United Kingdom Internal Market Bill

Lord Stevenson of Balmacara 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, I shall resist the temptation to follow the noble Lord, Lord Purvis, in what he has said. However, I reflect that in the other place I was responsible for, and chaired most of, the Maastricht Bill, with 500 amendments and 24 days of debate. Even there, I think that I would have been really stretched to have enabled what is labelled here as a new clause to be put into the purpose of Part 1 on an introductory basis.

I understand the feelings of Scotland, Wales and Northern Ireland. I had the privilege of being Parliamentary Private Secretary in Northern Ireland, and I was a local government leader. Of course they feel strongly, as I do about local authorities and the Covid situation. Nevertheless, it is quite clear that the purpose of Part 1 is

“the continued functioning of the internal market for goods in the United Kingdom by establishing the United Kingdom market access principles.”

It then lists what the mutual recognition and non-discrimination principles should be.

If the Opposition and those who do not like what is in Part 1 want to make a point, there is a case for having a small amendment including just the words “and services”. I see merit in that because, as I said earlier, that seems to have some validity, but to suggest in the introductory part, under “Purpose of Part 1”, that we have to await a statutory instrument

“containing regulations under section 56(3)”,

et cetera, is extraordinary. I cannot believe that there have ever been many Bills where that sort of new clause has been inserted into the introductory part.

Therefore, I say to my noble friend on the Front Bench that there are valid questions arising from this alleged new clause to be asked in the right place, but this is certainly not the right place in this Bill.

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

My Lords, as the noble Lord, Lord Dunlop, said, this debate is a sort of appetiser for the main course to come in later groups, when we will dig much deeper into the right approach to ensuring that our current well-functioning internal market continues after the transition period ends and that we can manage the necessary and inevitable policy divergences that we need across the United Kingdom and should welcome.

The noble Lord, Lord Bruce, said that the key questions are why we need the Bill at all, let alone now, why the Government are ignoring the evident successes of the co-operation and constructive progress which have been hallmarks of the common framework programme, why threaten the devolution settlement so directly, and what it is about the top-down approach that the Government wish to introduce that is so attractive, given the huge risks to devolution. Those are very important questions and I look forward to hearing what the Minister says when he comes to respond.

The noble Baroness, Lady Neville-Rolfe, said that she recognised the value of proposed new subsections (1) and (2) in the amendment but was worried that proposed new subsections (3) and (4) made it a wrecking amendment. I do not think that it is. Indeed, I make the same points about the need for a pause before we implement in my Amendment 178, which is in a later group.

I hope that the Government will think very hard about the clear message that seems to come from this debate. We need to carry on down the road well travelled in recent years, encouraging the devolved Administrations to continue to collaborate, to work together with mutual understanding until agreement is reached, and then to go further so that there is agreement on all the issues that need to be agreed and a way of resolving any issues that are left over. This is the way in which we make progress—not by imposing a top-down solution. Indeed, anything else risks destroying the complex but pretty successful devolution settlement that we currently enjoy.

[Lord Callanan (Con)]

My Lords, Amendment 4, tabled by the noble Lords, Lord Fox and Lord Purvis, would prevent the market access principles applying by the end of the transition period. As my noble friend Lady Neville-Rolfe pointed out, that would produce a considerable delay in providing certainty to businesses that free trade can continue within the UK’s internal market.

I heard the noble Lord, Lord Bruce, query my assertion at Second Reading about business support for these measures, but over 270 businesses and organisations responded to the public consultation on our proposals and, overwhelmingly, businesses supported our approach. Particularly as they look to recover from the impacts of Covid-19, businesses need certainty, and that is what this Bill, as drafted, seeks to provide.

I repeat that the aim of the Bill is to ensure that there are no internal barriers to trade within the UK, while respecting the devolution policies. All devolved policy areas will stay devolved. The proposals ensure only that no new barriers to UK internal trade are created. The Bill aims only to procure frictionless trade, movement and investment between all nations of the UK. The policies that different parts of the UK choose to pursue in the future is a matter for those Administrations. The Bill ensures that these local policies can be pursued while, at the same time, maintaining seamless trade in the UK internal market.

The noble Lord, Lord Bruce, asked me specifically about barley, and indeed the noble Lord, Lord Purvis, has written to me on the same subject. We believe that this provides a good example of the risks that businesses could be exposed to. Food produce placed on the market must comply with rules on pesticide maximum residue levels. These are currently set at EU level, and so are consistent across the United Kingdom, meaning that food can be traded across the devolved Administrations. This is an example of a policy area which will be devolved after 1 January. At the moment, all Administrations are supported by the same regulator—the Health and Safety Executive. That will, to a certain extent, aid consistency, and we are of course committed to working closely with the devolved Administrations to jointly agree consistent maximum residue levels across Great Britain.

However, without the Bill’s mutual recognition provisions, there would be the possibility of divergent decisions being taken, which would then introduce new trade barriers on food between different parts of our country. Depending on any particular decision, this could affect any agricultural or horticultural produce that has been previously treated with pesticides. For example, different residue rules might mean that it is not lawful to sell in Scotland barley grown in England.

More broadly, without the principles set out in the Bill, harmful divergence would be possible, in spite of the important protection provided by industry standards. That is because industry standards are voluntarily agreed between private economic actors and so cannot provide the same certainty for businesses and investors as the legislative principles set out in the Bill.

The consent process proposed in the amendment would remove that certainty and make operating conditions for businesses across the UK dependent on a number of fairly onerous conditions. These conditions include matters that would cut across ongoing collaborative work with the devolved Administrations. I say to the noble Lord, Lord Bruce, that these include the common frameworks programme and the intergovernmental relations review, both of which the Government are fully committed to pursuing. Indeed, in the next group, we will examine the common frameworks principles in more detail, and my noble friend Lord True will explain our position in more detail.

However, I assure noble Lords that the Government have already committed to appropriate consultation with the devolved Administrations on these matters. Furthermore, we are engaging them in all suggestions for how practically to improve intergovernmental relations, including both the machinery, such as dispute resolution, and the way in which these joint forums are run.

The noble Lords, Lord Fox and Lord Purvis, asked a question about dispute resolution. I can tell them both that the office for the internal market will support existing arrangements for dispute resolution. Its non-binding reporting will ensure that evidence-based dispute resolution takes place in line with the current memorandum of understanding on devolution. The OIM’s reporting will be available to all four Administrations and legislatures on an equal and purely advisory basis. It will provide information and support separate political processes to resolve any disagreements and enable intergovernmental engagement. The amendment would cut across all ongoing collaborative work with the DAs and remove our ability to give businesses the certainty they need at this time.

The noble Baroness, Lady Randerson, said that the Government would override the rest of the UK when legislating for England. That is certainly not our intention. The nature of our constitution is that the UK Parliament will be able to legislate over existing legislation, but the Bill aims to treat all domestic legislation in the same way. Her Majesty’s Government will be cognisant of the importance of market access principles in supporting any extra legislation.

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

My Lords, this has been an excellent debate, brilliantly introduced by my kinsman, the noble and learned Lord, Lord Hope of Craighead, and with some other excellent speeches, particularly from those who were members of your Lordships’ Select Committee and, of course, the chair, my noble friend Lady Andrews.

The weight of the arguments deployed in this group and the virtual unanimity of views expressed from all sides of the Committee were to be expected, but Ministers might not have expected to be offered a route out of the mess that they have got themselves into. If common sense prevails, there is a win-win here. As the noble Lord, Lord Dunlop, said, the Bill currently has things the wrong way around. The Government need to signal tonight that they will take away the amendments in the name of the noble and learned Lord, Lord Hope of Craighead, and work with him to find a structure that better delivers the aims of the Bill.

They should use this legislative opportunity to encourage the completion of the current work on the common frameworks, to encourage the process to cover the remaining outstanding issues and to anticipate future needs. They should then draft an effective safety net for the Bill, based on mutual recognition and non-discrimination, while, as the noble Lord, Lord Vaux, said, having regard to subsidiarity and proportionality. They should ensure that the current informal processes have a light-touch underpinning, with a regulatory framework that commands trust and the confidence of the devolved Administrations. If they do this, we will happily work with and support them.

[The Minister of State, Cabinet Office (Lord True) (Con)]

My Lords, it has been a most fascinating debate. I endorse what the noble Lord, Lord Stevenson, has just said. While I sadly cannot claim to be his kinsman, I thought the opening speech by the noble and learned Lord, Lord Hope, was a masterclass in how to present a case. That does not necessarily mean that the Government accede to the case, but it was entirely clear. I also pay tribute to those members of your Lordships’ Select Committee on common frameworks who spoke. Their experience is obvious and the work of that committee is important. I believe it will shortly meet or hear from my honourable friend Chloe Smith.

Many businesses welcome this Bill. They welcome it on the basis that, after the end of the transition period, they hope, expect and require that they will be able to operate in a period of certainty, not buffeted by any unexpected or unreasonable developments. I respond to the general tone of the debate by saying that it is, of course, the Government’s intention—it always has been and remains so—that the functioning of the UK internal market will be driven by co-operation with the devolved Administrations. The market access proposals here are designed not to replace but to complement the common frameworks; I know that is a phrase I have used before. The common frameworks are the key. They support coherent policy-making across the UK by setting out terms of engagement between the UK Government and the devolved Administrations as well as, where appropriate, common strategic goals and policy approaches.

The Government remain committed to the common frameworks programme. As many noble Lords have said, it is progressing well. The UK Government and the devolved Administrations continue to co-operate closely as we jointly develop the programme. Yes, progress overall has been slower than we would have liked, and I acknowledge the effect of the resource constraints driven by the response to Covid, and the need to prioritise planning in advance of the end of the transition period. However, all parties remain committed to the programme. At a recent JMC (EN) meeting last month, both the UK Government and DA Ministers reconfirmed their strong commitment to it.

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Ever since the establishment of devolution, constitutional experts have warned about its flimsy foundations. However, it has continued to operate, largely on the basis of good will. This Bill is not offered in a spirit of good will. It also illustrates how easy it is to dismantle the process of devolution. My own experience of Welsh devolution—as a Member of the Welsh Assembly, as it then was; as a Welsh Minister; and, in this place, as a UK Government Minister—has brought home to me the importance of the detail of devolution powers. Welsh devolution powers came slowly and piecemeal, and only in the most recent Government of Wales Act were they given true coherence. I say to the Government: hollow out those powers now at your peril. A large majority support Welsh devolution, and it is cross-party support. There is also, to my regret, increasing support in Wales for independence. If the Government have any common sense, they will leave well alone. They will face renewed uncertainty in Northern Ireland with this, and will continue to face persistent problems in Scotland. They should concentrate on bridging the gaps with the devolved Administrations and not widening them.

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

My Lords, at the end of the previous group the Minister, the noble Lord, Lord True, kindly said that his mind was not closed to further discussion on this issue about common frameworks and how they relate to the Bill. I welcome that. In a sense, the amendments in this group are part of the same debate. I therefore hope that they will also be included in the next-stage discussions, as they are a variation on the theme.

I set out my route map for progress in my response to the previous group and I will not repeat it. However, I endorse the points made by the noble Baroness, Lady Finlay, my noble friend Lady Andrews, the noble Lord, Lord German, and the noble and learned Lord, Lord Hope, particularly their growing confusion about what exactly is in the Government’s mind on this issue. Perhaps the noble Baroness, Lady Bloomfield, coming fresh to the debate, can persuade us that there is indeed a coherent logic to the Government’s position—because it certainly eludes me.

[Baroness Bloomfield of Hinton Waldrist (Con)]

I hate to disappoint the noble Baroness, Lady Andrews, but it falls to me to respond to this debate. I will now speak to the two amendments—Amendment 6 and the consequential Amendment 44—concerned with how UK market access principles, as proposed in the Bill, will apply. I understand that the noble Baroness, Lady Finlay of Llandaff, has tabled these amendments on behalf of the Welsh Government. Accordingly, I would like to begin by thanking the Welsh Government for their positive engagement on this Bill so far. The UK Government look forward to continuing constructive future engagement with the Welsh Government.

As my noble friend Lord True said earlier, we continue to work closely with the Welsh Government to develop common frameworks, in line with the framework principles agreed by the Joint Ministerial Committee (EU Negotiations) in October 2017. I know the Senedd were happy to see the Joint Ministerial Committee provisionally confirm the first two frameworks of the programme on hazardous substances and nutrition. Work continues in earnest to reach further such agreements in the coming months and beyond.

Before I turn to the detail of the amendments, I want briefly to cover the context of the Bill in order to explain the approach the Government took to applying the market access principles. At the risk of repeating the arguments of my noble friend Lord True, now that we have left the EU and as we recover after our fight against Covid, it is vital that we deliver legislation which allows the continuing smooth function of our UK internal market at the end of the transition period. The Bill aims to ensure frictionless trade, movement and investment between all the nations of the UK. The policies that different parts of the UK choose to pursue in the future is a matter for each Administration. The Bill ensures that these local policies can be pursued while maintaining seamless trade in the UK internal market. There is no question of the UK Government intending to bypass the common frameworks; the Bill is intended to complement them.

The approach we have taken in the Bill will give businesses the regulatory clarity and certainty they want. It will ensure that the cost of doing business in the UK stays as low as possible, and without damaging and costly regulatory barriers emerging between the nations of the UK. With this context in mind, I turn to the amendments. They would, in combination, prevent the market access principles from applying at the end of the transition period. The lengthy process they put in place before the principles can apply, including the need to exhaust frameworks discussions, would mean a considerable delay in securing business certainty that trade can continue unhindered within the UK’s internal market. The resulting threat of unmanaged regulatory divergence would not provide the certainty businesses need and could deter businesses that wish to expand and supply customers across the UK. This is not desirable, especially as we continue our recovery from Covid-19.

The amendments would also limit the areas to which the market access principles can apply. Again, this would unduly constrain the scope of the principles and fail to protect the internal market fully. In contrast, the Government’s approach is more comprehensive and ensures that businesses in all sectors can continue to trade across the UK without facing new barriers or discrimination.

The amendments also present a challenge in defining the exhaustion of the frameworks process. In all cases, common frameworks are designed as living arrangements, capable of change by agreement as required. Thus, the process is never wholly exhausted. The new clause also specifies a consultation process with the devolved Administrations and the CMA, or, failing that, a 12-month delay before any regulations can be made specifying areas to which the market access requirement would apply. The Government are already committed to appropriate consultation with the devolved Administrations; however, under the terms of the amendments, the time limits proposed would create unnecessary delay.

The noble Lord, Lord German, asked about the timing of the Bill. Reduced certainty would indeed be a disaster to our recovery from Covid-19. We do not believe that it is acceptable for businesses to have less certainty on trade with their UK supply chain after 1 January 2021 than they have today and have had for centuries. The UK Government are committed to ensuring that the status quo of seamless internal trade is maintained for the shared prosperity and the welfare of people and businesses across all four nations of the UK. Without the internal market, livelihoods would be at risk. There is also the issue of future-proofing the Bill to allow that, for the jobs of the future, mutual recognition will apply across areas that we may know nothing about today, including things such as the artificial intelligence industry.

My noble friend Lady Neville-Rolfe and the noble and learned Lord, Lord Hope, asked whether reference should be made to the common frameworks should be made in the Bill. We already have a statutory obligation to report quarterly on progress on the common frameworks, so there is no need to put this in the Bill as well. Far from being silenced, as the noble Baroness, Lady Randerson, suggested, as she knows, two common frameworks have already been agreed. However, some 38 more have yet to be considered, with only nine or 10 weeks until the end of the transition period. They do indeed provide a very sensible framework, but they remain voluntary. Ultimately, the common frameworks depend on continued co-operation. In spring 2019, the Scottish Government walked away from the internal market project. This legislation is required to provide certainty for business and consumers.

The noble Baroness asked about labelling in Welsh. There is nothing to prevent labelling in Welsh for goods produced in Wales. I was also asked about the use of plastic teaspoons. The Welsh Government can still ban their use, but perhaps not their sale.

For these reasons, and for the uncertainty and confusion that it would generate for businesses and consumers, unfortunately the Government cannot support the amendments in this group and I would ask noble Lords to withdraw or not move them.