United Kingdom Internal Market Bill

Lord Wigley Excerpts

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

Moved by

[Lord Wigley]

22: After Clause 10, insert the following new Clause—
“Market access principles: protection of devolved competences
The United Kingdom market access principles do not affect the existing powers of Senedd Cymru, the Scottish Parliament or the Northern Ireland Assembly, with regard to—(a) their existing procurement practices and procedures, or(b) their existing competence to legislate to secure and apply procurement policies which underpin their economic and social strategies.”Member’s explanatory statement
This amendment seeks to ensure that existing policies pursued by the devolved legislatures are not undermined by this Act and aims to prevent uncertainty regarding the legitimacy of procurement rules and regulations currently in force in the devolved territories.

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[Lord Wigley (PC) [V]]

My Lords, Amendment 22 stands in my name and that of my good and noble friend Lord Hain. It follows on fairly naturally from Amendment 21, which we have just passed. The objective of this amendment is to put on the face of the Bill an unequivocal statement that nothing in this Bill, if enacted, will diminish or constrain the devolved Governments from continuing to use their purchasing power to help achieve their economic objectives. As there have been many worries expressed in this Chamber, in the other place, in Cardiff Bay and in Edinburgh about the danger of a clawback of powers to Westminster, I believe that it would be helpful for the devolved Governments if an unequivocal statement along the lines which I propose could be included in the Bill. I know that Ministers in the devolved Governments would welcome such a definitive statement.

I have at earlier stages, and in the context of the Trade Bill, drawn the attention of the House to the way in which successive Welsh Governments—Labour, Labour/Plaid Cymru coalition and Labour/Liberal Democrat coalition—have all regarded the purchasing power of the Welsh Government as a valuable tool in implementing their policies and achieving economic objectives. It would be very strange were that not the case.

When the late Professor Phil Williams and I, with the help of many others, published in 1970—yes, 50 years ago—An Economic Plan for Wales, we identified that a key ingredient in Wales’s economic plight, namely that the GDP per head in Wales was significantly below the UK average, was the fact that activity rates in Wales were some six percentage points below those in England and that therefore a central objective of economic policy in Wales should be to raise those activity rates to the UK average. Over the subsequent three decades, it was an uphill struggle. Only after the establishment of the National Assembly—now our Senedd, of course—were real inroads made. It was only a couple of years ago that, for a brief time, activity rates in Wales were actually higher than the UK average.

I focus on this for a very good reason: that a significant contributory factor to this success was the deliberate strategy pursued by successive Welsh Governments of using their procurement policy to support businesses within Wales. They did this within the constraints of European competition policy, and without lowering standards. When the Assembly was established, between 30% and 35% of goods and services were procured by the Welsh Government from within Wales. By now, the figure is 55% and the target, I understand, is to achieve over 70% procurement from within Wales. As the larger corporations realised this was happening, some of them opened new sales offices in Wales. In due course, this led to their also establishing local suppliers within Wales. This means that, for every pound spent by the Government, there is a multiplier effect within the Welsh economy: more jobs are created and a virtuous circle is established.

Previously, we saw on occasion the total nonsense of purchasing bodies within Wales—central government, local government, our health authorities, universities and colleges—using suppliers many miles distant when a local capability existed. I well recall during my time as an MP a school in north-west Wales having its grass cutting done by a company from England and a hospital getting its sandwiches from a supplier in the Midlands. Now, the green agenda has at long last become more generally recognised as essential for the survival of the human race, and the concept of buying local and eliminating unnecessary product miles has become mainstream. Supporting local economies is now seen as a valid, indeed essential, objective of government policy. Last month, partly as a response to the devastation that Covid could cause to small businesses, a campaign began called Where You Shop Matters, underpinned by Visa. That campaign has gained widespread support in Wales and, hopefully, will do so elsewhere.

Clearly, it will never be possible to source all Welsh government procurement within Wales. We do not produce all the goods in Wales, and where we do, they do not necessarily compete on price, standards or punctual availability. The fact that they are made in Wales certainly should not overrule all other considerations, but, other things being equal or within a tolerable latitude of being so, economic, social and environmental good sense tells us that this is a valid governmental approach.

Let us not pretend that the sourcing of relatively mundane supplies within the local economy is going to solve all our problems; it is not. The truth is that, despite raising employee activity rates, Wales’s GDP per head remains stubbornly near the bottom of the UK league table. To get to the top of that table requires innovation, creativity, investment, enterprise, self-confidence and initiative. However, as we have slowly started to depend more on ourselves and less on others, we have seen those factors move in the right direction. Within a UK single market, Wales needs the latitude to develop its own solutions to what are long-standing psychological, as well as economic, challenges. The last thing we need now is for central government in London to impose dramatic straitjackets on our capability and capacity to help ourselves.

My amendment seeks assurances that the Bill will in no way limit devolved Governments in taking initiatives in their procurement policies to create economic gain that will serve their communities. It seeks to ensure that existing procurement practices and procedures will not be constrained and that the devolved Governments may continue to legislate in a manner that helps to ensure that their procurement policies underpin their economic and social objectives. That has been permissible under European single market rules, and I ask the Minister to confirm that the Bill cannot and will not be used to undermine those policies within the UK internal market. I beg to move.

[Baroness Boycott (CB)]

My Lords, I agree with many of the noble Lord’s points. I have tabled Amendment 23 and I am very grateful to the noble Lords, Lord Whitty and Lord Randall of Uxbridge, for supporting it. It simply seeks a derogation from market access principles to allow all four nations of the UK to put in place proportionate measures to protect the environment, to support the progressive improvement of environmental standards and to tackle climate change.

The combination of the market access principles in the Bill and the absence of an agreed common framework means that, although different Administrations will not be prevented from introducing different standards, in practice we risk seeing a stifling of innovation and a chilling effect when one nation wants to introduce different, higher environmental standards for a particular good or service, or wants to introduce other measures to tackle climate change. Effectively, we are disincentivising Governments from aiming higher because incoming goods from other parts of the UK implementing lower standards will not have to meet the new ones.

Some examples bring this issue to life. The first is the sale of peat for horticulture, which should not happen anywhere, but if any of the four nations were to decide to ban the sale of peat for horticulture due to its impacts on biodiversity, that nation would still have to sell peat from elsewhere in the UK. A second example is single-use plastic. The Welsh Government are currently proposing to ban the sale of nine single-use plastic products, but we are proposing to ban only three. Given how the mutual recognition principle currently operates, Wales would have to allow the sale of the six additional products if they had been manufactured elsewhere in the UK, which would totally undermine that policy. Thirdly, the Government are planning to phase out the sale of household coal and wet wood next year in England. However, under the mutual recognition principle the sale of both household coal and wet wood from other parts of the UK would carry on in England.

In Committee, the Minister said that protecting the environment and tackling child climate change are vital. The EU provides that in certain circumstances, it is possible to go beyond its commonly agreed standards to protect the environment—for instance, banning particular kinds of packaging, such as metal drink cans. However, the Bill as drafted does not allow for environmental or climate-related exceptions. It provides for exceptions in only a limited range of circumstances, such as to prevent the spread of disease or pests or to authorise the use of a chemical in a particular part of the UK. There also exclusions for fertilisers and pesticides, which were added during the Bill’s passage through the Commons.

My amendment asks for one further, crucial addition to the list of exclusions—for environmental standards and for tackling climate change. I would welcome the Minister’s clarifying the decision-making process. Why was it considered necessary to introduce exclusions in certain policy areas, but not in others such as the environment and climate change? I know that that is a broad brush stroke, but it is still possible to address individual elements, which currently we are not. Surely, there can be no more important time to incentivise ambitious climate and environmental policy.

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[The Deputy Speaker (Lord Lexden) (Con)]

I call the noble Lord, Lord Wigley, to conclude the debate.

[Lord Wigley (PC) [V]]

My Lords, first, I thank the dozen or so noble Lords who participated in this debate, which was very focused and has raised a number of issues that will need to be taken further. I was grateful to the noble Baroness, Lady Boycott, for introducing her amendment, many parts of which overlap with mine; I certainly support her amendment in its own right, irrespective of how it interplays with mine. I am sure that she and other colleagues will accept the principle of product miles being an important element in the consideration of environmental and economic policy.

I was taken by the references the noble Lord, Lord Liddle, made to regional policy in England. This was touched on by the noble Baroness, Lady McIntosh, as well. That is absolutely valid, because circumstances vary from area to area, certainly between the south-east and the north of England, and between other areas. Where there are different circumstances one needs different policies and mechanisms of government that can deliver those policies in line with the areas’ requirements.

Therefore, in advocating these powers for the three devolved nations, I also accept entirely the argument that there should be an ability to fine tune policy for the regions in England. It is for those regions to stand up and be counted, and to demand the powers to do so. After all, the facility in Wales of having our own Government has enabled us to take new initiatives that have helped to solve some problems—not all of them, but some of them. The noble Baroness, Lady Bennett, whose support and that of the Green group I welcome for both amendments, has underlined on a number of occasions the need for there to be devolution to the regions of England.

I listened carefully to the comments made by the noble Lord, Lord Empey, in particular, who raised a question that I do not think has been fully answered by the Minister regarding how the use of orders might be undertaken in Northern Ireland. That leads me on to the question, in responding to the Minster’s argument that there will be a separate policy statement on procurement reform, of whether that new policy and the legislation associated with it will be driven through by statutory instrument. We might be in a position where Wales and Scotland could, like Northern Ireland but for different reasons, be subject to that sort of policy.

What I want from the Minister before I conclude this short debate is some assurance that, in drawing up the consultation and procurement proposals he has in mind for a later stage, that will not go through the back door, which he is not admitting to doing through the front door in this Bill. I would be grateful if he could respond specifically on that question: that the procurement reform will not undermine the thrust of the argument we have had in the debate. I would be grateful for his comments on that before I conclude.

[Lord Callanan (Con)]

The Government intend to deliver measures on procurement through a wider package of procurement reform. The aim is for primary legislation to be made in the second Session, as I said in my answer. I hope that is enough reassurance for the noble Lord.

[Lord Wigley (PC) [V]]

I am grateful to the Minister for clarifying that this will happen in the second Session, but I very much hope that it will not open a totally different view of the devolved competencies and the balance of powers needed not only between the three devolved nations, but regionally in England. I hope that that can be given greater thought.

I will not press the amendment, but I believe that the approach encapsulated in it can be combined with some of the other amendments we have already passed that will be part of the revised Bill that goes back to the House of Commons. If that is the case, there may be opportunities for Welsh MPs to pick up this matter in the House of Commons so that we can come back to it again when we consider how the House of Commons responded to the Bill as it finds it. Having said that, I beg leave to withdraw the amendment.

Amendment 22 withdrawn.

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

My Lords, I welcome the government amendments as I would welcome any improvement, but unfortunately they do not go far enough to compensate for all the implications of the OIM being within the CMA. I shall say more on that in later groups, and I do not need to rehearse all of it now, save to say that these amendments do not sufficiently change the nature of the CMA, its culture and what it was originally set up to do, so it is no longer—or it never was—the right home for a body that has to operate with the much more sensitive and different objective of the OIM.

I recognise that requiring the CMA to support the operation of the internal market in the interests of all parts of the UK, to act even-handedly with respect to the national authorities and to recognise consumers among the other classes of interested persons all featured in debate in Committee. Indeed, I rather recognise some of the wording. Amendment 55, reflecting the balance of the panel, is also welcome. Again, I seem to recall saying similar things. But I would like the Minister to clarify one thing. I am still concerned about what is controlled by this panel amendment. If the panel size in the amendment is a minimum of three, as it is for the CMA, how can you guarantee that all those interests are represented by three? In Committee, I introduced an amendment to say that the investigating panel should be a minimum of five because I thought that that was the number of people you would need to do an investigation. So both the pool from which the investigations can be drawn and the panel need to have all these characteristics. Is that how it is going to work going forward or are we restricted to the three individuals?

Amendment 56, requiring the consent of the devolved Administrations, looks good until you get to Amendment 57 and the override of one month. While I acknowledge that that can give time for discussions or whatever else may go on, absent any other conditions or explanations of why that override has been operated, it just looks like a convenient delay that you can put up with and then have your way in the end. So I do not think that that goes far enough. As I said, I do not object to the CMA having representatives of the devolved Administrations appointed to the board, but the OIM should not be in the CMA.

[Lord Wigley (PC) [V]]

My Lords, I am glad that the Government have moved a little on matters relating to the CMA and the IOM, but it is not quite far enough. I support Amendment 54. The Government have opted to give the CMA a central role. They could have opted to use not the CMA, but a whole new body created to cover this essential work that would have fully understood the world of devolved politics. They have chosen not to do so, although, to be fair, they have certainly moved on the IOM.

The consequence is that the Government lay the CMA open to criticism that it is simply unaware of the detailed issues that might concern devolved Governments. If the CMA had a nominee from each of the three devolved Governments it would avoid finding itself in a whole new world, as seen through the prism of Cardiff, Edinburgh and Belfast. This is an amendment to save the CMA from getting into an almighty and unnecessary tangle—or, as we would say in Welsh, since we are all quoting from Celtic languages tonight, into a smonach. I suspect that the CMA has not a clue what a smonach is; I rest my case. Amendment 59 is merely a consequential provision to deal with occasional vacancies on the CMA’s board, so I support that also.

[The Deputy Speaker (Baroness McIntosh of Hudnall) (Lab)]

The noble Lord, Lord Cormack, has withdrawn from the debate, so the next speaker is the noble Lord, Lord Bruce of Bennachie.