble Baroness, Lady Bennett of Manor Castle, spoke in favour of what Baroness Thatcher called “subsidiarity”—but I have not heard her, or the noble Lord, Lord Wigley, or other noble Lords opposite criticise the EU as it moves to centralise and harmonise fiscal and other powers at the expense of the nation states.

[Lord Fox (LD)]

My Lords, once again, this has been a very widespread and high-quality debate. To the Minister, who has not had the benefit of the soap opera that you tend to have on Report, I say that we have reached the point that—here I agree with the noble Viscount, Lord Trenchard—is the meat of this Bill. At Second Reading, in Committee and on Report, many of your Lordships asked why this Bill was necessary. Of course, there was the political and negotiating posturing that came with Part 5, but I put it to your Lordships that one of the central, driving reasons for this Bill is exactly what we are discussing here today: it is so that central government can get its hands on this money and administer it through whatever means it sees fit, because there is no detail on that administration —here, again, I echo the point made by the noble Viscount, Lord Trenchard.

Some people called it pork-barrel; I would perhaps call it a hobby horse. We saw the benefit of the Prime Minister’s attempts at hobby horses when he was the Mayor of London: we saw the amount of public money that was spent on “Boris Island”, the green bridge and the Emirates wire crossing of the Thames. These are just small potatoes compared to what we could look forward to.

In her speech, the noble Baroness, Lady Noakes, characterised those of us on these Benches and in Her Majesty’s Opposition as, somehow, thinking that the Government are evil in this. I make it absolutely clear to the noble Baroness and the Minister that I do not think that she is evil, and we do not have a policy of thinking that the Government are evil. However, we do think that the Government are wrong, and we are allowed to do so. Many of the speeches on the Benches opposite have also been factually wrong on the subject of devolution, and I will correct some of those facts.

However, I will err on the side of giving the benefit of the doubt, because I do not believe that the people who drafted this Bill misunderstood devolution in the way that many of the speeches we have heard today have. I believe that there is a very deliberate attempt in this Bill to bypass the processes that have become normal in devolved government and, unless we see actual details as to how this will go forward, this suspicion will only get greater.

Very recently, the Government introduced the notion of the role of local councils. This has come along only in the last 24 to 48 hours in relation to their possibly getting involved in the process of disbursing. I can only assume that it is the antidote to the Prime Minister’s loose lips around devolution, but perhaps the Minister can explain what role the Government see in any future disbursement process for local councils—and, if there is not one, perhaps they can disabuse us of that as well.

My noble friend Lord Purvis set out how the multiannual financial framework works. In answer to the noble Baroness, Lady Noakes, who said that the devolved authorities are not having financial powers taken away from them, I say that they most definitely are, because they had functions under EU structural funds and state aid within the fiscal framework which are being withdrawn.

I am afraid that the noble Baroness was similarly wrong on the subject of public finance and tax. If you happen to live in Scotland, as my noble friend Lord Purvis will tell you on many occasions that he does, you pay Scottish income tax, which is set by the Scottish Government: it is a different tax. Perhaps the noble Baroness, Lady Noakes, would acknowledge that there are differences across this country in the fiscal arrangements for the people who live in the nations of the United Kingdom. Those differences arise through the devolved process, which, somehow, is now being withdrawn and pulled back by this Government under the misapprehension that, by being seen to spend this money, they will somehow become popular. That is not the way to be popular, and it will fail. The noble Lord, Lord Naseby, spoke about ferrets. My experience of ferrets is that they usually bite the people who are handling them—so perhaps he should be warned.

I have one final point, which is a question that I really do want an answer to—it is not a rhetorical question. The noble Baroness, Lady McIntosh, raised the interesting point about how the markets could get distorted. I would like the Minister to explain the role of the office for the internal market in this. As we have discussed in previous amendments, considerable powers are being vested in the OIM, not least Clause 31 powers, so can the Minister confirm that the OIM will be able to investigate the UK Government’s use of the powers that they seek in Clauses 42 and 43 to investigate whether this distorts the market? Can the Minister also confirm that devolved authorities will be able to request such an investigation from the CMA?

[Lord Stevenson of Balmacara (Lab) [V]]

My Lords, I am going to say much the same things as the noble Lord, Lord Fox, but I will focus a little on my Amendment 65, which has been supported by the noble Baroness, Lady Finlay, as well as offering support from the Opposition Benches for Amendment 64 in the name of the noble and learned Lord, Lord Thomas, and—if it is treated as consequential—Amendment 68.

The last time she joined us, the noble Baroness, Lady Penn, responded to my amendment on the shared prosperity fund with a very full and useful speech, part of which the noble and learned Lord, Lord Thomas, has already quoted. It was helpful to hear, because it was so clear what the purpose behind the new approach to the shared prosperity fund was to be. Although she may have to slightly change the way she expresses it when she responds in a few minutes, she confirmed, stressing the collaborative nature of the future, that this would

“allow the UK Government to complement and strengthen the support given to citizens in Scotland, Northern Ireland and Wales, without taking away devolved Administrations’ responsibilities.”

That is all good stuff, but she went on to say—this was not quoted by the noble and learned Lord earlier—that

“the response to Covid has shown how the UK Government … can save jobs and support communities. This could only have been delivered strategically and at that scale by the UK Government.”

That interesting formulation has been much explored during this debate. I do not think the Minister will find much support across the House for that statement.

The Minister went on to say:

“The UK Government are uniquely positioned to level up across every part of the UK”. —[Official Report, 2/11/20; col. 596.]


That also needs to be challenged. It is the sort of thinking from which comes the “Westminster knows best” process, which has been criticised, and spending decisions being taken against the advice of those in the best position to know about them. As the noble Lord, Lord Fox, said, this may lead to follies of the type of the garden bridge and, perhaps, the much-mooted bridge between Scotland and Northern Ireland, which seems to be the answer to the Northern Ireland protocol problem.

I will talk a little about Amendment 65. I was grateful to my noble friend Lord Rooker for talking about the work done in your Lordships’ House on a critique of the Barnett formula. He is absolutely right: if that formula had been replaced by something of a different nature, the funding levels in Wales and Scotland would have changed, because of inward immigration to Wales and external emigration from Scotland. There has been a change in the population levels which has not been reflected in settlements. The system does not command much love and affection, let alone support.

The proposal in Amendment 65 challenges the Government to think again about how they might wish to do the shared prosperity fund. If it is not clear, because the drafting is somewhat complicated, it is based on a model to which the closest analogue would be the Low Pay Commission. Despite allegations to the contrary, it weighs heavily on subsidiarity and proportionality as the principles under which it might be set up. Under the proposal in Amendment 65, it is the Secretary of State who sets the level of the fund, it is clearly the Government’s funding and their authority to set a level every year for that is not, in any sense, taken away. What the amendment does is to mandate consultation and provide an alternative, needs-based basis for judging the bids. As set out in proposed new subsection (11), this approach looks at an area’s proportion of children below the poverty line, low income, economic weakness, the age structure of the population, the impact of the pandemic and the impact of climate change—something we might want to consider more fully, though it has also been picked up today.

I thank the noble Baroness, Lady Finlay, for her kind words. For anyone in the Official Opposition to be ruled as “intelligent and thoughtful” is almost too much to take, but it probably rules out any further consideration of my amendment. It would not do to be seen to be endorsing that, would it?

As the noble Lord, Lord Purvis, said, if Amendments 64 and 68 are passed, there will be a bit of a hole in the Government’s thinking on this area. They might want to think again about how do to that by looking at this amendment, certainly in the context of the responses to the now notorious box 3.1. I congratulate the noble and learned Lord, Lord Thomas, on being able to adapt his speech to take account of the fact that he could have had only a few minutes to look at that box. His critique of it was spot on. As the noble Baroness, Lady Finlay, said, box 3.1 is based on the assumption that the Government will receive the new financial assistance powers in this Bill—it says so straight out, at the beginning. It is also interesting that this is clearly a top-down approach:

“The government will develop a UK-wide framework for investment in places receiving funding and prioritising: investment in people … investment in communities … investment for local businesses”.


There is nothing exceptional or egregious about the list of things to do, but the idea that there is a top-down approach jars with everything we have been doing in the last 20 years to develop a much more responsive, local environment.

--- Later in debate ---

[Baroness Penn (Con)]

My Lords, I do not think that I can go any further than what has been announced in the spending review today: that it is the Government’s intention to use the powers under this Bill to deliver the shared prosperity fund.

[Lord Fox (LD)]

My Lords, I thank the Minister for attempting to answer my final question but I fear that she may have been wrongly advised. Clause 31 states:

“The CMA may from time to time undertake a review”.


Subsection 1(b) certainly points to “Parts 1 to 3”, as in the Minister’s answer. However, subsection 1(a) says that such a review can refer to

“the internal market in the United Kingdom”,

which is a far broader swathe than the narrow answer given just now.

While I am up and reading the legislation, subsection (2) states:

“The CMA may receive and consider any proposals that may be made or referred to it for undertaking a review”.


Can the Minister confirm that the devolved authorities are one of the bodies that can request such a review of the whole UK internal market as in Clause 31(1)(a), rather than the answer that was just given?

[Baroness Penn (Con)]

The noble Lord will probably be unsurprised to know that the advice I have received has not changed in the short time since he asked his further question. I will commit to reviewing that advice; if any part of it was not accurate, I will write to the noble Lord. My understanding is that those reviews do not refer to the powers in this Bill, and whether the devolved Administrations or others can refer matters to the CMA for review relates to other parts of this Bill.

--- Later in debate ---

[Lord Flight (Con)]

I am certain I was.

[Lord Fox (LD)]

My Lords, the debate on this amendment has been relatively short, but the Minister should not conclude from that that it is unimportant. The reason why the debate has been short is that it crystallises points that have recurred since Second Reading, through Committee and in various discussions on other groups of amendments, around the basic suitability of the CMA as a home for the OIM. That is the central point.

I am pleased to follow the noble Baronesses, Lady Noakes and Lady Neville-Rolfe, whose analysis of the concerns around the location of the OIM I completely concur with. They conclude that they do not necessarily like the full nature of this amendment, and I respect that point. This amendment is the culmination of several other attempted amendments but, without it, we will not get the focus on this issue that we need from the Minister. Even though it may be a bitter pill to swallow for the noble Baronesses, Lady Noakes and Lady Neville-Rolfe, we need to get somewhere to concentrate minds—and this is the amendment.

It was ably set out by my noble friend Lady Bowles, and I know that the noble Lord, Lord Stevenson, will also set out a good case, so I will not point to any more issues. I simply say that this is a really important issue, which will colour the culture of the market in this country and how it is run. I had not considered the point brought up by the noble Baroness, Lady Noakes, that it may also jeopardise the CMA’s current role, which is a good point and well made. This is an important amendment to get behind. Noble Lords on the Liberal Democrat Benches will vote for this amendment when it is put, and I hope that other noble Lords, who find problems with some words in this amendment, will stave that to one side and consider that, without it, we cannot change the culture of how the market will be run in future.

[Lord Stevenson of Balmacara (Lab) [V]]

I am going to disappoint the noble Lord, Lord Fox, as I will not go through my arguments at length, because they have been made so well by the noble Baroness, Lady Bowles, and the noble Lord, Lord Wigley. I put on record my absolute support for the noble Baronesses, Lady Noakes and Lady Neville-Rolfe, who, while they have comments about the detail of the amendment, support the principle of it. I am grateful to them for that.

It is a simple proposition: the internal market must work and be seen to work for all and, therefore, must have buy-in and support from all. It should not favour one geographical area or country over another. It is important that we do not upset the balance struck in the CMA and its functions. The noble Baroness, Lady Noakes, is right that there may be an adverse impact on the CMA, if it is forced to take on something that is not its primary purpose. Thirdly, the devolved Administrations need to be part of the organisation, its process and appointments.

There are reservations about proposed new subsections (3) and (4) in the amendment. It is beyond our hopes, but perhaps the Minister will consider bringing forward an agreed amendment at Third Reading. If he did, we would support it but, if he will not do that, we will support the noble Baroness if she tests the opinion of the House.

--- Later in debate ---

[The Duke of Montrose (Con) [V]]

My Lords, it is a pleasure to follow my noble friend Lord Trenchard, who has contributed so much to the different stages of this Bill. Once again, it has also been a great pleasure to support my noble and learned friend Lord Mackay of Clashfern as he tries to prompt the Government to outline a process of devolved consultation on any major disputes in the creation of regulations or statutory instruments that future Administrations will consider adequate to the task under this Bill.

Almost all the issues discussed today fall very much into the area that recalls the off-the-cuff remark that slipped from the lips of my right honourable friend the Prime Minister, which he has since spent some time trying to explain in any way that fits with government policies going forward. Speaking as a Scotsman, however, I believe that the First Minister of Scotland should take some comfort from what the Prime Minister said and the fact that as devolution has progressed she has been able to move many Scots institutions and practices—never as far as she might like, but always in the direction that she would like, towards an independent nation. The situation in Wales has not been the same; it has been much healthier. Naturally, this is the approach that we can expect the First Minister to use with any future changes, and it presumably explains the lack of consent from that area.

Like my noble friend Lord Cormack, today I wish to support a Government who aim to maintain a United Kingdom. The Government are looking for support and settlements in structures and frameworks that can support devolution within, and as part of, the United Kingdom. In supporting my noble and learned friend, we are all seeking a truly robust mechanism that has the possibility of overcoming disagreements at the highest level. The debates in your Lordships House today are more and more an illustration of the levels of disagreement that will have to be solved.

In Committee, my noble friend the Minister in his reply gave some idea and suggestions of the criteria that the Government have in mind for resolving disputes at a more mundane level. Some of it sounded quite good, as far as it went. Disputes such as those he outlined are frequently liable to comprise very technical elements, and the Government would like to resolve these at a departmental level, or, as they say, at as low a level as possible—whatever that is.

In Committee, my noble and learned friend Lord Mackay insisted that his suggestion for working these things out through the Joint Ministerial Committee on EU Negotiations was exactly what is needed. However, he is hoping that the amendments the Government have now introduced will move it some way in that direction.

In his response in Committee, my noble friend the Minister enticed us—and it was repeated at a briefing I received today—with the thought that there is in train a revision of the workings of the Joint Ministerial Committee, where already

“The proposal for reforming the formal process for avoiding and resolving intergovernmental disputes was jointly drafted”.—[Official Report, 2/11/20; cols. 529-30]


Having said that, the Minister was then asked by the noble Lord, Lord Purvis of Tweed—who has also prompted us today—whether we would be given some indication of what this reform contained, as it is of consequence to our consideration of disputes under this Bill. But the Minister would not be drawn, and we are being asked to consider this Bill without this knowledge and without the proper mechanism. It sounds as if the Government are going to rely on some political bargaining somewhere along the line.

I have another question of clarification for my noble friend the Minister. Will the Competition and Markets Authority—which is above political interference —and its office of the internal market task force be given the support they need to face disputes in a court of law? That appears to be where this is all heading.

[Lord Fox (LD)]

My Lords, this has again been a high-quality debate. It is an honour to follow the noble Duke, the Duke of Montrose, who spoke with great wisdom. In offering Her Majesty’s Government support, that support was heavily nuanced with some important questions, which I look forward to hearing the Minister answer.

In the previous debate, on Amendment 69, the noble and learned Lord, Lord Thomas of Cwmgiedd, set the question of whether it was diktat versus consensus. It is the same with group. I am pleased to speak in a group which has heard the contribution of the noble and learned Lord, Lord Mackay, and I share in the admiration of the noble Lord, Lord Cormack, for his contribution. He painted a rather half-full picture of where we have got to in the Bill, and the noble Lord, Lord Cormack, was a little more half-empty. I am afraid that I side with the concerns of the noble Lord, Lord Cormack. Those concerns were further illustrated by my noble friend Lord Bruce, who set out the flaws and problems that remain with the Bill.

I am speaking to Amendment 75, in my name, and I am grateful for the support of my noble friend Lord Purvis of Tweed, the noble Baroness, Lady Bennett, and the noble Lord, Lord Wigley. Overall, my noble friends have been very clear and helpful in setting out the purpose of this amendment. It is essentially to help drive a process whereby the consensus that the noble and learned Lord, Lord Thomas, talked about in the last group can be delivered—an explicit process.

Why do we need an explicit process? One thing that has come through the Bill, and through amendments brought by both Ministers, is an acknowledgement of the need for consultation. However, as we heard from the noble Lord, Lord Empey, who was here just a few minutes ago and I am afraid is not here now, one Minister’s consultation is not necessarily one recipient’s feeling consulted. There is a process that is called consultation, whereby people are informed marginally before the general public, and then there is genuine consultation. All Governments practice both these forms of consultation.

Amendment 75 sets out a process whereby consensus is driven, rather than relying on the Minister or the Government of the day, whether this one or future ones, to deliver that consensus around the Joint Ministerial Committee. That process has been set out, as I said, by my colleagues. The purpose is, in a sense, to bookend the amendment of the noble and learned Lord, Lord Hope. After Part 5 discussions, we started these discussions with the amendment of the noble and learned Lord, Lord Hope, which pushed the common frameworks to the forefront of how the future internal market should be organised. Amendment 75 seeks to put in place a process by which this can happen and, as my noble friend set out, avoids the pitfall of a veto.

The noble Lord, Lord Cormack, said that he had concerns about the union. I have concerns about the union. It is only by delivering a truly consensual process that is seen to be transparent and set out, rather than optional, for people, that that danger can start to be averted. That is why I will be pressing Amendment 75 to a vote—unless, of course, there is a damascene conversion on the Benches opposite.

[Lord Stevenson of Balmacara (Lab) [V]]

My Lords, like others, I congratulate the noble and learned Lord, Lord Mackay, on his campaign. The Government have listened to it and that has resulted in a number of good and important changes to the Bill. He exerts great influence on our work, and long may it continue.

I admire the thinking that has gone into Amendment 75, in the name of the noble Lord, Lord Fox, and his supporters. It proposes a response to another of the gaps that we keep encountering in the Bill—the need to reform the JMC system and the need for a mechanism for getting agreement, with particular reference, in this case, to the market access principles, about which we have different views. This may not be the time to bring this particular proposal in, but it shows us the way forward and I hope that that will influence the Government’s thinking in other ways and in other parts of our political consciousness.

Amendment 76, in my name, was intended as a fallback, in case our plans for ensuring that the common frameworks programme was made the centrepiece of the process for agreeing the rules required to underpin the UK internal market fell by the wayside. However, this House has strongly supported the amendments of the noble and learned Lord, Lord Hope, on the common frameworks, and we hope that, in time, we can persuade the Government that they can and should do likewise.

I am less sure that we have persuaded the Government about the damage they will do to the devolution settlement if they do not change tack on how state aid is to be organised and their current top-down plans for the shared prosperity fund. I urge them to reflect on the opportunity they have been given by the votes today, but I do not think Amendment 76 will actually take the trick that it was intended to in this case, so I shall not be pressing it to a vote.

--- Later in debate ---

Moved by

[Lord Fox]

75: Clause 50, page 39, line 5, at end insert “, subject to subsection (3A).
(3A) A statutory instrument containing regulations under subsection (3) may not appoint a day for the commencement of Part 1, 2, 3 or 4 until the following requirements are met—(a) the requirement in subsection (3B), and(b) the requirement in subsection (3C) or the requirement in subsection (3D).(3B) The requirement in this subsection is that the Prime Minister must convene a plenary session of the Joint Ministerial Council in order to seek agreement of the market access principles set out in section 1(2).(3C) If an agreement on the market access principles is reached at the conclusion of the Joint Ministerial Council session, the requirement in this subsection is that the Secretary of State must lay before Parliament a memorandum of understanding which sets out—(a) details of the agreed principles; and(b) proposals for the establishment of an agreed dispute resolution mechanism relating to the internal market in the United Kingdom for any disputes among the Secretary of State, the Welsh Ministers, the Scottish Ministers, and a Northern Ireland department.(3D) If unanimous agreement is not reached at the conclusion of the Joint Ministerial Council session, the requirement in this subsection is that the Secretary of State must lay before Parliament a report outlining—(a) why unanimous agreement could not be reached; and(b) proposals for the operation of the internal market in the United Kingdom in light of the fact that an agreement under subsection (3B) was not reached unanimously.”

[Lord Fox (LD)]

My Lords, it has been very helpful to hear the Minister. His description of the intergovernmental discussions is very important and we wish the Government good speed on that. If the Minister or his colleagues can keep us updated on the progress of those very important discussions, we would be grateful.

On Amendment 75, the Minister made great play about the timetable, but it should be noted that the Bill does not affect any existing legislation on day one. Furthermore, the devolved authorities have agreed to a standstill arrangement. The Minister is creating a false timetable pressure on your Lordships. I do not believe that your Lordships need to be constrained on time for this.

In conclusion, the noble and learned Lord, Lord Mackay, spoke about the internal market as a living, breathing, changing process. To run that, there needs to be a structure with the JMC and the devolved authorities. Amendment 75 would set in place one way of doing that and I am sure we would be very happy to discuss other ways of doing that with the Government if they have ideas. To put that pressure on, I would like to test the will of the House.

United Kingdom Internal Market Bill

Lord Fox Excerpts

3rd reading & 3rd reading (Hansard) & 3rd reading (Hansard): House of Lords
Wednesday 2nd December 2020 Lords Chamber

[Lord Fox (LD)]

My Lords, when the Bill entered your Lordships’ House, it presented many problems—not to put too fine a point on it. It is a great honour to follow the noble and learned Lord, Lord Garnier, who, among his many pieces of advice, advised Peers not to rehearse the arguments that we have heard over the course of the Bill. So I will not do that, but I agree that the Bill leaves your Lordships’ House in a better state than when it arrived, though it is of course still far from perfect.

During the scrutiny process, as the noble Baroness, Lady Finlay, alluded to, over 30 amendments have been inserted into the Bill through your Lordships’ overwhelming votes. At the same time, as other Peers have said, large and important parts of the Bill were removed as a result of this process. I hope this gives Her Majesty’s Government cause to reflect further, rather than simply trying to move on.

Additionally, the Government themselves have made more than 30 amendments to the Bill, and that indicates that the Ministers have been listening to and participating in this debate. I thank the noble Baronesses, Lady Bloomfield, Lady Penn and Lady Scott, and the noble Lords, Lord True and Lord Callanan—the full cadre of Ministers—for their stamina and general good humour through this process. I agree that the Ministers listened, and the government amendments are testimony to that. The departmental Bill teams must get much credit for keeping Ministers on the straight and narrow—if indeed they did. The Bill has been drafted and debated on an extremely tight schedule, and I am sure that the Bill team lost many weekends and evenings as it stewarded Ministers through this process—as well as drafting the many letters for my noble friend Lord Purvis that have emerged.

I thank all the Cross-Bench and Labour speakers, the Bishops and their teams for the great collective effort on the Bill. It is invidious to pull out names but I would like to thank the noble Baronesses, Lady Hayter and Lady Finlay, the noble Lord, Lord Stevenson, and the noble and learned Lords, Lord Judge, Lord Hope, Lord Thomas and Lord Falconer, who put in many hours to get us to where we are today. Perhaps the Law Society of Scotland and the Welsh Government should also get a special mention for the hours that they have put into drafting amendments.

I would also like to mention the parliamentary clerks, as well as the Whips’ Office and the usual channels, for helping to get the Bill timetabled and get us through it. It was not an easy task in the circumstances. From our team, I would single out Elizabeth Plummer and Sarah Pughe in the Lib Dem Whips’ Office, who have done a fantastic job. Finally, I thank the cadre of colleagues I have on the Benches today, my noble friends Lady Bowles and Lord Purvis, and the 20 other Lib Dem Peers who have participated in the various stages of the Bill.

It is clear from what I have been saying over the past weeks that this is not the way the Liberal Democrats would have done it, but I feel that the debates have been deep as well as wide, and serious and well considered on all sides. It is important that this is considered as the Bill leaves this House and goes forward.

The Minister mentioned legislative consent. Other speakers have said how important it is that Part 5 remain out of the Bill; that is very true. Many of the other amendments were also targeted at the grab at devolution that the Bill seeks. The principle of legislative consent requires that those amendments be given full consideration in the other place. If they are summarily dispatched, as is often the case with your Lordships’ amendments, the message will be sent clearly to the devolved authorities about what this Government consider to be important in terms of the devolution settlement. That runs far past this Bill, and far past the term of this Parliament. It is a very important issue—and not one that I think the Government, in the end, want to have on their hands.

I am wont to give Ministers advice, and they are wont to ignore it, but there are many other people wiser than me who are also giving Her Majesty’s Government this advice. I hope that, when it all comes out in the wash, that advice will be listened to— because this issue is far more important than just this Bill.

United Kingdom Internal Market Bill

Lord Fox Excerpts

Consideration of Commons amendments & Ping Pong (Hansard) & Ping Pong (Hansard): House of Lords
Wednesday 9th December 2020 Lords Chamber

[Lord Foulkes of Cumnock (Lab Co-op)]

My Lords, I fear I will not match the eloquence of my noble friend Lord Adonis. I want to say a few words in support of the amendments of the noble and learned Lord, Lord Hope, who, like me, is a member of the Common Frameworks Scrutiny Committee. In his introduction, the noble Lord, Lord True, praised my noble friend Lady Andrews and the work she and that committee are doing. If the Minister thinks that method is so good, why does he not accept these amendments, since that is exactly what we are suggesting—that it should be done through the kind of procedure that the Common Frameworks Scrutiny Committee is operating? He argued that case, perhaps without realising it, from the Dispatch Box.

Yesterday, I heard a very interesting debate. On one side of the argument was the importance of a level playing field for an internal market—I thought the United Kingdom Government were arguing that case in relation to what we are discussing—and on the other was sovereignty. I thought it might have been the Scottish or Welsh Governments arguing that case. Ironically, it was not. It was the European Union arguing the case for a level playing field for a common internal market and the United Kingdom Government arguing the case in relation to sovereignty. The tables were turned; the UK Government were arguing entirely the opposite case in relation to Europe that they argue in their dealings with the devolved authorities. It is about time they got their arguments right on this and accepted these amendments.

[Lord Fox (LD)]

My Lords, throughout the many stages of this debate the common frameworks have been given a great airing, and many of your Lordships have had a chance to vent their respective spleens on the subject. The Minister may be assured that my spleen will remain in its correct place, because enough has been said on this issue. Indeed, he observed that noble Lords have made their position on common frameworks very clear.

However, the Government have shown great and steadfast reticence on writing the common frameworks into this Bill. The Minister set out two reasons for this: first, in stressing the word “voluntary” on several occasions, and, secondly, in pointing out the joint ownership of the common frameworks between the devolved authorities and the UK Government. On that second point, have any of the devolved authorities objected to the idea that common frameworks might be a central part of this Bill? I have seen no such objections; on the contrary, I have seen enthusiasm from devolved authorities that this might happen.

The noble and learned Lord, Lord Hope, has drafted elegant solutions in his amendments, which I hope will help the Minister to get to the point of developing the market access principles and legal certainties—the Minister is right to say that we need them—but, at the same time, respecting the devolution settlement. A key part of the noble and learned Lord’s speech was about the respect that this Bill needs to show the devolved authorities and the settlement that has developed so well there.

I was impressed by the tone of conciliation and consultation in the Minister’s speech, which came through in his “willingness to continue to engage in discussion”, “discussions have not been exhausted” and “open to discussions.” The door is clearly open. With respect to the noble Lord, Lord Naseby, there is time; I have also worked in commercial life and while the idea of “give me certainty” works within a correct framework, if it is “give me certainty” in a terrible framework then I would rather wait a little and get it right. We can spend a few days more getting this right. A vote for the amendments set out by the noble and learned Lord, Lord Hope, would help keep the door open for those discussions with the Minister. That is why we on these Benches will vote in favour of them.

[Baroness Hayter of Kentish Town (Lab)]

My Lords, the noble Lord, Lord Callanan, who is not in his place, will recall how the notion of common frameworks evolved. When we were doing the first EU withdrawal Bill, it became clear that some of the powers returning from Brussels clearly fell within devolved competences. It was therefore widely understood that, to facilitate trade throughout the UK—as otherwise the rules affecting trade could vary across internal borders—a coming together of the four authorities would be needed to balance the desire for, and attraction of, diversity on some issues with a UK-wide approach to help consumers buy and manufacturers trade throughout the UK.

From the start, it was agreed that such frameworks would be established where needed—this is from the communiqué of October 2017—to

“enable the functioning of the UK internal market, while acknowledging policy divergence”

and that they would

“respect the devolution settlements … based on established conventions … including that the competence of the devolved institutions will not normally be adjusted without their consent”.

That was how they started. At that point, a list of 24 such topics was identified and, with a lot of good faith and hard work—as the Minister has acknowledged—the initial three Governments, along with Northern Ireland officials, set to work developing frameworks to enable that UK-wide market to flourish while recognising where devolved authorities might want variations for whatever reason. The basis was, to quote again from that document signed by the Government, to

“maintain, as a minimum, equivalent flexibility for tailoring policies to the specific needs of each territory”.

Until this Bill arrived, everyone thought the system was working well and would accomplish the aims set for it. This should have been something for the Government to celebrate, as they have today, and build on. In fact, it has never been necessary for the Government to use their powers to freeze any devolved authority’s power—a provision set into the EU withdrawal Act, as the Minister has acknowledged.

While this Bill was anticipated, the expectation was that it would help build a new, in some ways unique, internal market across our four nations, which have different cultural, linguistic, agricultural, geographical and industrial histories and realities. Above all, our nations have different democratic governance structures from when we ceded rule-making to the EU in 1973. We thought the Bill would respect the devolution realities while helping to ensure the UK market could prosper for the sake of business, consumers, workers, our agriculture and the environment. As we now know, in addition to throwing the quite unnecessary Part 5 grenade into the Bill, the Government pulled the pin on another grenade by writing into the Bill market access rules which trumped, rather than solidified, the common frameworks programme, which is an approach built on consensus rather than top-down diktat.

The noble and learned Lord, Lord Hope, is not a revolutionary. He is not trying to rewrite the Bill. He is seeking—rather like the Minister himself through the Government’s welcome amendments on regulation-making, for which we will give thanks when we come to them later—to start the process on the basis of consent across the four devolved authorities, and, where that is not possible, leaving it to the UK Parliament, rightly, to legislate. We support a union, and therefore we support Parliament’s right at that point to have its proper role. But we start with consent, and then move to Parliament. What we do not support is starting here in Parliament and government, rather than with the four-party common frameworks. So, we welcome the noble and learned Lord’s upending of the procedure, starting with common frameworks and, where or if those do not work, using the market access approach of the Bill in areas obviously otherwise within devolved competencies.

I think we would all warn the Government to be very careful about clawing back decisions from our now quite long-established devolved settlements. I find today’s vote in the Senedd, by 36 to 15, to deny legislative consent to this Bill extraordinarily regrettable. It is an important Bill; it is not a small one. That was denied because of the message sent to Wales and the other devolveds by the rejection in the Commons last night of this approach. So we need a backstop for any failure to agree, but we fail to understand that what should be a backstop has become the starting gun.

The amendments in the name of the noble and learned Lord, Lord Hope, build on the devolution settlements and would support and strengthen the union, as well as creating what we all want: a successful, growing internal market, which is in the interest of all our citizens. We are right, as my noble friend Lord Adonis said, to ask the Government very genuinely to think again about the mechanisms—because that is what we are discussing—to achieve what I think we all want.

The noble and learned Lord, Lord Hope, said that if there was a will on the Government’s part to make the common frameworks system work, a solution could be found. Along with the noble Lord, Lord Fox, we concur with that view, and we welcome the Minister’s saying that “discussions are not exhausted”—I think I have his words right. Whether we do that by recognising the framework system in some way, extending the freeze provisions when they expire or pausing market access for a period of time while the four Governments talk—as mentioned by my noble friend Lord Adonis—there is surely a way forward. But I believe we need this amendment to get the Government to continue to discuss, so that we can get that way forward. That is why we will support the noble and learned Lord, Lord Hope, when he calls for a vote shortly.

--- Later in debate ---

[The Deputy Speaker (Lord Faulkner of Worcester) (Lab)]

Does any noble Lord in the Chamber wish to speak on this amendment? If not, I call the noble Lord, Lord Fox.

[Lord Fox (LD)]

My Lords, like the noble Lord, Lord Stevenson, I will take the amendments in the opposite order to the Minister, if the House is happy with that.

The delegated powers issue has almost become a ritual in your Lordships’ House. A Bill is published and in it are many very draconian powers, which seek to change almost everything the Bill can do at the will of the Minister. There is then a report from the DPRRC which condemns it, and then there is a debate and we start to move towards a more reasonable situation. I hope, perhaps, that we can learn from this and maybe cut out a few of the steps, so that we can get to the reasonable situation. The Government have given considerable ground on this, and for that we should all be accepting and reasonable and, I suppose, grateful, although perhaps gratitude is the wrong word.

With respect to Clause 12, I think we will all be watching quite closely to see how those powers are exercised, because advice can come in many forms and we will be seeking to observe that.

The characterisation that these delegated powers are required in order for the Government to react and act with speed has been absolutely confounded by the way in which the Covid crisis has been addressed by the Government. There has been very rapid legislation and very rapid reaction. Looking forward, we have got to a better place than we were in when we started. I still do not think that we would call it perfect, but we have taken a long time to get there.

My reading of the amendment proposed by the noble Lord, Lord Stevenson, is that it is the return of Amendment 21, or at least most of it. Listening to his very reasonable presentation of the amendment and having listened to the debates on Report, I am somewhat surprised that the Government continue to dig their heels in. I can understand that the list in subsection (2) of the proposed new clause might have raised some concerns, and it can of course be subject to negotiation, but as the list now stands—with environmental standards and protection; animal welfare; consumer standards, including digital; employment rights and protections; the health and life of humans, animals or plants; the protection of public health; or equality entitlements—it seems that the Government could not possibly object to it, so I am surprised. The Minister has set out his concerns about an ordered market, but it is very clear that any market that did not observe these things would not be one that we wanted anyway.

With that response, I suggest that we will be supporting the noble Lord, Lord Stevenson, when this Motion is put to a vote. We hope that the Government will be able to have discussions with the noble Lord and others, so that next time they can come back with something much closer to what we have seen today.

[Lord Callanan (Con)]

I thank both noble Lords for a good, albeit brief, debate. To summarise, earlier I expressed my concerns about Amendment 8L and the expansive list of exclusions from the market access principles that it introduces. The list that we have included has been carefully drafted to strike what is, in our view, a measured balance. It protects the ability of the devolved Administrations and the UK Government to deliver policy, while avoiding harmful or costly barriers to trade within the UK internal market. The Bill does nothing to stop all nations working together to achieve mutual goals and build on our shared high standards.

On the delegated powers in the Bill, it is not proportionate to remove the Government’s ability to ensure that the list of exclusions and legitimate aims remains appropriate. The Government have already set out a comprehensive package of changes to the delegated powers in the Bill, including for the removal of certain powers and for reviews and reporting to Parliament, and new amendments on the role of the devolved Administrations. This provides for effective transparency and scrutiny of the remaining powers.

We believe that there is a reasonable middle ground here. Many noble Lords tabled and supported amendments to alter, but not remove, the powers in the Bill. We agree with those colleagues. These powers are necessary, and we believe that the changes we have proposed should address their concerns. I therefore hope that noble Lords will be able to support the Government’s approach to reinstating these powers in the Bill.

--- Later in debate ---

[Baroness Fox of Buckley (Non-Afl)]

I would like to remind noble Lords, especially on the Government side, that the clauses being removed were themselves argued for as a necessary legal shield for the internal integrity of the United Kingdom and its sovereignty. I am told now that the Government are content with assurances. I am not sure that many leave voters are content simply to be assured. Goodness knows, he might be surprised when I say this, but the noble Lord, Lord Adonis, made a very important point when he said that at the beginning of the week, he did not anticipate this debate. Many in the House did not expect these clauses to be removed, and now we are told to be assured; yet they were crucial clauses only last week. I therefore at least want to raise the question of trust and whether we should be expected simply to trust. It sometimes feels as though some of us have been marched up a hill and marched down it again.

[Noble Lords]

By whom?

[Baroness Fox of Buckley (Non-Afl)]

We know by whom. As an aside, I rather like a heckling atmosphere, but I would prefer it if it happened not just when I am speaking.

With absolute due respect to the noble and learned Lord, Lord Judge, who speaks so eloquently about constitutional and unconstitutional principles—I have listened very carefully to him for many years, not simply in recent weeks—I would be rather disappointed, and I think it would tarnish those principles, if it was thought that the decision was made because of the strength of feeling in this House. I would rather think that it was because the Government were satisfied by the debates, not that this House, rather unconstitutionally, might have got in the way of parliamentary sovereignty. There is a danger that some of the comments being made are self-aggrandising and self-congratulatory.

However, the main point for me—made clearly by the noble Baroness, Lady Hoey, and emphasised by the noble Lord, Lord Dodds—is that Northern Ireland is being treated separately, as a different entity. I am afraid that some seem to relish this: in many debates that I have sat through in this House, I have felt as though the 2016 referendum of the whole United Kingdom was being used as an excuse to interpret devolution as some kind of federalisation of the United Kingdom. Interestingly, even today, one noble Lord noted that 56% of Northern Ireland voted to remain in the European Union—that is of no matter, indeed no interest, if you believe in the United Kingdom.

--- Later in debate ---

[The Deputy Speaker (Lord Russell of Liverpool) (CB)]

Does any Member in the Chamber wish to speak? No? Then I call the noble Lord, Lord Fox.

[Lord Fox (LD)]

My Lords, this has been, again, a short but important debate. I thank the previous speakers and I thank the noble and learned Lord, Lord Thomas of Cwmgiedd, for his detailed proposal.

First, I will address the comprehensive and well-laid out response by the Minister on why your Lordships’ amendment has been knocked back. I will not come between the noble and learned Lord and the Minister when it comes to deciding whether it is a financial issue; I shall leave those two to have that argument. However, I will pick up on the second issue. The Minister painted a genuinely exciting picture of all this wonderful investment that will happen across the country—I am not being ironic—and I agree that there needs to be a response to what we have seen this year, and it needs to be comprehensive, co-ordinated and well organised. This cuts to the point made by the noble and learned Lord, Lord Thomas, and the noble Lord, Lord Adonis: without working with the devolved authorities, the efficiency and the effectiveness of any investment are massively undermined. Leaving aside the devolution issue for now, the efficiency issue raised by the noble and learned Lord, Lord Thomas, is absolutely called into question here. The measures from the noble and learned Lord in Motion K1 bring the devolved authorities back into this process. It recognises the importance of the devolved settlement, as set out by the noble Lord, Lord Adonis, and makes sure that this investment, which will be so important to the future prosperity of this country—if indeed there is enough of it and it is delivered properly—can be made efficiently and in keeping with the needs of the people of that particular country.

As someone who comes from Herefordshire, which is a far-flung part of England, I wish that we had similar regional structures in England, whereby the same level of consultation that should be coming through this amendment could also be offered to the regions of England. While some parts of England have unitary mayors and some parts have negotiations directly with Government, places such as Herefordshire that are in as much need as some of the worst-affected places across the United Kingdom, do not have the benefit of that access. This is not the place, but going forward, I ask that when these proposals are brought, an approach towards the English regions that the Government have towards the devolved authorities would be appreciated.

With that, we look forward to supporting the noble and learned Lord, Lord Thomas, when he presses this.

[Lord Stevenson of Balmacara (Lab) [V]]

My Lords, I thank the Minister for her clear and concise introduction to this topic. Although she said she was relying primarily on the Commons argument that this issue engages financial privilege, she recognised there were other issues going on, and it was good of her to take the argument a bit further. We are, as the noble Lord, Lord Fox, has also said, completely cognisant of the restrictions placed on the House due to financial privilege being engaged. The noble and learned Lord, Lord Thomas, made a compelling case about the wider issues, and it is important to have those on the record. I will add to the list of points he made.

The Government clearly assert—and we believe them —that these will be additional to existing powers, and we should not be concerned, as we have been, that the devolved Administrations will have their responsibilities and authority challenged in this way. The Minister said that the driving force behind the shared prosperity fund is to add and complement existing arrangements. If she wishes to repeat it when she winds up, that would be helpful. In that sense, there should be no need for the concern that is currently in the devolved Administrations about that particular aspect of it. We do not have the detail, and I think she said the likely outcome for their consultation would not be before spring 2021, which seems a long way away in terms of what we are doing. We accept that existing programmes are currently running out—but they are running out; they are not being continued at the same level and, therefore, there will be a shortfall unless the Government are prepared to move a bit faster than the current timescale suggests.

The Minister also confirmed—and this is good news —that there will be engagement with the devolved Administrations. When she responds, perhaps she could explain a bit more about what that means. We have already heard from the Government today about programmes of engagement that have involved substantial change in previous views; it would be good to hear that language repeated when she talks about how the devolved Administrations might be engaged with this process.

The Minister has confirmed there will be some form of shared prosperity fund board, which is interesting. She may recall that at the previous stage of this Bill, we proposed a shared prosperity commissioner. I said at the time, and I still think, that that was code for a board, because we were trying not to engage financial privilege. We have clearly failed in that. Can she confirm the board will be independent and say more about the powers that might be invested in that board? Can she also talk a bit more about whether the programme itself, when it is brought forward, will be subject to guidelines? Will those be published and discussed before they are invented? Will there be themes to it, as there have been in previous rounds of the regional structural funds? Will the funds be competitive and open to all countries to bid for? Can she confirm, most importantly, that the plan will be for the funds under the shared prosperity fund to be separate from any Barnett formula calculations? That is not in the sense of making people not eligible for funding—that is not what we are about here—but a needs-based or different set of indicators to set out the ideas under which the shared prosperity fund will operate. I look forward to hearing her response.

--- Later in debate ---

[The Deputy Speaker (Lord Russell of Liverpool) (CB)]

I have received a request to ask a short question of elucidation from the noble Lord, Lord Fox.

[Lord Fox (LD)]

The Minister will be aware that the current structural fund does not reach many regions across the United Kingdom, compared, I think, to the planned extent of the new shared prosperity fund. Can the Minister confirm whether that is true? If it is, and the money put into the shared prosperity fund is only—I use the word advisedly—as much as that put into the structural fund, it will be spread more widely. There will be losers among those who have been able to take advantage of the structural fund, because the money they would bid for will be spread to other regions and countries. Will the Minister acknowledge that? Is that perhaps one reason that the Government are rather reluctant to allow the devolved authorities any more involvement in this, because they know there will be issues around losing out on money that would have come through the structural fund but is now to be spread more widely across the United Kingdom?

--- Later in debate ---

[The Deputy Speaker (Lord Faulkner of Worcester) (Lab)]

Does any other noble Lord in the Chamber wish to speak? No noble Lord does, so I call the noble Lord, Lord Fox.

[Lord Fox (LD)]

My Lords, as the Minister set out, this group relates to state aid, the Competition and Markets Authority and the office for the internal market. At Report, your Lordships removed a clause that changed the devolution statutes to specify that state aid powers are a matter exclusively for the UK Government. This was overturned in the Commons. Notwithstanding that, the Government have come back with the proposals set out by the Minister, which are welcome. My noble friend Lady Bowles set out where they have come from and should be congratulated for her work on this Bill.

Notwithstanding that, the noble Baroness, Lady Finlay, has tabled Motion L1, which would enable the devolved Administrations to appoint people to the CMA board. The Minister has stressed that the OIM, while being within the CMA, will be independently governed. One of the reasons for not allowing previous amendments was a financial rule. This indicates clearly that the CMA will be holding the OIM’s purse strings. In that respect, culture is one thing, but budget is something completely different. We have heard from the noble Baroness, Lady Neville-Rolfe, and from my noble friend Lady Bowles, and as I have said, we remain extremely concerned about the culture and role of the OIM. The Minister again stressed the technical expertise in the CMA, but the OIM is being asked to do something that is essentially different from the CMA. Frankly, this technical expertise, if deployed in the way the Minister hopes, is the problem we are warning the Government about. That accepted, one of the small ways of dealing with this issue is to support the amendment from the noble Baroness, Lady Finlay, and to make sure that there is at least some board-level representation from the devolved authorities.

Motion L2, from the noble and learned Lord, Lord Thomas, would insert a new provision relating to Clause 50, on state aid. As the Minister has acknowledged, it would create a common framework process whereby state aid is managed.

The noble Lord, Lord Liddle, and others have talked about the message all this sends to the devolved authorities, at a time of great fragility and change. To set this up in this way sends a bad and dangerous message to the devolved authorities. The noble and learned Lord, Lord Thomas, set out a reasonable response—a reasonable way of involving the devolved authorities centrally in the process of delivering the structures and frameworks for, and areas of, state aid. To simply consult with the devolved authorities on draft and not go back on the final decision is a little derisory, to say the least. The Government need to understand the message they are sending—a message clearly articulated in the Senedd vote today.

We are pleased that the noble and learned Lord, Lord Thomas, is going to test the mood of the House regarding his Motion, and we will support it when he does.

[Lord Stevenson of Balmacara (Lab) [V]]

My Lords, this has been an interesting debate, covering a wide range of issues previously discussed in Committee and on Report. I will not go through them in detail but I will say three important things. First, I welcome the Government’s movement on the matters raised in the Minister’s opening address on the OIM: its membership, the review within three to five years of the potential location of the OIM, and the firm commitment to ensuring that the DAs are consulted and their views fed in to this report. That was not as much as we wanted, but it is certainly a positive step forward that we welcome at this stage.

United Kingdom Internal Market Bill

Lord Fox Excerpts

Consideration of Commons amendments
Monday 14th December 2020 Lords Chamber

[Lord Fox (LD)]

My Lords, I thank the Minister for clearly setting out his objections to the last set of amendments. In his closing words he said that the Government view the common frameworks process as complementary to the market access principles. Listening to the noble and learned Lord, Lord Hope, it was very clear that there is a discontinuity—a lack of complementariness—between the two positions. As the noble and learned Lord set out, a central feature of the framework agreement is to come to an agreed process for divergence between the four nations, within which the UK has a major role. That divergence is killed off by the automatic nature of the market access principles. That is the central point that the noble and learned Lord’s amendments address. In doing so, the new versions of the amendments have taken on board the comments that have come back from the other place, having recognised the level of uncertainty that could have been injected by a previous proposed new clause, which has now been removed. The amendments adopt the regulations within the Bill to facilitate that decision, so that it is consistent with the way that the Bill seeks to operate, but also consistent with the principles of devolution that have served this country so well to date.

[Baroness Hayter of Kentish Town (Lab)]

My Lords, perhaps we need to remember why we are here. It is really quite simple. When the case for Brexit was all about “taking back control”, we failed to understand that the Government meant taking control to themselves, even over issues that were fully devolved. However, when the Bill was published—without any involvement from the devolved authorities, remember—we soon discovered that it ran roughshod over devolved competences, as the noble Lord, Lord Fox, said, trumping the common frameworks programme.

I have often wondered whether this was deliberate or an oversight, though the lack of prior consultation suggests the former. However, that makes the statement on the publication of the Bill, on 9 September, signed by the Scottish Secretary but not the Welsh Secretary, and by Mr Sharma and Mr Gove, a bit strange in the light of this Bill. It says that the devolved Administrations will enjoy a “power surge” when the transition period ends.

Let us take that at face value. Perhaps the particular construction of the Bill was clumsy—as an oversight rather than deliberate—and perhaps it is right that the Government did not intend to bring back to themselves all the powers long devolved to the other three authorities, but in that case the amendments tabled by the noble and learned Lord, Lord Hope, would rectify the problem. They would simply restrict the market access powers in the Bill, which of course are only about devolved competences, to those where the four-party process failed to reach agreement.

As the Government are one of those four parties, they will be in a very strong position to revert to the Bill, and to Parliament, for the powers they feel are vital for an internal market on areas where disagreement cannot be overcome. That seems, to this side of the House, a simple, clean solution. It would hard-wire in a common frameworks process which the Government themselves described last week in the latest of their three-monthly reports on the frameworks—reports which, I think, we added to Schedule 3 to the EU withdrawal Bill as a requirement for the Government to publish—as

“an agreed approach to ensuring regulatory coherence”

in devolved areas. That is absolutely spot on—coherence, not uniformity—and that is probably where we are trying to get to. The problem is that, as written, the Bill adopts “uniformity”.

The same document, which has just been published, despite having talked about coherence, then asserts:

“Common Frameworks cannot guarantee the integrity of the entire UK Internal Market.”


However, the document does not provide any evidence of why the frameworks will not work. It gives no examples of where, within devolved competences, any agreements might not work. Indeed, the Minister, in introducing the debate, again asserted that it would have to be for Parliament alone to decide when the market access rules would not be used, but he did not explain why the four-party process would not be able to deal with that and why they would come to Parliament only when there was a failure to agree. The same document notes the “freezing power” contained in the withdrawal Act, and it also notes that it has never needed to be used, but it fails to suggest where it might be needed.

Therefore, in the Bill the Government are saying that on the one hand the frameworks are very good and have been able to produce coherence but, on the other hand, the Bill allows the market access principles to trump that process, even if it produces agreement.

We have it said before and I say it again: we on this side of the House want an internal market which thrives and serves the needs of business, the professions, consumers and the environment, but it has to be one that respects rather than dismantles devolution. These amendments seem to us to offer the path to achieve that, so we will support the noble and learned Lord when, as I am sure he will do, he asks the House to vote. I hope that in the light of that vote we can, as the Minister suggested, continue the dialogue so that we can reach an agreed position that would safeguard all that has been going on with the devolution settlements and the common frameworks process but, in the last analysis, would of course come back here.

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[Lord Fox (LD)]

My Lords, I welcome the noble Baroness, Lady Bennett, back to her seat—just in time for tier 3 to arrive. We have again had a short debate. As we have seen the evolution of this argument—in the amendment’s approach to common frameworks it is, in a sense, the yin to the yang of the noble and learned Lord, Lord Hope—we are now looking at a different way of trying to ensure that diversity can survive under the automation of the market access measures.

In the past, the Minister has brought to bear the Government’s disapproval of the breadth of the exclusions that previous versions of this amendment made. As the noble Baroness, Lady Bennett, pointed out, many of those have now dropped off. So, in a sense, the Government have already pushed this to a narrower set of exclusions. The Minister highlighted his uncertainty around the word “proportionate”. Of course, none of us would want to do something disproportionate, but I cannot help thinking that the Government, in all their wisdom and with all their clever legal people, could come up with a frame of words that will prevent hideous problems developing in the courts—so I cannot help thinking that that is something of a red herring.

As the noble Lord, Lord Stevenson, said, this is getting more modest than was previously attempted, but it still has the overriding aim of dealing with the problem which keeps coming up throughout this debate. The Minister has magnanimously said that the devolved authorities are perfectly at liberty to develop new and innovative ways of doing things—so far, so good—and then, of course, the market access principles mean that those innovations will get undercut if someone else in the British Isles is doing it differently. I do not understand how the Minister can keep linking those two sentences without seeing that the one excludes the other. If it does not do it in governmental terms, it will do it in the courts. This will be a creature of the courts, because there will be businesses that will be going at a legal opportunity to get their products into devolved authorities that have sought to raise standards, as they see it.

The issue of minimum-unit alcohol pricing often comes up, and it is quite clear that this legislation will not affect that at all. We are all in agreement there. But if we were seeking to bring that in once this legislation was in place, what chance would it have of surviving the courts? That is why we will support this amendment.

[Lord Callanan (Con)]

I thank everybody who has contributed to what has been a very good, albeit brief, debate. I have listened very carefully to the points that have been raised, and I will respond directly to the points of the noble Lords, Lord Stevenson and Lord Fox. Innovative policy-making relating to public health and the environment will be fully possible under the Bill, within the clearly defined market access principles. Schedule 1 sets out a clear exclusion process for:

“Threats to human, animal or plant health”.


There are also several other exclusions relating to the environment and public health: chemicals and pesticides, for example. All of these are drafted tightly to strike the right balance between these objectives and the integrity of the market.

It is also essential to remember that neither of the market access principles affects the devolved Administrations’ abilities to uphold and enforce rules governing how consumers use goods. Neither would they prevent reasonable “manner of sale” restrictions, as long as they are not discriminatory. If an Administration wanted to introduce minimum alcohol pricing or the plastic bag charges, they are fully able to do so and can use them to fulfil environmental or public health aims in future; the principles would not be an obstacle to that, as long as those rules do not discriminate. I say to the noble Baroness, Lady Bennett, that she is wrong: if a future devolved Administration wanted to introduce the plastic bag charges, they would be able to do so under these market access principles, as long as they were non-discriminatory.

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[The Deputy Speaker (Lord McNicol of West Kilbride) (Lab)]

Does anyone else in the Chamber wish to speak?

[Lord Fox (LD)]

There is almost no one left in the Chamber who has not spoken. This has been an interesting debate and, no doubt, the Minister is carrying away lots of advice from some of the Benches. I thank the noble Lords, Lord Adonis and Lord Liddle, for their passion. If that passion is matched by votes in the event that the noble and learned Lord, Lord Thomas, decides to ignore the advice of the noble Baroness, Lady Noakes, and press this to a vote, I will have more excitement because otherwise, it is merely a rhetorical gesture.

The noble and learned Lord set out his view on devolution. It is quite clear, as was set out a number of occasions, that in the structural fund process, which this will herald the replacement for, the devolved authorities were in the driving seat of deciding where and on what the money was spent. It is not clear from anything the Minister said today, or in answer to questions last time, that the Government will not seek to impose things on the devolved authorities. The Minister said there would be governance structures; it would be interesting to hear how those governance structures will be introduced and what the Government envisage. In other words, do central Government have the veto in deciding what goes where? In the end, that is the difference between this being genuinely consultative and, as we have heard described around the House, a Westminster-knows-best process. Consultation is fine but only if it is adhered to.

My final point on the quantum of money and its distribution comes back to a question I asked earlier. I think the Minister said that the amount of money envisaged to go into the shared prosperity fund is equivalent to that which came through the structural fund. The Minister also indicated a much broader remit for spreading that money around than was the practical reality of the structural fund. How will the Government manage the process of certain areas that have been particularly well funded through the structural fund, such as Cornwall and Wales, getting less money if there is no increase in funds and they are spread more widely? Furthermore, the European Union distributed that money using classifications of need, so how will the UK Government develop those? Do the Government envisage that they will be different, and can they undertake that they are transparent?

In conclusion, if the noble and learned Lord, Lord Thomas, decides to call a vote, we on these Benches would support it, but there are a lot of questions we would be grateful if the Minister could answer.

[Lord Stevenson of Balmacara (Lab) [V]]

My Lords—[Inaudible]—on earlier discussions around this issue and the issue that will come up in the next group of amendments on state aid and spending as a result of moneys which may be available to support that. We should pause and take note of the fact that the noble and learned Lord, Lord Thomas, has engaged with this issue again despite the view taken in the other place that it is a financial privilege. The noble Baroness, Lady Noakes, is right in saying we are in a difficult area. I am not sure how the comments from the noble and learned Lord, Lord Thomas, will take him forward. He certainly has a point, but I do not think this is the right amendment or place to explore it. It needs a wider perspective. Many of these issues date from time immemorial; it is important to respect them and understand where they come from, but they should not block debate and discussion on key issues.

The issue the noble and learned Lord is raising, which has also been picked up the Minister, is how, in the future, possibly using statecraft—whatever that is—we will manage spending in the devolved areas, which are not reserved, when the funding mechanisms are different and have to be adapted to meet current arrangements. There are issues that will need to be addressed in the future, but we covered a lot of ground in earlier debates, and I thought the points made by the Minister on the shared prosperity fund were sufficient to ensure that we do not need to go back over this again. It is not our view, as Her Majesty’s loyal Opposition, that we need to divide the House on this issue again.

If the issue is common between us, we need to understand where we can get to in respect of comments made from the Dispatch Box. The noble and learned Lord, Lord Thomas, made a number of good points and asked a number of questions, and I am sure the Minister will respond to them. I do not think the points added by my noble friends Lord Adonis and Lord Liddle vitiate that approach; they made a good case that we will need more in this area in the future, but this is not the right amendment to take us down that route.

--- Later in debate ---

Therefore, big, centrally important constitutional principles are at stake here, and I will strongly support both the noble Baronesses, Lady Finlay and Lady Bowles, if they press their amendments to a vote. It is very important that noble Lords are on the record as to their position when it comes to defending and taking forward the devolution settlement in our United Kingdom.

[Lord Fox (LD)]

My Lords, I can assure the noble Lord, Lord Adonis, that we on these Benches are not keen to hustle this through; we are keen to see one or other of these amendments put back so that we can continue to have the discussions in this area that we need.

I shall speak briefly to both amendments, starting with Amendment 50F, as put forward by my noble friend Lady Bowles. The Minister said that the amendment limited Parliament’s scope. Au contraire, it would make sure that Parliament was in the driving seat of any significant changes. State aid is clearly important—so important that the Government are prepared to crash the entire economy to maintain control of it. If state aid is so important, Parliament and not Ministers or the Secretary of State should be in the driving seat. That, briefly, is what my noble friend Lady Bowles’s amendment seeks.

On Amendment 50E, in the name of the noble Baroness, Lady Finlay, even through the attenuation of the virtual system, her passion for and understanding of devolution, her understanding of the union and the threat she sees posed to it by the overall communication atmosphere created by this Bill and other things—a view which many of us share—rang through her speech. It is clear that, without co-creation, as she called it, that threat to the union remains strong. The Minister should heed the noble Baroness and, whether or not she presses her amendment, look at ways of genuinely bringing on board the devolved authorities so that there is shared ownership of this important process. If either proposer presses their amendment, we will support them.

United Kingdom Internal Market Bill

Lord Fox Excerpts

Consideration of Commons amendments
Tuesday 15th December 2020 Lords Chamber

[Lord Stevenson of Balmacara (Lab) [V]]

My Lords, a stranger to our Parliament would find this whole ping-pong process completely bizarre and almost impossible to follow. I have some sympathy, as this is my first time going right through ping-pong from beginning to end, even though I have been in the House for over 10 years. However, the Motion paper before us today, which I think has reached everybody, although superficially complex, tells the story rather well—over eight pages, it must be said.

In essence, we are where we are because we took the view that the internal market Bill as originally drafted was unbalanced between market access principles, which we felt might provoke a race to the bottom on standards, and the managed but limited divergence of standards which we thought would naturally flow from the wish of the devolved Administrations to reflect the views of those who elected them and the particular circumstances, as the Minister says, of their areas. We wanted to make sure that market access principles do not always trump the common frameworks process. We believe that that process has many benefits to offer in building coherence and a feeling of engagement with the UK internal market.

We made that position clear to the Ministers involved in this Bill in our first meeting. Motion A tells the story of the progress in recent weeks. As the Minister said, the meetings were often robust. That is not to be regretted because it is only through real engagement with some of the deeper issues raised by Bills that you can understand the positions of the two sides and make progress, where it is clear one has to compromise one way or another. There were, as the Minister said, many meetings and exchanges of drafts. It is fair to say that when Bills involve many departments—in this case, three separate departments—it is difficult to work across them and sometimes it is hard to manage meetings that necessarily involve 20 or even 30 advisers and others, who need to be involved in developing the thinking behind them.

To cut a reasonably long story short, the meeting that unblocked the situation took place last week, when the noble and learned Lord, Lord Hope, found the key by building a dialogue with Ministers on where and in what form the changes he wanted to see, which we supported, could be made, and in such a way that the issues raised by those responsible for the original drafting would not be sacrificed.

I would like to thank the Ministers—in particular, Chloe Smith, Martin Callanan and Nick True—for sticking the course with us. It would have been easy for them to stamp their feet and say, “Get lost; we have a majority of 80 and we’re going to see this through”, but they did not. I think they sensed there was an issue that needed to be bottomed out for the good of the country as a whole, and I admire them for that.

A special mention needs to be made of the noble and learned Lord, Lord Hope. He is the last person who would want to be singled out for praise, but we would not be where we are today had he not spotted an issue he wanted to address early on, and used his skill and experience in drafting and interpreting the law to pick away at the issues and come up with a solution. He said in his last speech to your Lordships’ House on this issue that it was a bit like unwrapping a Christmas present overenthusiastically wrapped with lots of paper that concealed a rather small present. I said to him that he should have extended the metaphor and said that good things come in small packages. He felt that that was not the way to go, but I will use it now, because it gets to the point of what I am saying.

What the noble and learned Lord has drafted and we and the Minister have accepted is a very small change to the Bill as originally drafted. But it is really important, because it restores the balance that we feared was lost without giving undue prominence or unbalancing the general principles underlying the Bill. It respects how we do things in this country, and the devolution settlement in particular. The noble and learned Lord, Lord Hope, should accept the plaudits offered to him for having the idea in the first place, seeing it through and finding the key that unlocked the differences between us. The differences were real and important, and we have resolved them. I am very grateful to the Minister for what he said today. It has been a good process, and I recommend accepting the measure; we hope it will work well in practice.

[Lord Fox (LD)]

My Lords, I will not go through the same list of people to thank as the noble Lord, Lord Stevenson, and the Minister did. I just want to add my thanks and express my admiration for the dogged wisdom of the noble and learned Lord, Lord Hope, in getting us to this point.

Never knowingly unchurlish, I would say that this Bill is not the direction we would have chosen to go in—that is a fact—but, over the course of the past five weeks, I have become absolutely convinced that, thanks to the dialogue between all the parties involved, this Bill has been improved substantially. The illegality was taken out, of course, but the sensitivity toward the devolution settlements, which was not there to start with, has been gradually installed, piece by piece. To get there, we have talked of Welsh coal. We have talked of Scottish teachers. We have talked of drinking straws and Scotch whisky, and of many other examples.

In our thoughtful debate, we have heard from people—including Members on these Benches—who care passionately about the union and felt that things had to happen to this Bill. It is with great pleasure that I can say that many of those things have happened; we are in a much better place and, clearly, look forward to hearing what the devolved authorities have to say.

If I have one reservation, it is about the mechanics of how this market will work and how the office for the internal market will sit alongside the CMA going forward. Clearly, that story may well run but, as the Minister set out, the OIM will have a pivotal role in monitoring how this market runs and in informing the process. How that is configured, who is in it and what its process are will, in the end, be the measure of how successful, smooth and, frankly, unfettered this internal market ends up being.

With those words, I again thank the Minister and his colleagues, and give a special mention to the Bill team, which has also worked relentlessly on this. We look forward to sending the Bill away from this place unmolested by any further amendments.

[Baroness Hayter of Kentish Town (Lab)]

I also welcome the Motion moved by the noble Lord, Lord Callanan.

We are delighted that the Government have responded to the repeated and really quite strongly supported urgings from this House to hardwire, if you like, the common frameworks process into the Bill. After all, as we have heard, the Bill was introduced to deal with powers returning from the EU—powers that are devolved but might need to be used in ways that would not interfere with the development of our own UK single market.

Indeed, it was for that reason that the common frameworks process was established in 2017. The Government are about to write into the Bill—in a few moments’ time, when we will vote for it—that, in cases where a particular divergence in a market area is agreed under the common framework, such an agreement can be exempted from the market access principles. This recognises in law that uniformity is not always necessary in an internal market, allowing some divergence and differences to suit the particular circumstances of parts of our union.

Furthermore, as has been said, a review will take place to judge how that interplay between the framework and the market access principles is working in this new internal market. We hope that this review will show that a consensual approach to these issues works well with the wider aim of achieving a successful internal market. However, as the noble Lord, Lord Fox, said, it will also be interesting to see whether the review looks at how this works with the CMA and the OIM. We all have a lot to learn on this.

The Motion means that the frameworks are included in the Bill, which was lacking at the beginning. I thank Ministers for finding a route forward. I think they sometimes have to break more arms on their side than on ours—though they would know more about that than we do. We join them tonight in confirming the recognition of the devolved settlements and our wish to strengthen both devolution and the future of the union. We see those two aims as entirely compatible and I think they do too.

As we close this chapter of our adjustment to the post-Brexit situation, we also thank the Ministers for their other amendments, to ensure that the OIM appointments and most regulations are agreed with the devolved authorities. I think the Minister had a hand in the recognition of my particular pet project of recognising the importance of the internal market working for computers—sorry, consumers; too much time on Zoom. I do thank him personally; I know he had more than a little hand in that.

I thank all concerned. The Bill team have worked wonders. All those who have voted have enabled us to push on this. I thank the magnificent Lords clerks who have worked against the clock and conflicting interests to get this done, our colleague Dan Harris, my noble and learned friend Lord Falconer and my noble friend Lord Stevenson, who has led us on the Bill so well. I also thank our very special Leader, who gets us all here, my noble friend Lady Smith of Basildon. For the moment, let us put this Bill to bed.