United Kingdom Internal Market Bill

Lord German Excerpts

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

[Lord German (LD)]

My Lords, I have added my name to Amendment 21 to which the noble Baroness, Lady Finlay, has spoken. It seems to me that the clarification that the amendment is seeking is to understand whether, where a statutory regulation, rule or law is passed in a devolved Administration, that would exist until such time as the UK Government decided something different. Whether or not that is the intention of the Government, I do not understand.

The difficulty that I face in trying to work out the logical progression and the sequencing of what is happening in this Bill is correlated with the issue that we had on the common frameworks. It seems to me that the Government are moving down a dual carriageway in which one road is the internal market Bill and the other is the common frameworks progression, and between them is a brick wall. I do not understand how you can cross over between one and the other. That is the understanding that I got from the discussion we had in the earlier days in Committee.

The problem is that by the end of this year—I will use this as an example, which I would like the Minister to respond to at the end, if he would—the framework on emissions trading, which is a legislative framework, will be completed. I understand that it is with Ministers for final sign-off, but it has been agreed. If that emissions trading legislative framework is agreed, presumably there will then be legislation. I would like to understand where that legislation fits within the context of this Bill. Clearly, that has been reached by agreement—it has been agreed by all parts, including the United Kingdom Government, that there will be a legislative approach to this particular area of work. Then, of course, there will be a piece of legislation that sits either within this Bill or without it. I would like to know where that legislation will occur: will it be stand-alone legislation or will it be an amendment to the Bill we are discussing today?

There are two other frameworks—one on nutrition and one on hazardous substances—that are also virtually complete. They are non-legislative, and I understand that they will be agreed by Christmas. Take those three areas: on one side we have a legislative proposal and on the other we have a non-legislative proposal that the Government have agreed will be a non-legislative proposal and will therefore not require other legislation. And it will not require this legislation, because that is what the Government have agreed. Perhaps the Government could explain how the two are interconnected.

I understand that the reason for turning down a frameworks-only approach is because there are gaps, but we are yet to find out what the Government have established is a gap. We have asked for a current example that we can use, and I hope that, over the past few days, the Minister has found a current example that he can give us.

It seems to me that the fundamental principle that Amendment 21 is trying to establish absolutely is that, where there has been a legislative agreement or legislation that has been passed by either Wales, Scotland or Northern Ireland, when the Government introduce new legislation or regulations on the back of this legislation, such legislation will look only at the future and not the past and will have no retrospective effect.

[Baroness Noakes (Con)]

My Lords, I would like to remind the Committee of two things about this Bill. First, the Bill is to facilitate trade between all parts of the United Kingdom, not make it harder. Secondly, businesses favour barrier-free trade. That was the very clear message that came from the consultation on the White Paper during the summer. We should be trying to minimise the possibility of barriers being put up to trade within the United Kingdom.

If we allow exclusions of goods from mutual recognition, that will inevitably lead to higher costs. This is analysed in quite considerable detail in the internal market White Paper. Costs generally end up being borne by consumers. Excluding goods can also result in businesses deciding to withdraw from certain markets, which can in turn restrict consumer choice. I know the noble Baroness, Lady Hayter, is keen on consumer protection; she reminded us of that on the first day of Committee. Restricting trade tends to operate against consumer interests, so we should be very careful in trying to put amendments to the Bill that make trade more difficult. I also remind noble Lords that restricting trade is more likely to hit the devolved Administrations’ economies because of their greater dependence on exporting to the rest of the United Kingdom.

I want to comment on a couple of the amendments in this group, Amendments 7 and 8. The noble Baroness, Lady Hayter, said that Amendment 7 was a probing amendment, but by seeking to exclude imports into any part of the United Kingdom we are reducing the internal market rules to a very parochial interpretation. It seems to ignore the plain fact of commercial life, which is that there are complex supply chains and complex distribution logistics. It is of course the way we have been living in the EU; at the moment, we are quite accustomed to importing in one place and those imports being accepted throughout the rest of the community.

It also seems to me that the noble Baroness’s amendment would, in effect, impact exports between different parts of the United Kingdom. For example, if something was exported to Wales and imported to England, it would stop it then being imported into Scotland with the protection of the internal market Bill. That does not seem to make any kind of sense. It is pretty clear from the impact assessment that Wales and Scotland in particular are reliant on intermediate goods coming from other parts of the United Kingdom.

The noble Lord, Lord Rooker, spoke to Amendment 8. I did not follow what he said about pig semen because I do not think that, by any definition, pig semen is an animal feedstuff. I did have a chance to check the definition of “animal feedstuff” while he was speaking, and it is not. Perhaps we can put that to one side. We have to understand that if we try to exclude food and animal feedstuffs from the UK internal market mutual recognition rules, this will again potentially impact the devolved Administrations the most, given their import and export profiles. For example, if you look at Wales’s agri-food chain, you will see that 48% of agricultural inputs to Welsh food manufacturers come from the rest of the UK and 31% of food and drink sold in Wales comes from the rest of the UK. We should be thinking really hard about who we are likely to hurt when we put amendments such as this in the Bill, which restrict barrier-free trade.

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Moved by

[Lord German]

15: Clause 3, page 3, line 30, leave out “consult” and insert “obtain the consent of”
Member’s explanatory statement
This amendment requires the Secretary of State to obtain the consent of the devolved administrations before making regulations amending Clause 3(3), which specifies the types of statutory requirement that are within the scope of the mutual recognition principle.

[Lord German (LD)]

My Lords, the noble Baroness, Lady Finlay, is detained in another part of your Lordships’ House. I will move Amendment 15 and speak to Amendments 30 and 64 in this group, which attempt to place one limitation on the extraordinary and extensive Henry VIII powers that we were talking about in the last group: namely, they require the consent of the devolved Administrations to using those powers. Amendments 15 and 30 would impose this requirement in relation to Ministers’ power to remove or, more worryingly, add to the statutory requirements that are

“within the scope of the mutual recognition principle”

and “the non-discrimination principle”, respectively. Amendment 64 would require devolved consent for any guidance issued in respect of Part 1.

I must say that I am very attracted to the amendments tabled by my noble friend Lord Fox, which would simply strike out the Henry VIII powers in Clauses 3 and 6. As your Lordships will know, these have been strongly condemned by the Delegated Powers and Regulatory Reform Committee—a matter to which I will return later.

Without amendments such as these, it would be possible for the Government to strip back still further the very limited exemptions that these clauses provide for, which are far more limited than is currently the case with EU law, where the principles of subsidiarity and proportionality apply alongside far broader public policy exemptions. I remind your Lordships and the Government that they are working on the basis of principles that they repeated last month and established in October 2017—that they would move forward under

“established conventions and practices, including that the competence of the devolved institutions will not normally be adjusted without their consent”.

Those words, “without their consent”, represent a principle to which the Government have signed up. That is why the amendments of the noble Baronesses, Lady Hayter and Lady McIntosh, seek to engage with the devolved Administrations but do not require the Government to achieve their consent.

Obviously, either amendment would be preferable to the current problem, but the issue is that it would be easy for the Government to demonstrate that they had sought the consent of the devolved Administrations on a wholly unreasonable proposal, and the fact that it had not been forthcoming would have no relevance at all. Therefore, the Government could report that they had consulted the devolved Administrations and tick the box required without even attempting to address their concerns.

I return to the issue of secondary legislation; that is the source of these amendments because the powers are so sweeping and there is no restriction on, or knowledge of, what they will deal with. As noble Lords may be aware, three committees of your Lordships’ House have expressed concern about these matters. The Delegated Powers and Regulatory Reform Committee, the Secondary Legislation Scrutiny Committee and the Constitution Committee all wrote to the Lord President of the Council, the Leader of the House of Commons, who has government responsibility for the way in which delegated powers are used.

In Jacob Rees-Mogg’s reply of 19 October, he said:

“I agree that Bills with substantial powers, though sometimes essential, should not be a tool to cover imperfect policy development. As a Government, we must have a clear direction and be able to explain to both Parliament and our constituents how we are fulfilling the promises of our manifesto. I can see that extensive use of delegated powers can hinder rather than help us in that. Therefore, I am happy to consider issuing communications to Secretaries of State on this matter, encouraging them to minimise the use of delegated powers where possible”.


I ask the Minister: has the Lord President of the Council, the Leader of the House of Commons, consulted him on the matters that he is putting before us today? If so, will he heed that warning from Jacob Rees-Mogg?

The other matter that concerns me, which my noble friend Lord Purvis talked about, is the extent to which the powers can be used in a variety of ways. I reflect on the environmental aspects, which the noble Lord, Lord Callanan, just talked about, in relation to the recycling of materials, which is one of the issues on which the Government may wish to introduce regulations. The reason for that might well be that they have a concern about the environment, such as the nature of plastic film or single-use plastics; they might want to introduce those requirements.

However, it could go the other way and make the problem worse. For example, you might stop a devolved authority banning the use of plastic spoons or using plastic film on fresh food. The Government have admitted that they want to carry through all those health and environmental considerations by saying that they are looking at the recycling of materials as something that it might touch in the future.

Therefore, it seems to me that we have grave concerns about the way changes in these areas will be implemented. If we follow the advice of Jacob Rees-Mogg, then, certainly, we would not seek these powers in this Bill at this time because they do not include the policy intent that is to be provided. In these amendments, we can ensure that the consent of the devolved Administrations is given and that we can address and seek their approval, but it would be far better if we did not have these delegated powers at all.

[Lord Hope of Craighead (CB) [V]]

My Lords, as the noble Lord, Lord German, just said, it would be far better if we did not have these provisions in the Bill at all, but one must assume that they may remain. That is why these amendments, particularly Amendments 15 and 30, to which I have added my name, address the provision which talks about consultation but does not mention the word “consent”.

I have two requests for the Minister; I will not elaborate further on what the noble Lord, Lord German, said in his very helpful introduction to this group. First, would he be good enough to repeat, in the context to which these amendments refer, the assurance he has already given that the Sewel convention principles will be applied without any hesitation in regard to consultation?

Secondly, will the Minister consider whether it would not be wise, in view of the importance of the clauses in which these provisions appear, to adopt the system used, he will recall, in the European Union (Withdrawal) Act 2018 when considering the system of seeking the consent of the devolved Administrations—Assemblies, Senates and Parliaments—to the modification of EU law? He may recall that Ministers were given power to restrict the powers of the devolved Administrations to modify EU law in certain respects by delegated legislation. Provided for in Part 1 of Schedule 3 was a system whereby the Parliaments, Senate and Assembly were given an opportunity to provide consent. The wording in the Scotland provision was:

“A Minister of the Crown must not lay for approval before each House of the Parliament of the United Kingdom a draft of a statutory instrument containing”


the relevant

“regulations … unless … the Scottish Parliament has made a consent decision in relation to the laying of the draft, or … the 40 day period has ended without the Parliament having made such a decision.”


If it came to the point of there being no consent, when the Minister of the Crown laid this draft, as mentioned, before either House, he would be required to explain his decision to lay it without the consent of the Parliament.

That system was arrived at after a great deal of discussion in the 2018 Act; it is quite a useful one that might well be thought appropriate in this case to reduce the element of dismay which the devolved Administrations are feeling about how they are being treated by these provisions—all that has been provided for is consultation. They would at least have an opportunity in their legislatures to consider whether consent should be given. Of course, if they fail to give it within 40 days, ultimately the Minister can go ahead, provided he explains why he is doing so. There is no amendment to this effect, but this is an opportunity for the noble Lord to consider whether it would not be wise to soften the blow that has been felt by the devolved Administrations by adopting that system, which was so carefully worked out and eventually accepted in the 2018 Act.

Beyond that, I support everything the noble Lord, Lord German, has said in support of the amendments to which he has spoken.

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In reiterating the Government’s intent to engage in the most positive manner with the devolved Administrations going forward—as well as their sense of duty to maintain the smoothly operating status quo in our internal market—I hope that I have addressed the concerns expressed through these amendments. I ask the noble Lord to withdraw Amendment 15.

[Lord German (LD)]

This has been a very thoughtful debate. I think that it has got to the heart of the problem, which is how the UK Government regard the whole devolution settlement and the way that the United Kingdom currently operates.

I think the mood of the Committee is that we want to get a sense of moving together to sustain and develop our union. In that sense, we require consent, because consent is what eventually drives these matters forward. I pray in aid of the view of the CBI. It is often said in this Chamber, “Business needs to have this. Business needs to have that”. The CBI has said that it wants a collaborative approach, rather like the frameworks that are being used. That is the style that we need to ensure the Government provide.

We have had some very powerful commentary about the way our union should work. If you want to work together for consent, you need, as many noble Lords have said, a method for dealing with any disputes that may come at the end. There have been many suggestions, including from the noble Lord, Lord Hain, and the noble and learned Lords, Lord Hope and Lord Mackay of Clashfern. They talked about how to resolve these matters to move forward together. My sense is that, at the moment, the Government have not got the mood right. They have not felt that there is a need to move together in a way that people feel is the right way forward for the whole of our country.

In passing, one of the effects of what we have been discussing in this group of amendments is of course that it will lead to the end of EVEL in the House of Commons. Basically, everything will have a commentary on everywhere, and therefore it will not be possible to ban Scottish MPs from debating and voting on particular issues. So it will need a change of the way in which Parliament operates as well. But clearly what this whole debate has been about is the collaborative approach and the way in which we can work together in the thoughtful way that people have talked about. What the Minister needs to consider is how you can rectify the deficiencies of that mood inside the Bill.

The right honourable Jacob Rees-Mogg said that the regulations that you produce should clearly express the policy intent. I do not think the policy intent is closely laid out in what these regulations are going to be there for, whereas the collaborative approach would be to say very clearly, “Let’s work together as we go through to the future, and we’ll have some mechanism by which we can resolve disputes between us”. Because I think we are all looking for—and accept that we have to have—a fully functioning internal market. We have to have a sense of divergence, which we already have within our United Kingdom, where already we have a functioning internal market. But we also have to know that there are systems in place in this place and in the Government that will make it all happen.

I thank all noble Lords for their very thoughtful contributions and beg leave to withdraw the amendment.

Amendment 15 withdrawn.

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[Baroness Noakes (Con)]

My Lords, as noble Lords who have attended this Committee to date know, my role is occasionally to get up and give a minority perspective on the amendments before us. There are 20 amendments in this group and, one way or another, each of them would allow barriers to trade to be erected by one or more of the devolved nations. The effect of the amendments is to restrict the amount of trade to which the market access principles will apply and thereby reduce the extent to which barrier-free trade can take place throughout the UK’s internal market. I say to the noble Lord, Lord Anderson, that that is not an argument against devolution; it is an argument for trade and economic success, which I hope that we all want to achieve for the United Kingdom.

I will not repeat all of what I said on the earlier group, but the more that laws relating to trade in goods and services diverge between the component parts of the UK, the more likely it is that costs will rise and choice will diminish for consumers. Barriers to trade are also likely to result in lower GDP, as the impact assessment analysed, and we need all the GDP that we can get at the moment, given the impact of lockdown and similar anti-Covid measures. I am sure all those noble Lords who support and voted for devolution did not vote to become poorer through devolution.

The amendments give very considerable cover to the devolved Administrations to erect trade barriers under the guise of higher standards but, actually, on grounds of protectionism. At the very least, I predict that there will be massive scope for lawyers to argue for a very long period and to mount legal challenges. That may well be good for the fees of the legal profession—and for the noble and learned Lord, Lord Falconer of Thoroton—but the important thing I want to stress is that it will result in uncertainty for business. If there is one thing that is bad for business, it is an uncertain business trading environment.

Therefore, while I understand the desire for higher standards—and many noble Lords have spoken to this in respect of the particular varieties of relaxation that they are seeking in the Bill—at the end of the day, they can result in trade barriers. We really should be very careful not to wreck the UK’s internal market before it has even started.

[Lord German (LD)]

My Lords, I shall address Amendment 54 in my name. As the noble Baroness, Lady Finlay, said in moving her amendment, it harks back to debates we have had on the mysterious absence of common frameworks from the Bill. As your Lordships will know, common frameworks are a way of doing business that is supported by the CBI. The amendment would insert a new schedule into the Bill. It may look arcane, or like an obscure pub quiz question, so perhaps noble Lords would like to answer the question: what unites ozone-depleting substances and Caerphilly cheese? The answer is that the list in the schedule is the list of subjects where all four Governments in this country have agreed that legislative common frameworks are necessary. However, this is not intended as an exhaustive list. It would be possible to add to this by secondary legislation if new areas emerge that require a common framework.

I concede that it would not have been necessary to have such a schedule if the dual carriageway with the brick wall in between the two approaches that the Government are taking—this Bill and the common frameworks—were guaranteed to coincide and meet. Both approaches are progressing and have the enthusiasm of the Government behind them. This amendment would be a way of ensuring that those approaches coincided and met. The amendment would help, since it identifies common frameworks without using the name.

One of the more striking aspects of the Bill, as noble Lords and Ministers keep telling us, is that common frameworks on their own cannot guarantee the integrity of the entire UK internal market. They are sector-specific and not intended to address the totality of economic regulation. In answer to every question asked, there has been a real silence from the Government, who have failed to identify any areas where the integrity of the internal market might be threatened that are not covered by common frameworks. We had reference to the threat to the sale of barley from English farmers to Scotland, which has proved an issue already resolved by the common framework. There is also the wholly hypothetical example of a devolved Government wishing to legislate for additives to flour, which is already in one of the common frameworks on nutrition.

We therefore have to manage this problem of having two-track approaches to the internal market. The amendment proposes a way of creating that gateway between the two and ensuring that there is a link between them, so that we know that we are on the same course for a functioning internal market.

[Baroness Randerson (LD) [V]]

My Lords, I have added my name to Amendment 174 in this group. I wish to speak to that and other amendments that I support.

Possibly the greatest asset that we gained from our decades of EU membership was the development of and assistance on the highest standards. In consumer and environmental protection, employment practices, public health standards, animal health and in the development of social policies, we have all benefited enormously and our quality of life has been greatly enhanced. Often, we as a nation were at the forefront of the development of those EU policies. On occasion, in our own legislation, we chose to adopt even higher standards, as my noble friend Lord Teverson said earlier. Those were the days when we really were world-beating. It is therefore very disappointing that the Bill contains nothing to guarantee high standards; there is no process set out to agree even minimum standards. The amendments in this group seek to rectify this, hence it is a legitimate aim to seek higher standards or to maintain existing standards.

Across the world, the experience of capitalism reveals that unfettered markets—capitalism in the raw—without a sound framework of standards often drive down standards to the lowest common denominator. For example, in the USA, hardly a country struggling for development, market access provisions unaccompanied by agreed minimum standards have led to deregulation as a way to attract business. It is well known as a ploy.

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[The Deputy Chairman of Committees (Lord Russell of Liverpool) (CB)]

The noble Lord, Lord Liddle, has withdrawn from this group, so I call the noble Lord, Lord German.

[Lord German (LD)]

My Lords, I thank the noble Baroness, Lady Bennett, for raising this issue. It is of significance, and the Government will need to make some clear statements in order to avoid a very large flaring up of problems as a result of this matter.

Professional teacher registration is a devolved matter. The General Teaching Council for Scotland was established in 1965 and has ownership of the standards for teachers seeking registration and employment as a teacher in Scotland. The Education Workforce Council for Wales, Cyngor y Gweithlu Addysg, was established by the Education (Wales) Act 2014 to register schoolteachers who wish to work in schools in Wales. Teachers in Wales have to have qualified teacher status and be registered with the body in order to work in the profession. In England, since the introduction of the Teaching Regulation Agency, there is no longer a register of teachers.

Access to the teaching profession differs greatly between England, Wales and Scotland—and there are different qualification entry levels. The General Teaching Council for Scotland has an auto-recognition process for UK teachers who possess adequate qualifications for registration in Scotland. However, that does not mean that all teachers who teach in England or Wales can teach in Scotland. As such, teachers in Scotland should hold a qualification that is the equivalent of Scottish qualifications to enter the teaching profession in Scotland.

Teachers moving to Wales have to have equivalent standards. FE teachers, who are recognised by the National College for Teaching and Leadership in England and who are qualified to teach in England, are not recognised in Wales, and that means that they cannot be registered. Both Wales and Scotland have set different qualification levels to be able to work in the teaching profession.

There is an additional factor in Wales because of the bilingual nature of our education system. I know that noble Lords are aware that the Welsh language has equality status, and teachers have to be able to manage aspects of the school curriculum where they intersect with that language requirement. That does not mean that they have to speak Welsh, but they have to be able to manage aspects of the curriculum in English-medium schools.

Any flattening of qualification requirements would have a detrimental impact on the education provided in schools in Wales and Scotland and would dilute the standards that each country has set. I cannot think of any pressure to change these structures that has an impact on the internal market. The teaching profession should be excluded from this Bill as a result.

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I am sure that the Minister will try to assure me that these examples would not be “caught”. That seems to be the standard response to real-world examples of how the Bill, if enacted, might be applied. I hope that I have demonstrated my point and I look forward to the Minister’s reply.

[Lord German (LD)]

My Lords, I happen to have spent 10 years of my life working on the mutual recognition of qualifications in Europe. I left that role and, 20 years after that, it was applied to about only four or five professions across Europe. Trying to understand where people are able to employ the appropriate skills, knowledge, understanding and practice in another surrounding is an amazingly complex area. That surrounding might have a different framework of regulation and perhaps a different framework of operation.

The intention to have mutual recognition of qualifications is fine, but the timing for putting it in place is not fine, because the Government want it to happen very rapidly. It seems to me that the most sensible way of doing this would be to try to work through the professions in relation to their activities, trying to make sure that, where there are barriers, those are reduced, or where there are barriers that are appropriate, they are not legislated for by accident in advance.

The noble Baroness, Lady Finlay, has already talked about the Welsh language. There is a very interesting debate to be had about professions that can or cannot operate through the medium of Welsh. It depends on the services being provided and on the context of where those services are provided. A profession operating in a context that is different in different parts of the United Kingdom will have different requirements because of the geography, culture or operation of the services that are to be provided. Therefore, my request to the Government is that they step back a little, take some time, concentrate on trying to fix the things that they can fix and, for goodness’ sake, allow this thing to mature properly before going in with legislation that will be doomed to failure in the end.

[Baroness Bowles of Berkhamsted (LD) [V]]

My Lords, on the next group I will explain that the drafting of some clauses of Part 3 is complex and not as straightforward as it could be. One way or another, it would be useful to have a statement clarifying whether the end result is the status quo, either as a general objective or for certain circumstances.

However, as the hour is late, and as I will elaborate a specific instance on Monday, I do not need to say any more, other than to support what has been said by my noble friends Lord Fox and Lord German. This appears to be a rather complex topic. Maybe taking time to sort it out and make sure that the drafting is as clear as possible would be a good exercise.