United Kingdom Internal Market Bill

Lord Whitty Excerpts

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

[Lord Whitty (Lab) [V]]

My Lords, most contributions so far have related to Part 5 and the Government’s somewhat ham-fisted attempt to unilaterally disavow an undertaking made only a few months ago. I agree with those sentiments. and with the reports of the Constitution Committee and the EU Select Committee and the contributions by their chairs, the noble Baroness, Lady Taylor, and the noble Earl, Lord Kinnoull. I will also support the Motion in the name of the noble and learned Lord, Lord Judge, at the end of the debate.

However, this is quite a big Bill, and I want to talk about something else. Before doing so, I welcome my noble friend Lady Hayman to the Chamber. I commend her speech, including the importance that she stressed of environmental standards, which relate to this Bill as much as they do to much of the legislation we will face over the coming months.

I want to talk about state aid, which is in the Bill but is dealt with rather superficially. It needs to be clearer before the Bill finishes its passage through this House. In a sense, the noble Baroness, Lady Noakes, referred to this in her contribution. She and I were members of an EU Select Committee that produced a report on state aid about two years ago. We rarely agreed on anything fully, but we do agree on the importance of this issue.

At its most acute, the issue of state aid could be epitomised by the issue in Northern Ireland. As a result of the agreement and the way the Government are now pursuing the matter, through the Northern Ireland protocol Northern Ireland is to be part of the customs union and, to a large extent, the single market. So if the Stormont Government gave a subsidy or preferential public procurement arrangement to, say, a Northern Ireland textile company, the main exports of which are to the Republic, and if its Irish competitors objected, would EU state aid rules prevail or would the UK internal market rule prevail? It is clear that we need a UK state aid regime and it is fairly clear how that will relate to our international obligations under the WTO and, I hope, to future bilateral free trade agreements. But it is not at all clear how it will operate in relation to the internal market, which is the focus of the Bill. If that same Northern Irish company’s main export were to Scotland, what then would the arrangements be? If it were to England, would it be different again, because there would be an equivalent objection from England-based competitors?

The fact is that industrial, employment and consumer policy—all of which are relevant to state aid considerations —are differentially devolved between the three Administration and centralised in England but not in the UK. Of course, even in England there is the expected intention to devolve more industrial and employment policy to the English regions, so the question could, at some stage in the future, apply to Greater Manchester, which may have a different industrial and employment support system from that in the West Midlands. How does that play out in the new state aid framework?

The central question is whether there is yet a draft framework for all of this in relation to state aid, at least between the UK Government and the Scottish, Welsh and Northern Irish Governments. If not, what do the Government think it should look like and, above all, how should it be enforced? Is the office for the internal market, due to be established within the CMA, wholly a creature of the UK Government or will the devolved Administrations have a say in its governance and decision-making? During the EU regime, the Commission’s state aid arm had authority over member states, with prohibitions and fines at its disposal. That could be the case for the CMA.

[Baroness Bloomfield of Hinton Waldrist (Con)]

I remind noble Lords of the speaking limit.

[Lord Whitty (Lab) [V]]

Before the passage of the Bill, we need to clarify these issues.

United Kingdom Internal Market Bill

Lord Whitty Excerpts

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

[Lord Whitty (Lab) [V]]

My Lords, like the noble Baroness, Lady Altmann, I originally put my name down to speak on this group because I wanted to give strong support to Amendment 52 in the name of the noble Baroness, Lady Boycott. She, the noble Lord, Lord Teverson, and the noble Baroness, Lady Altmann, have made a good case; after all, climate change and the other environmental challenges are bigger issues than Brexit, Covid or even the break-up of the United Kingdom. We need to ensure that nothing we do in this Bill or in parallel Bills diminishes our commitment to meeting our international obligations under the Paris Agreement or our national obligations under the Committee on Climate Change’s proposals on carbon budgets and the commitments we make as a Government and as a Parliament to meet our targets on that front. Amendment 52 would help deliver that.

During this afternoon—I was not here on the first day of Committee—I have also become increasingly concerned that the Bill is, as the noble Lord, Lord German, called it, twin-tracking different aspects of government policy on the devolution settlements and the way they are going. The two do not meet. The principal commitment here is market access. There are government commitments to standards in the Agriculture Bill and elsewhere, and there is the whole process of common frameworks, many of which are still in very preliminary form.

With regard to the broad public debate, the Government have managed a great diversionary tactic by banging Part 5 into the Bill and causing public and international outrage. However, there are some fairly profound issues in the lack of commonality or melding in the approaches on market access, common frameworks and the long-term implications for our devolution settlement. They have not been resolved today in the subjects we have discussed. At Second Reading, I expressed some concern that the Bill was not clear in relation to state aid and the internal market, or the role of the proposed office for the internal market.

A lot of this needs to be pulled together before we complete the Bill. I have a proposition. We have as a House established a short-term Select Committee looking at common frameworks. That has called for evidence; the deadline is 30 November. Would it not be sensible for the Government and the usual channels to talk to it? I am afraid I have not consulted my noble friend Lady Andrews, who chairs that committee, on this; it occurred to me only this afternoon. It is looking at the role of common frameworks, but in this Bill, which the Government are trying to get through as fast as possible, we are doing something which cuts across some of the commitments on them. Would it not be sensible to ask that Select Committee to look at the relationship between the Bill and common frameworks before we move to Report, or, if that is not possible, at least between Report and Third Reading? The process we normally adopt will not resolve these conundrums in the Bill; we need to find a novel way of dealing with them, and we have a solution at our fingertips with the Select Committee, which has already begun its work. I ask the Government and the usual channels to look at that proposition.

[Lord Judd (Lab) [V]]

My Lords, what a powerful team at the end of this very interesting debate. It was great to hear the noble Baroness, Lady Randerson, putting her case on standards so strongly; she is absolutely right. I was also delighted to hear my good neighbour and noble friend Lady Hayman—we live in the same ward in the west of Cumbria—speaking with all her authority. She will bring a very important contribution to the considerations of this House. My respect for the noble Baroness, Lady Altmann, is continuing and constant, and noble Lords hear it again tonight. What my noble friend Lord Whitty was saying about the useful contribution the Select Committee could make in getting things right should be taken very seriously. We get awfully trapped in patterns of organisation for our affairs and debates. Sometimes we do not look at our assets and the contributions they can make.

I strongly support my noble friend Lord Stevenson’s amendment and I am impressed and struck by the importance of Amendments 52, 53 and 54. They all deal with the essential quality of our existence and the action that is necessary to ensure that we have some sort of quality of existence, and ensuring that we are in a strong position to ameliorate the impact of climate change. These are absolutely fundamental issues for our future.

I sometimes look back on a long time in Parliament and politics and think that we sometimes want to fit things into organisational structures. Of course, the market is crucial and what we are debating is a reform of the market and what we are going to do, but the market is not an end in itself. We should constantly be restating the challenge: in the environment, in conditions of work and workers’ rights and employment conditions, of animal welfare, and of good husbandry of our land and care of it. There is also the whole issue of understanding that this is not just a choice of what we might do; we are dependent upon getting it right. From that standpoint, these amendments are a very important part of our proceedings, and I congratulate all those who have been involved in proposing them.

United Kingdom Internal Market Bill

Lord Whitty Excerpts

Committee stage & Committee: 3rd sitting (Hansard) & Committee: 3rd sitting (Hansard): House of Lords
Monday 2nd November 2020 Lords Chamber

[Lord Whitty (Lab) [V]]

My Lords, when the debate on this group of amendments started, it seemed that it would be another round of Westminster versus the devolved Administrations, which is a major theme of the group. Nevertheless, there are other issues.

I added my name to Amendment 166, which the noble Baroness, Lady Boycott, spoke to so ably just now. I also support Amendment 169 in the name of the noble Baroness, Lady Bennett, in principle. Both amendments would correct a glaring omission: the absence of any reference to environmental outcomes in either the Bill and the Government’s earlier statements on a shared prosperity fund or my noble friend Lord Stevenson’s otherwise admirable attempt to set up a shared prosperity commission to administer the framework of financial aid across the four countries of the UK.

In effect, the shared prosperity fund concept is a sort of replacement for the EU’s structural funds and regional funds—probably other funding too—which have hitherto been provided back to the UK by the European Union, largely to level up economic and social well-being and performance across Europe. In principle, I like the concept of such a fund or a commission, which may well be a better home for the administration of that framework than the office for the internal market within the CMA, but I must confess to your Lordships that I do not like the term. I racked my brains as to why. I think that it is somehow a bit redolent of the euphemistic terminology of the Soviet era or, perhaps even more worryingly, of imperial Japanese militarily dominated eastern Asia during the time of the co-prosperity zone in the 1930s and during the war. Neither of those historical examples were ever cited by Brexiteers as preferable to the supposed centralisation by Brussels. If that rings alarm bells for me, no wonder it does for the devolved Administrations. Whatever we do, can we perhaps set up a body such as the one proposed by my noble friend Lord Stevenson, but find a better title?

More substantively, if the UK is to distribute aid to business and others to replace and improve on the benefits of the money that we previously received from the EU—which, quite rightly, disproportionately benefited the devolved nations of the UK and deprived areas in England—we need some objective criteria, constraints and rules surrounding that allocation. We also need an institution along the lines proposed by my noble friend Lord Stevenson. His amendment lists a lot of economic and social criteria that such an award of funds would have to take into account, but there are no environmental criteria.

As Amendment 166 in the name of the noble Baroness, Lady Boycott, indicates, the biggest crisis facing us all is the climate emergency. Our international obligations under the Paris Agreement and national commitments under the budget of the Committee on Climate Change surely mean that future state aid of any sort must advance progress on mitigation of and adaptation to climate change, and certainly not lead to effects that undermine our carbon and greenhouse gas targets or make worse the outcome of our industrial system. To that degree, it needs to be an improvement on the operation of some EU funding to sectors and projects that even I, as a passionate pro-European, recognise were not always done well in the EU—that is, some projects, particularly in eastern Europe, undoubtedly damaged the environmental prospects for Europe as a whole, particularly by favouring the substantial further use of fossil fuels.

It is therefore important that any such criteria are written into the terms of the proposed shared prosperity fund, and the commission must reflect those environmental aims. Indeed, any proposition for state aid subsidy, preferred public sector procurement treatment or clearance for planning permission, whether by the UK Government, a devolved Administration, local government or a quango, needs to have attached to it a clear environmental assessment of the impact on the climate, particularly regarding greenhouse gas emissions.

The noble Baroness, Lady Bennett, takes it further than the carbon figures to cover other environmental dimensions, particularly the protection and enhancement of the natural world. Some of what she refers to may be more difficult to measure than greenhouse gas effects, but in reality, if subsidised projects lead to a deterioration in biodiversity and habitats, as did some European projects under the common agricultural policy, that is a contribution to environmental degradation and in many instances leads directly to increases in carbon, methane and other greenhouse gas effects. We should adopt the concepts in these two amendments before we move any further towards something like the shared prosperity system proposed by the Government.

The negative effects of some government subsidy need to be discouraged by the criteria, but positive investment—in renewable energy and other carbon-saving outcomes, for example—needs to be sustained through this system and written into it. The noble and learned Lord, Lord Thomas, was right to say that Clause 48 in its present form should be deleted, but if we are to provide a substitute it has to be an improvement, and an improvement on my noble friend’s amendment—it has to be greener.

[Baroness Hayman of Ullock (Lab)]

My Lords, I speak in support of Amendment 166, in the name of the noble Baroness, Lady Boycott. It is an honour to follow her, along with the noble Baroness, Lady Jones, and my noble friend Lord Whitty. I also support Amendment 167, in the name of my noble friend Lord Stevenson of Balmacara, and its inclusion of the impact of climate change—particularly flooding. That is an issue close to my heart, living as I do near Cockermouth in Cumbria, which has suffered such devastating flooding over the past 10 years.

As we heard today, and in last week’s debate, Part 6 does not rule out working through the devolved Administrations, but—and this needs repeating—sets no requirements to do so, and enables Ministers to spend money directly in otherwise devolved policy areas.

Right across the world it has been recognised that we have to combat global warming and restore biodiversity. It has been agreed that the next round of European structural funds will have tackling climate change and addressing the just transition as a major theme. In May of last year, Parliament recognised, on the Floor of the other place, that we are in a climate and environment emergency. Last week, in his response to Amendment 52, the Minister said that

“the protection of the environment and tackling climate change are vitally important, and something that the Government are, of course, already committed to.”—[Official Report, 28/10/20; col. 339.]

If the Government are serious about achieving this aim, they need to ensure that where direct financial assistance is given it is consistent with these climate and environmental goals. We need to commit to environmentally sustainable, transparent legislation and policies, and apply them to any future trade deals and relationships, if we are to have any hope of tackling climate change. Whatever the formal future relationship between the UK, its constituent nations and the EU, it is vital that we maintain close environmental co-operation and do not risk undermining it through poorly thought-out legislation. As the noble Baroness, Lady Boycott, explained, Amendment 166 could avoid funding being provided for projects that are not compatible with climate and environmental targets and could undermine these goals.

Funding to support the environment needs to be secure as we leave the EU, because we will lose access to so much. I will give a couple of examples that have not yet been mentioned. The EU LIFE programme for environment and climate action has €3.4 billion to support, among other policies, the special conservation areas in the Natura network. The EU maritime and fisheries fund is a €6.4 billion programme, more than a quarter of which supports projects protecting marine environments, developing sustainable fisheries, and supporting the scientific and data-collection aspects of fisheries management. The concept of sustainability involves operating in a way that takes full account of an organisation’s impacts on the planet, its people and its future. That includes how Government operate and the decisions they take. Amendment 166 will help us to secure this for the future.

United Kingdom Internal Market Bill

Lord Whitty Excerpts

Report stage & Report stage (Hansard): House of Lords & Report: 1st sitting & Report: 1st sitting: House of Lords
Wednesday 18th November 2020 Lords Chamber

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

My Lords, I support the general thrust of all the amendments in this group, and I have added my name to Amendments 10 and 21, which relate to goods. I should also have put my name to the services amendments, because both I and my group support those as well.

As was debated in Committee, we already worked under a more generalised public policy, legitimate aim regime while in the EU, and, as the noble Lord, Lord Anderson, said, that provided safety valves, which have now been taken away. In Committee, the Minister argued that the UK internal market was different, and for some reason that meant that it needed to be narrower. I cannot understand why—perhaps because we are closer together—we have to have fewer freedoms because we have left the EU. Therefore, I agree entirely with the drafters of the amendments that there are many more legitimate aims that need to be spelled out.

Realistically, differences will not be introduced into the market without a lot of thought. As my noble friend Lady Humphreys said in Committee, Wales is a good size to experiment with. The noble Lord, Lord Young, gave examples of various nations progressing at different speeds. Differences will survive only when they are practical and when matters of good public policy all deal with specific problems within a particular area, but they should be allowed to be put to a proper test and should not be undermined from the start by immediate get-arounds.

These are important amendments, and I hope that the Government will consider carefully why it is necessary for the Bill to undermine the freedoms currently enjoyed. That is not how Brexit was advertised, whether you were for or against it.

[Lord Whitty (Lab) [V]]

My Lords, I have added my name to Amendment 11, in the name of the noble Baroness, Lady Boycott. She has her name down to speak later but has indicated to me that, because of other appointments, she might not be able to make it. She has therefore asked me to say a few words—more than I might otherwise have done.

I recognise that the amendment in the name of my noble friend Lord Stevenson lists a number of public interest exceptions that should be put into the Bill. There are good arguments for many or all of them, but surely, in this crisis period for our climate and our natural environment, the protection of the environment must be seen as an exception. It is one where, for example, the Welsh Government could take a lead, with different regulations on, for example, air quality limits, pollution in rivers, noise and dangerous chemicals that are tighter than those adopted by the UK, or English, Government.

The noble Lords, Lord Anderson and Lord Young, have both set out examples of where the devolved Administrations have indeed taken that lead. If the Government oppose long lists, they ought at least to accept a short list of environmental protections, because they are speaking with forked tongues on this. We have had that today with the 10-point plan for a long-term strategic approach to a green economy. We have had the green industrial recovery plan and commitments made for houses to be fuelled entirely by offshore wind. We have also had big commitments to green spaces and other environmental objectives. And, of course, the Government are trying to impress the world—rightly now—on our commitment when we take over to lead the COP 26 in Glasgow next year.

However, we also know that, historically, free trade is regarded as being breached when environmental protection regulations have been opposed by the WTO and in free trade agreements around the world. There is a global change in attitude towards this, and indeed to some of the WTO rules, but it would be absolutely absurd if, to preserve an internal market within the United Kingdom, we prevented progress on environmental protection by the devolved Administrations or by England alone in the name of having complete and absolute internal market access rather than mutual recognition of different requirements.

If a regulation, a tax process or a planning approach that preserves environmental protection aims is to be regarded as a barrier to trade in our internal market, we are going against the trend of the whole of the rest of government policy and actually going against what is a rather slow but nevertheless clear intent of how world trade will have to be conducted in the age of the Paris climate agreement and the need to reduce carbon and greenhouse gas emissions. If there is one public interest limitation, surely it ought to be environmental protection, and that is what would be provided by the amendment in the name of the noble Baroness, Lady Boycott, which is also signed by myself and the noble Lord, Lord Randall.

[Lord Randall of Uxbridge (Con) [V]]

My Lords, it is a pleasure to follow the noble Lord, Lord Whitty. I too want to speak in support of Amendment 11, in the name of the noble Baroness, Lady Boycott, which I was pleased to add my name to. We have just heard from the noble Lord, Lord Whitty, who also signed the amendment and has astutely and eloquently put the case for it.

I apologise that I was not able to join your Lordships’ deliberations in Committee, but, from reading Hansard, I see that my noble friend the Minister stated:

“The current list of legitimate aims will … align in many cases with the protection of the environment … expanding the list … beyond the current list would increase the grounds on which goods from one part of the UK could face discrimination in another … but with each addition steadily eroding the benefits that we all enjoy of the UK internal market. Expanding the list would also make discrimination easier to create and implement within the internal market.”—[Official Report, 28/10/20; col. 338.]


With respect, I disagree with that. Amendment 11 adds the protection of environmental standards to the shortlist of what constitutes a legitimate aim. It is imperative that, at a time when most acknowledge that we are in a climate and nature crisis, the protection of environmental standards should be considered a legitimate aim—indeed, as the noble Lord, Lord Whitty, said, it is probably the most important legitimate aim—and that we can do so without it being treated as indirect discrimination.

As we have also heard today, the Government have unveiled a series of measures that are ground-breaking and very ambitious, and I do not doubt that the Government take environmental standards very seriously. I hope that this amendment will give them an opportunity to give more power to their elbow. This, I believe, is a very achievable ask and I hope that my noble friend the Minister will agree that it will help to ensure that the internal market supports the achievement of environment and climate goals and targets at this crucial time.

United Kingdom Internal Market Bill

Lord Whitty Excerpts

Report stage & Report: 2nd sitting (Hansard) & Report: 2nd sitting (Hansard): House of Lords
Monday 23rd November 2020 Lords Chamber

[Lord Whitty (Lab) [V]]

My Lords, I added my name to the amendment tabled by the noble Baroness, Lady Boycott. She has made most of the points that I was going to make, so I will be reasonably brief.

If there is any area that should override the assertion of a single UK market, particularly on mutual recognition, it must be the ability of each of the jurisdictions to go faster on our environmental commitments, particularly on the horrendously difficult task of meeting our carbon and greenhouse gas emissions targets and adapting to climate change. That is the key point in this amendment.

Northern Ireland is in a different situation, since it will still be within the single market of the EU, but if, for example, the Welsh or Scottish Governments wished to go faster in limiting carbon emissions or providing alternative energy sources, and that required specific legislation within those areas, then it would be perverse for the provisions of this Bill and UK internal market rules to prevent that. There are other environmental issues—the noble Baroness, Lady Boycott, has referred to single-use plastics, which are clogging up many ecological habitats and having an effect on biodiversity and on the oceans—which might perhaps also be areas of exception.

However, my main point is on climate change. At present, the Bill does not recognise the prime importance of going faster—and, if necessary, going faster in one part of the United Kingdom than another—to achieve our climate change aims. At present, the Bill allows legitimate interests for health and pest control. These are important issues, but not as important as climate change. This single-issue amendment ought to be written into the Bill. We need a race to the top in environmental standards, not to enforce a race to stick to the bottom.

The proper functioning of the framework agreements would probably provide some way of resolving any conflict on these issues, but without framework agreements being referred to in this Bill, we need something such as the new clause that we are proposing here. As my noble friend Lord Hain said on the previous amendment, by keeping the Bill as it is, we are acting in a more rigid and top-down way than the EU single market.

Climate change needs a particular reference in this Bill, and this is the easiest way to do it in this section. I strongly support it being written in.

[Lord Randall of Uxbridge (Con) [V]]

My Lords, I will speak briefly to Amendment 23, in the name of the noble Baroness, Lady Boycott, to which I was pleased to add my name. We have just heard from the noble Lord, Lord Whitty, who has also signed it, and he put his finger on the case for this amendment, as did the noble Baroness herself.

As the noble Baroness, Lady Boycott, said, this amendment would ensure that there is a derogation from the market access principles of mutual recognition and non-discrimination which would allow all four UK nations to put in place proportionate measures to protect the environment and tackle climate change. I echo completely what she and the noble Lord, Lord Whitty, said. We do not need to emphasise the crisis that we are facing with climate change and the environment. It is the big issue of our time.

There are concerns that without this derogation there is a potential for stifling innovation, as there will be no incentive for a nation to set higher environmental standards for goods given that it will have to sell goods from the other three nations which may have been produced to a lower standard. I make no apology for repeating the example of a possible consequence if we do not include this amendment, and I want my noble friend the Minister to put my mind at rest on this.

A potential ban on peat for horticultural purposes is a good example, and something that I have been campaigning on for some time. It is an issue that affects climate change and biodiversity. If any of our four UK nations decided to ban the sale of peat for horticulture due to its impacts on biodiversity and emissions, and to preserve our precious peat bogs, what would that mean for another part of the UK that had, at that time, decided not to go down that line? Can my noble friend confirm that, as I read the Bill as currently drafted, the far-sighted nation that decided to ban peat would still have to sell peat from elsewhere in the UK? I am no expert on this, so can my noble friend the Minister also clarify what the situation was while we were still within the EU? I have often heard that one of the advantages of leaving the EU was being able to do exactly what we wanted.

I use that as an example, but I could have given a number of other similar scenarios, such as single-use plastics. I know well from my time as a special adviser to the previous Prime Minister that the devolved countries do not always move at the same speed on environmental measures. I do not want their ambitions to be stifled, however accidentally.

I do not want to detain your Lordships over this excessively, as we have heard already from several others, but I will just say this: without insurance, I regard this as a very serious flaw in the Bill.