United Kingdom Internal Market Bill

Lord Vaux of Harrowden Excerpts

2nd reading & 2nd reading (Hansard): House of Lords
Monday 19th October 2020 Lords Chamber

[Lord Vaux of Harrowden (CB) [V]]

My Lords, I will leave detailed discussion of Part 5 to colleagues, but I will just say that I find the idea of a UK Government knowingly and deliberately breaking the law—to wriggle out of a deal signed less than a year ago—repugnant. It is not something that this House should accept. In the justifiable outrage over Part 5, however, there is a risk that the other flaws of the Bill get lost. As the Constitution Committee has explained so well, it has significant implications for the UK’s devolved structure.

There are three elements that are necessary for the efficient operation of an internal market: rules for market access, a framework for agreeing minimum standards, and a mechanism for resolving disputes. This Bill provides only the first element, the market access rules. If the EU’s single market had worked with only market access rules, it would have allowed, say, Romania to reduce its standards so that its businesses could produce, for export, substandard goods that could be sold freely here. We would not have accepted that as part of the EU, so why would we think it appropriate for our own internal market? I do not often say this, but the Scottish Government are right: this Bill undermines their devolved competencies. This works both ways, and the UK Government should be just as worried about, say, Scotland reducing its standards and selling substandard goods into the rest of the UK. As the Welsh Government pointed out, it incentivises a race to the bottom.

To avoid this, a system for agreeing minimum common standards is essential. We have heard that good progress has been made towards agreeing common frameworks, but the Bill completely ignores them. Indeed, it would undermine them. I would go as far as to say that, if the Bill is not amended to take account of the common frameworks, including the necessary flexibility described by my noble and learned friend Lord Hope of Craighead, it will be more damaging to the UK’s internal market than no Bill. Like the Constitution Committee, I question whether this Bill is really necessary. Perhaps the Minister could explain why the common frameworks have been ignored and how a race to the bottom will be avoided.

The third element required for an internal market to work is a mechanism for dispute resolution. To be acceptable to all parties, any mechanism needs a high degree of independence, all parties should be represented, and it must have the ability to resolve disputes. The Bill creates the Office for the Internal Market, but that is neither independent nor representative. And it cannot actually resolve a dispute: all it can do is issue advice and reports. Does the Minister not see a contradiction in being ready to die in a ditch to prevent the European Court being the arbiter of a trade deal, but not allowing an independent arbiter in our own internal market?

There is general agreement throughout the UK—and I agree with it—on the need for an efficient internal market, but this Bill does not achieve that. We must adopt a more consensual approach between the UK’s constituent parts. After all, there is one overriding requirement for an internal market: the parties must want to be part of it. This Government in particular must know that the heavy-handed imposition of rules from the centre can lead to countries wanting to “take back control”. If the Government want to keep this kingdom of ours united, they would do well to remember that.

United Kingdom Internal Market Bill

Lord Vaux of Harrowden Excerpts

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

If noble Lords and the devolved Administrations believe in the union, they ought to believe that we want an effective and efficient internal market within the UK. The issue should be, how best we can get that. For that reason, I support Clause 51, which ensures that this can continue to be a UK issue and cannot be overridden by the legislation in the devolved Administrations. We know that the Scottish Government do not believe in the union; they will find any way to undermine such a provision. I hope noble Lords will not let their version of grievance politics poison our approach to getting a sensible Bill on to the statute book to give the certainty that business needs.

[Lord Vaux of Harrowden (CB) [V]]

My Lords, it is a pleasure to follow the noble Baroness, Lady Noakes, and for once find myself in agreement with much of what she said. In his winding-up speech at Second Reading, the Minister said:

“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.”—[Official Report, 20/10/20; col. 1426.]


The noble Lord, Lord Callanan, has repeated the same point today. Well yes, the devolved Administrations will be able to continue to regulate, but those regulations will become effectively meaningless if they can be undermined by unfettered market access from other parts of the United Kingdom. The Minister seems unwilling to address that simple point. Within the EU single market the devolved nations have enjoyed a level of discretion to diverge within a wider framework of agreed standards. Despite that divergence, our internal market has operated smoothly, and I do not think that many would argue otherwise.

Like it or not, devolution is a fact and we cannot and should not back-pedal on it. The Government recognised that in the frameworks agreement when they agreed that the common frameworks should

“maintain, as a minimum, equivalent flexibility for tailoring policies to the specific needs of each territory as is afforded by current EU rules”.

Can the Minister please confirm that the Government still stand by that agreement, in spirit as well as letter?

This Bill is a blunt instrument which effectively removes that flexibility for tailoring policies. What would be the point in, for example, the Welsh Government legislating against single-use plastics, if they are unable to block such items coming in from other parts of the UK; or of Scotland tightening labelling requirements, if goods sold in Scotland from other parts of the UK do not need to follow those requirements? Does the Minister seriously argue that those kinds of actions have created or would create significant barriers to internal trade?

The common frameworks programme, as we have heard, provides a simple solution that already exists. The programme is generally thought to have been a positive and consensual process to try to find the right balance. Indeed, as the revised frameworks analysis published by the Cabinet Office states:

“The cooperative approach on frameworks so far demonstrates the progress that can be achieved through proceeding collaboratively”.


As we have heard, however, the Bill as drafted ignores the common frameworks completely. There is not so much as a reference. The Minister said at Second Reading that the Bill does not make the common frameworks redundant, but it is very difficult to agree with that. As explained earlier, any divergence of regulation by a devolved Administration will be undermined by the precedence that this Bill gives to unfettered market access. I really do not see that that is an arguable point. It is the logical result of this Bill.

It is hard not to sympathise with the view of the devolved Administrations that the hard work and constructive engagement on trying to reach agreement on the common frameworks has effectively been torn up by this Bill. The Government cannot, in all honesty, be surprised that the devolved Administrations have rejected it. It is precisely this kind of heavy-handed, non-collaborative behaviour that is adding to the impetus towards the breaking up of our United Kingdom, which I am extremely worried about.

I said at Second Reading that I am not fully convinced that this Bill is actually necessary to achieve its stated aims. The Constitution Committee, and a number of noble Lords, has made the same point. However, I can see that there is some argument for the market access rules it creates, provided that they genuinely work alongside the common frameworks. However, for that to work without undermining them, the common frameworks must be recognised in the Bill, and any agreed permitted divergence from common standards allowed by the common frameworks must take precedence over the mutual recognition and non-discrimination principles of the Bill.

There are a number of ways to achieve that end, and the amendments in this group try to do this in different ways. I am particularly attracted by the approach taken by my noble and learned friend Lord Hope of Craighead in his Amendments 5, 11 and 53, and by Amendment 170, in the name of the noble and learned Lord, Lord Mackay of Clashfern. These seem to be a neat and simple way of recognising the common frameworks explicitly in the Bill and giving them precedence over the market access principles where appropriate, without undermining the Bill as it stands. I am also drawn to the introduction of the proportionality and subsidiarity principles in Amendment 2, which were discussed earlier.

I was heartened by the Minister’s commitment at Second Reading that the Government will

“study carefully the observations of your Lordships’ Select Committees on this part of the Bill”.—[Official Report, 20/10/20; col. 1427.]

Accepting these amendments, or something like them, would recognise that the internal market can work perfectly smoothly in a more nuanced, flexible and collaborative manner, just as it has in the past. That would show sensitivity to the legitimate and reasonable concerns of the devolved Administrations, and the respect for devolution that the noble Lord, Lord Callanan, referred to earlier today, without undermining the smooth-running internal market that we all want and which this Bill is intended to achieve. I would therefore urge strongly the Government to consider these amendments in a constructive light.

United Kingdom Internal Market Bill

Lord Vaux of Harrowden Excerpts

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

[Lord Vaux of Harrowden (CB) [V]]

My Lords, I have added my name to Amendment 62A, proposed by the noble Baroness, Lady Bowles. We owe her our thanks for bringing this important wrinkle in the Bill to our attention. She and the noble Baroness, Lady Altmann, have already eloquently set out the reasons why this amendment is needed, so I will not detain the House for too long.

The Bill creates draconian powers of investigation for the CMA, with associated penalties which, as we have heard, are much more suited to its duties of investigating market abuse. Indeed, as the noble Baroness, Lady Bowles, pointed out, the wording has actually been lifted from those duties. However, the purposes of the investigation set out in this Bill are very different from market abuse investigations. In this Bill they are investigations into the impacts of regulations or provisions made by the various national authorities. Businesses are not in this case being suspected of, or investigated for, market abuse, yet the Bill will mean that they will have to respond to notices subject to penalty as if they were.

Even if we reluctantly accept that these powers and penalties are appropriate—and I do not—we must surely ensure that the powers, and in particular the penalties, do not become an undue or unfair burden on business. I listened carefully to what the noble Lord the Minister had to say in this opening speech, and I am afraid that I do not think that the protections and the consultations that he mentioned go far enough in this case.

While larger businesses may be able to cope with such an investigation, small companies do not have compliance departments or in-house legal teams. They do not have the excess capacity to be able to deal with such investigations. Even in normal times, these investigations would be burdensome for small companies, and it is even more the case when they are trying to recover from the Covid crisis and at the same face up to the challenges that leaving the EU single market will create. This is no time to load additional burdens on to small businesses. Therefore, I urge the Minister to accept this simple—and, I had hoped, uncontroversial—amendment, or at least to come forward with some protections for smaller companies, as has been suggested.

[Lord Liddle (Lab)]

My Lords, I very much welcome the opening statement from the noble Lord, Lord Callanan. I think he has proposed an improvement in the Bill, by adding further requirements for consultation with the devolved Administrations. That is for the good. I also have a great deal of sympathy with the amendment moved by the noble Baroness, Lady Bowles. I can see the argument that, if there are impediments to the internal market in a particular sector, the new body will require an information-gathering power, and if you have that power you have to have an enforcement power. It is welcome that the Minister says that these powers will be exercised in a voluntary and proportionate way. Yes, maybe—but I do think that there is a special concern about small businesses, to which I hope the Minister can find a way of responding positively in his reply.

I have to say—and I cannot resist the temptation to poke fun at the noble Lord, Lord Callanan, on this—that if such clauses had been proposed by the European Commission, we would have heard his screams of protest from the committee rooms of Brussels to the banks of the Tyne, which he represented, and he would have raised the roof on the wonderful auditorium of the plenary in Strasbourg. I can hear him now in excellent Brexiteer mode. Of course, now that Brexit has happened, these concerns are of no consequence. The truth is—and I think this is going to become clear—that for business Brexit means more and more bureaucracy, and this is what we are seeing in terms of the new customs arrangements and in terms of this Bill. There—I cannot resist making that point.

Having said that, there are many serious issues with this Bill. I regard it as a treaty-breaking, devolution-wrecking, United Kingdom-unravelling Bill. These are serious points for debate and many of the amendments we are considering this afternoon, I am afraid, contribute to those consequences. So I hope that a compromise can be reached on this matter before Third Reading and, on that basis, I will abstain in the Division.