United Kingdom Internal Market Bill

Lord True Excerpts

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

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

My Lords, obviously, I thank all those who have spoken in this long debate and, in particular, the noble Baroness, Lady Hayman of Ullock, and my noble friend Lord Sarfraz for their remarkable and uplifting maiden speeches. Sometimes all of us need uplifting, and long may they stay in this House to enlighten us.

This has been a serious debate, as is appropriate on serious matters of serious importance—the sustaining of the union of the United Kingdom and the building of prosperity in a climate of certainty and security for business. However, I had some reflections during the course of the debate, and at one point found myself asking whether Henry VIII’s foundation of the Church of England was fully in accord with both our domestic law and international obligations.

I apologise if I cannot mention over 100 speakers by name when addressing the many issues raised, but I have listened carefully to every speech, shall respond as fully as I can on the main issues and will write to noble Lords on points of fact where that is not possible. First, I address points made on the main parts of the Bill, ably presented by my noble friend Lord Callanan, before I come directly to answer the amendments before us, on which the noble and learned Lord, Lord Judge, has indicated that—unusually—he wishes to divide the House at Second Reading.

I was pleased to hear understanding across the House for the purposes behind the Bill, even if we do not agree on it. There is agreement that commerce, services and professions must be enabled to operate freely across the whole United Kingdom. That is widely supported—indeed, demanded—by business, including in Northern Ireland. Without this legislation, there could be problematic divergence, putting at risk the seamless trade that businesses in Scotland, Northern Ireland, Wales and England enjoyed before we entered the EU, enjoyed in it and should enjoy hereafter. This Bill will protect trade and secure jobs across all parts of the United Kingdom after the end of the transition period. It will guarantee that UK businesses can trade unhindered in every part of the United Kingdom.

I assure those noble Lords who raised this that the Government will maintain the highest standards for consumers, workers, food and the environment. We have repeatedly stated our commitment to high standards. Under our proposals, the devolved Administrations will continue to have power to regulate within devolved areas, in so far as these do not cause a barrier to internal trade. We are committed to being a global leader in environmental protection and animal welfare standards while maintaining the high quality of our produce for consumers at home and overseas.

Some noble Lords, including those who spoke today, have questioned the need for the Bill, arguing that non-statutory arrangements may be enough. They fear that the Bill may restrict the freedoms of devolved Administrations. We have listened and will continue to listen to such concerns; we wish for close co-operation with the devolved Administrations—there is no so-called power grab here. Indeed, at the end of the transition period, hundreds of powers currently exercised by the EU will flow back to the UK, as the British people have asked. Many of the powers coming back from the EU fall within the competence of the devolved Administrations, which will see a major transfer of powers that before the EU exit they did not have.

As we set out in our White Paper, without an up-to-date, coherent market structure, economic barriers could block or inhibit trade in goods across the United Kingdom, and services could be significantly and detrimentally impacted. Future complexities could arise— for example, differing qualifications for plumbers or technicians could limit access to skilled construction workers and make it harder for one nation’s construction companies to bid for contracts in another. Such costs could ultimately reach consumers, increasing prices or decreasing choice. Significant and unmanaged economic barriers arising across the UK could not only cause serious harm to the interests of our business and consumers but threaten the prosperity of the UK economy as a whole.

I was pleased that so many noble Lords commended the common frameworks programme, which has been mentioned again today. It is an important process and one that will continue. We will update the House on progress as we work with our friends in the devolved Administrations in the months ahead and will study carefully the observations of your Lordships’ Select Committees on this part of the Bill. I assure the House that this Bill does not make the common frameworks redundant, as many, including the noble Baroness, Lady Finlay of Llandaff, my noble friend Lord Dunlop, the noble Baroness, Lady Crawley, the noble and learned Lord, Lord Hope of Craighead, and the noble Baroness, Lady Andrews, fear. However, common frame- works do not replace the need for this Bill; they are a mechanism for collaborative policy-making in areas of returning EU law which intersect with devolved competence. They are sector-specific and allow for a deeper level of regulatory coherence, but they do so in a specific set of policy areas. While they remain a crucial part of our regulatory landscape, common frameworks alone cannot guarantee the integrity of the entire internal market.

The Bill ensures that areas without a common frame- work will still benefit from the regulatory underpinning and, crucially, market coherence will be provided for issues that fall around, or between, individual sector-focused frameworks. The Bill complements common frameworks by providing a broad safety net and additional protections to maintain the status quo of seamless intra-UK trade across all sectors of the economy. That will ensure maximum certainty for businesses and for investors, domestic and foreign. I am sure that all noble Lords support that objective. We look forward to pursuing these important issues in detail in Committee —and I give that undertaking.

Let me turn to the subject of most of the speeches yesterday—Part 5 of the Bill and the amendments before your Lordships. The future of our union and the sustaining of the Belfast agreement are at the heart of this Bill. A strong and open internal market with the ability to support all parts of our union and deliver prosperity for communities across the whole of the United Kingdom is something that we should surely all support. That includes Northern Ireland, as is affirmed in Clause 42 in Part 5. Support for free trade across the United Kingdom must extend to the good people and businesses of Northern Ireland; they are our countrymen and women, and part of our union. This Government will allow no foreign authority, armed with whatever pretext, high or low, to undermine the principle of free trade within our customs territory that has been fundamental since the Act of Union.

I am pleased to tell the noble Lord, Lord Browne, that EU state aid rules will not apply to Northern Ireland as they do today. State aid provisions apply only to trade subject to the protocol, which is limited in scope to goods and wholesale electricity markets. Northern Ireland will therefore enjoy new flexibilities with respect to support for its service industries, including those with potential for rapid growth—for example, fintech and cybersecurity businesses.

I thank the noble and learned Lord, Lord Judge, and I hope that the House will forgive me if I send my good wishes to Lady Judge, and wish for a speedy recovery. I thank him for meeting me; I understand why he cannot be here today, and I thank him for sharing with me his thoughts on this part of the Bill. As we have heard, his objections fall not on the objective to safeguard our union and the Belfast agreement, but on his strongly held sense, held by other noble Lords who have spoken, that Part 5 of the Bill, sent to us by another place, undermines the rule of law.

We share a full and fundamental respect for and belief in the rule of law. That is not something handed to us from outside by some directive or convention. It was won in the sacrifice of civil war and affirmed in the Glorious Revolution, the Bill of Rights and the Claim of Right, since when our parliamentary Government and rule of law, as many have said, have been an inspiration to the world.

The Government do not believe that the limited, contingent proposals in this Bill change that position. They do not accept that these safeguard provisions render our country, as has been claimed, an international pariah, or justify, as was asserted, murderous actions by others. People are still talking to us. Indeed, your Lordships’ Constitution Committee said in paragraph 171 that in

“domestic law, it is correct that Parliament may enact legislation which”

infringes

“international obligations.”

This Bill does nothing to abrogate our commitment. We are committed to implementing the withdrawal agreement and the Northern Ireland protocol, and have already taken many practical steps to do this. We continue, as the noble Lord opposite said, to work with the EU in the joint committee set up to address uncertainties and incompatibilities in parts of the Northern Ireland protocol. We hope we may resolve the outstanding issues and avoid the maximalist interpretations by the EU that might lead to a situation where tensions arise between our domestic obligations and our international commitments and we have to act to resolve them.

We cannot guarantee that agreement will be found. The fact remains that we have not reached agreement. Last Thursday the EU summit appeared explicitly to rule out a Canada-style deal. It effectively restated its opening position in the negotiation as its present position, and instructed the UK to move. As my right honourable friend the Prime Minister said last Thursday, the EU has

“refused to negotiate seriously for much of the last few months”.

We must therefore address the contingent possibility that a threat to the union and to the Belfast agreement might arise. The provisions in Part 5 of the Bill are about creating a legal safety net, taking powers in reserve whereby Ministers could act to guarantee the integrity of the United Kingdom and protect the peace process. The Government never have and never will seek north-south barriers in Ireland; equally, we cannot accept east-west barriers in our customs territory. The imperative here is balance. The prerequisite is reason. In the difficult and highly exceptional circumstances in which we find ourselves, it is right that we take these precautionary steps now.

I can also confirm to the House, as asked by the noble and learned Lord, Lord Falconer, that we will take action, if necessary, in a finance Bill in 2020, to address the issue of tariffs.

We are clear that we are acting in full accordance with UK law and the UK’s constitutional norms in our actions. We do not take this action lightly or without good reason.

Your Lordships will have every chance to consider these matters in Committee, and consider them we must. We cannot set aside our constitutional duty to scrutinise a Bill that has passed through the other place with a healthy majority, as was said by the noble Lord opposite. To do so would be a failure to fulfil our revising purpose. Neither amendment before your Lordships refuses that. They accept Parliament’s right to receive and consider legislation such as this. The effect of the amendments is declaratory. As such, their purpose is to send a message. I hear the message about the importance of the rule of law. We can all assent to that. The noble Lord opposite used the language of “message”. There is another message that some will hear; a message, as he said, to the European Union: if the UK Government and the elected Chamber refuse to accept the EU’s most encroaching demands, your Lordships will deny the UK Government a contingent power to protect our union and safeguard the Belfast agreement.

That, and, still more, a threat to destroy this whole Bill, would be a heavy missile to launch at what is a profoundly delicate state of negotiations, when this Government are seeking to fulfil the firm resolution of the people of the United Kingdom that this country should be a fully independent state. That is the context of these proposals. I am deeply mindful of the wise words of my noble friend Lord Hunt of Wirral and the noble Lord, Lord Skidelsky, that this House should not tie the hands of this Government at this time.

It is the Government’s sincere wish that these provisions need never be invoked. We have listened to the views of those concerned and amended the Bill so that Clauses 44, 45 and 47 can be commenced only following approval by the House of Commons. In addition, I can confirm to my noble friend Lord Lamont that regulations under Clauses 44 and 45 could be made only following approval by Parliament as a whole, which includes your Lordships’ House. In circumstances where your Lordships have the power to set a staying hand, at a time when we will know the state of negotiations between the UK and the EU, it would seem quixotic to threaten, as the noble Lord, Lord Butler, did, to destroy the whole Bill now.

My noble friend Lord Bridges posed a question. The Government do not consider that these clauses, as and when the Bill is enacted, of themselves breach Article 4 of the withdrawal agreement, which requires that those provisions of EU law made applicable by the withdrawal agreement are given effect in domestic law in the UK in the same way as they are in EU member states. However, there is a political question before us as well as a legal one, and a balance of judgment to be made in the national interest. I repeat: the fact remains that there is no negotiated agreement, and the Government must be realistic that we are barely more than two months away from the end of the transition period.

I do not accept strictures around morality, although I note with interest that I now have to seek moral guidance in the House journal of Mammon. It would be irresponsible not to have measures in place in our domestic law that allowed Ministers to protect the UK’s internal market and the Northern Ireland peace process. The Government are making sure that the protocol is implemented in a way that works for Northern Ireland; that is, in a flexible, pragmatic and proportionate way, in line with the approach set out in our May Command Paper. That approach was broadly welcomed by the majority of businesses and political parties in Northern Ireland and is the basis on which we have been negotiating and will continue to negotiate with the EU. However, we cannot and will not allow harmful legal defaults under the protocol to take effect.

In all circumstances, Northern Ireland is and must remain part of the UK customs territory, with genuine unfettered access to the rest of the UK internal market. We must at the very least avoid the European Commission applying its state aid rules to companies in Scotland, Wales or England with no link, or only the most trivial one, to Northern Ireland.

As we have made clear, if these measures were ever needed, their commencement would be subject to a vote in the other place and a take-note debate in our House, as set out in the Government’s Statement on 17 September. Your Lordships would have the opportunity to vote against the necessary statutory instrument, although I of course hope you would not be so inclined—one has to travel in hope.

The rule of law is a great matter, and the integrity of this union is also a great matter. There is a balance to be struck in these difficult times, and proportion to be found. We believe that these measures, with all the safeguards I have mentioned, strike that balance without tying the hands of the Government at a critical time.

What is potentially proposed is not an armed invasion of another nation but a contingent and potential power, subject to safeguards, which the Government have stated they hope need never be invoked. It is presented to Parliament fully in accord with our constitutional norms. 

I urge noble Lords to support the Bill and not to support the amendments in the names of the noble and learned Lord, Lord Judge, and the noble Lord, Lord Cormack.