United Kingdom Internal Market Bill

Lord Thomas of Cwmgiedd Excerpts

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

Moved by

[Lord Thomas of Cwmgiedd]

At end insert “and do propose Amendments 48B, and 48C to the words restored to the Bill by the Commons disagreement to Amendment 48—

48B: Clause 48, after subsection (1) insert—
“(1A) The powers in subsection (1) may only be exercised—
(a) after consultation with the relevant authority on the principles under which financial assistance may be provided by a Minister of the Crown;
(b) after publication of such principles; and
(c) with the consent of the relevant authority where the financial assistance is assistance that could be given by a relevant authority.”

48C: Clause 48, in subsection (2), after the definition of “providing” insert—
““relevant authority” means the Welsh Ministers in respect of Wales, the Scottish Ministers in respect of Scotland, and the Northern Ireland Executive in respect of Northern Ireland.””

[Lord Thomas of Cwmgiedd (CB) [V]]

I thank the Minister for the opportunity to discuss this matter with her. In light of what she said about wishing to set up a governance structure, I am sure that progress could be made. However, there are five short reasons why I hope the House will accept the compromise I have offered in Motion K1, which I now seek to move. First, the Commons reasons were, as has been stated by the Minister, to do with financial primacy. With the utmost respect, they are not correct. Powers to spend in devolved matters are powers of the devolved Governments, not the UK Government. Most of what is covered in this clause are matters that are devolved. Secondly, the clause therefore seeks to change the devolution settlements to enable the UK Government to override the devolution settlements. The clause is therefore a constitutional and not a financial issue.

My second reason is that, at present, funds provided by the EU for regional aid for matters within devolved powers are provided to the devolved Governments, who have to agree how the funds are to be spent. The amended clause would continue this architecture for the shared prosperity fund, the successor fund to that. Under the amendment, the UK Government would agree with the devolved Governments the way in which the funds would be spent where the funds were for matters within the devolved competences—roads, health, education and the like. This would combine the benefit of an overall strategy for the UK with the benefit of devolved Governments agreeing how funds were to be expended in the areas for which they and they alone were responsible.

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[Baroness Penn (Con)]

My Lords, the Government made a number of commitments on the shared prosperity fund in the manifesto, both about the overall quantum of the fund and the funding that different parts of the UK can expect to receive. We set out in the spending review that that would ramp up to £1.5 billion per year as the structural funds tail off. Our approach will be guided by that but, as I say, more detail will be set out in advance of the operation of the fund in spring next year, with the multiyear settlement coming in the following year.

[Lord Thomas of Cwmgiedd (CB) [V]]

I thank all noble Lords who have spoken in this short but interesting debate. I will deal with the Minister’s points in turn.

First, it seems clear that these powers—the Minister actually said this in Committee—were being taken to give the UK Government power to spend across the United Kingdom. These powers would plainly not be needed unless they were encroaching on devolved powers. City deals can be done without them; the Government can spend without them. I say respectfully to the Minister and to those who say this is a financial matter that it is not. When powers are devolved, the spending power goes with them. The reason of financial privilege is not correct.

Secondly, on how the funding works, I find it difficult to understand why, in light of what the Minister has said, she cannot agree to the very short amendment I have put forward. It spells out the principles, deals with consultation and ensures that, within the areas of devolved spending only—the amendment is clear on this—there should be agreement so that funds are spent together. With respect, the importance of this amendment is to show that, as we go forward, we do so as a United Kingdom with the central UK Government and the devolved Governments working closely together. Putting this provision in the Bill, particularly the structure under which this is to be done in this area, would be an enormous reassurance. It would strengthen the union, not imperil it, by enabling inconsistent spending to occur in devolved areas. Having listened to the debate and heard what all noble Lords have said, I seek to take the opinion of the House on this issue.

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

I now call the noble Lord, Lord Thomas of Cwmgiedd, to speak to, but not at this point move, Motion L2.

[Lord Thomas of Cwmgiedd (CB) [V]]

I am grateful to the Minister for the opportunity to discuss this clause with him. I hope that there is a basis on which we can move forward to agree this. I will explain the purpose of the amendment in five short reasons. First, it has always been the position that there must be a competition regime that must apply to the whole of the UK. The issue is how we get there in a way that preserves and strengthens the union.

The position at the moment is that there is no agreed new competition policy. We will be operating, subject to anything that may be agreed with the EU, under the WTO regime, which devolved Governments are bound to apply under the existing devolution settlements. There is therefore time to set about this constructively. It is clear that, in devising a competition regime for the control of subsidies, a lot of things need to be ironed out. What is the role of the CMA to be? Is it to be an independent adjudicator or merely advisory? If so, whom does it advise? What does control over subsidies mean? These issues need to be examined carefully.

There are two ways forward. Way one—what I would call the UK Government’s way—is, first, to change the devolution settlements. This is a change to the devolution settlements because they operate on the basis that, if a power is not reserved, it is devolved—and there is no reservation in respect of this matter. It is therefore plainly devolved, and the purpose of this amendment is to change the devolution settlement. Having changed the settlement for a policy that they have not yet devised, the Government then wish simply to consult—and I am grateful for the clauses that affirm that they will at least do that—and then announce their decision. That is what I would call “way one”—the UK Government way.

But there is a better way, which is to do it by agreement but with a backstop. I think that there are good prospects of agreement. The Welsh Government offered unequivocally, in a letter sent on 24 November—the day before the Report stage of the Bill—to try to agree a common framework, but what I do not think many have appreciated the significance of is that the Scottish Government committed themselves to joining in that. I am not sure the extent to which that might have been appreciated at the highest levels of government, but if we simply reject this offer by the Scottish Government, that will, in my view, have very serious consequences.

Therefore, the amendment seeks to build on the progress that we have been able to make and to provide that an attempt should be made to agree a common framework—which is a regime that can govern the control of subsidies. However, if one is not agreed in the specified period of time—I have suggested three years—this clause would then take effect. If there is a view that that period is too long, obviously that is a matter that can be discussed.

The vital question is that the amendment, I respectfully urge, would allow for a further strengthening of the union, with an agreed way forward and the UK Government and the devolved Governments working together to achieve a regime applicable across the UK under the mechanism of consensus through a common framework. This would achieve what the Government want by consensus, not simply consultation. To reject the amendment and restore Clause 50 would be to impose unilaterally a change in the devolution settlement by reserving a power that is not reserved. This would be a gratuitous present to those who say that the union does not work.

There is an offer to work together from the Scottish and Welsh Governments. This House should not allow the Government simply to reject a consensual solution, as there is a time limit for that consensual process. In due course, I will move my Motion and seek t test the opinion of the House.

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

My Lords, the following noble Lords have indicated that they wish to speak: the noble Baronesses, Lady Bowles of Berkhamsted and Lady Neville-Rolfe, and the noble Lord, Lord Liddle. I call the noble Baroness, Lady Bowles.

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Moved by

[Lord Thomas of Cwmgiedd]

Leave out “Amendment 50B” and insert “Amendments 50B and 50C—

50C: Clause 50, before subsection (1) insert—
“(A1) Subsections (1), (2) and (3) shall take effect when the Welsh Ministers, the Scottish Ministers and the Northern Ireland Executive have agreed with the Secretary of State a common framework applicable to the United Kingdom to regulate the provision of subsidies by a public authority to persons supplying goods or services in the course of a business or, if agreement cannot be reached, three years after the passing of this Act.””

[Lord Thomas of Cwmgiedd (CB) [V]]

My Lords, I am very grateful to all who have taken part in this very interesting and difficult debate. The points may seem obtuse, in that they concern state subsidies, but there are very real issues of principle involved. In the first place, it is quite clear, as the noble and learned Lord, Lord Hope of Craighead, pointed out earlier in this debate, that the state subsidies are devolved. For example, Schedule 5, Part III, paragraph 4(1) of the Scotland Act says:

“This Schedule does not reserve giving financial assistance to commercial activities for the purpose of promoting or sustaining economic development or employment.”


When one then looks at the amendment that is brought in by Clause 50, it speaks of:

“Regulation of the provision of subsidies which are or may be distortive or harmful … to persons supplying goods or services.”


There can obviously therefore be an argument, as any subsidy may be distortive, that the whole of the power is subsumed in what the Government are seeking to do through their Amendment 50.

Where we have got to is an almost Alice in Wonderland situation: they want to change the devolution settlement first, in this way, which cuts right across agreed provisions, quite apart from the general reservation, and then work out the policy second. Surely, the better way to do this is to work out the policy first, and to do it in consultation with the devolved Governments. The amendment I have put forward gives a way of doing that and, most importantly of all, apart from these technical issues, to take away power—express power in the devolution agreements—because all these powers are not reserved. The Government would not need this change. Not having a clear idea that you can explain and work out how this works with the devolution settlement in my view is a gift to those who say, “The union will not work. We offered to co-operate and they won’t”. I therefore want to test the opinion of the House on this amendment, which is a compromise to try to secure the future of our union, in which so many of us have such faith.