Draft Definition of Qualifying Northern Ireland Goods (EU Exit) Regulations 2020

Paul Blomfield Excerpts

Tuesday 10th November 2020 General Committees

[Paul Blomfield (Sheffield Central) (Lab)]

It is a pleasure to rise to speak with you in the Chair, Mrs Miller.

As the Minister has said, the SI sets out the definition of ‘qualifying Northern Ireland goods’ in the context of the United Kingdom Internal Market Bill, about which the Opposition set out our concerns when it was debated in the Commons, and which was overwhelmingly amended last night in the other place by an extraordinarily broad coalition that included former leaders of the Minister’s party. They share our concern about the rule of law.

The Labour party clearly supports unfettered access of Northern Ireland businesses to the rest of the UK market, so will not oppose the SI today. As the Minister said, unfettered access was a commitment made in the ‘New Decade, New Approach’ agreement to restore devolved government to Northern Ireland, and Labour strongly welcomed that. However, the Opposition have concerns about the SI, which I believe the Minister anticipated in her opening remarks, and we would welcome some further assurances on them.

Our first concern relates to the breadth of the definition of ‘qualifying Northern Ireland goods’—something to which the Minister herself referred. The Government appear to acknowledge that it is problematic. It will need further clarification in further legislation because that definition is not sufficiently tightly drawn to provide protections. The SI is provided for by the Henry VIII powers under the European Union (Withdrawal) Act 2018, which gives the Government extraordinarily wide powers to

‘make any provision that could be made by an Act of Parliament (including modifying this Act)’.

We opposed that when that Act was debated two years, but in terms of the specifics of the SI, the wide drafting of the definition of qualifying goods is the problem, because it includes anything that is in circulation within Northern Ireland without being subject to customs control while there. However, it also includes goods processed in Northern Ireland from GB-derived goods, which are themselves subject to customs control in Northern Ireland. For example, that includes whisky imported from Scotland to Northern Ireland which might be in duty suspension in Northern Ireland, but then used to make mince pies in Belfast. That would leave those mince pies as ‘qualifying Northern Ireland goods’, despite the whisky used to make them being subject to customs control. Therefore, as I think the Minister acknowledged, the definition of ‘qualifying Northern Ireland goods’ is not sustainable in the longer term.

Separately, the National Crime Agency has warned that Northern Ireland could become a back door into the UK internal market, with the risk of counterfeit goods or, less likely, lower standard goods flowing into the UK. I am sure that the Minister is aware that UK farming unions have expressed concern that livestock and dairy could be disproportionately impacted by the measure. The potential problems were also raised by the Police Service of Northern Ireland in its evidence to the Northern Ireland Affairs Committee, when it said that the definition offered in the SI is simply not good enough.

The Opposition recognise that the Government see the SI as phase one and, as the Minister said, it is suggested that they will come up with a more refined definition in due course. Can the Minister tell us when that might be? When will we have the clarity that we all need? Can she also update us on the anti-avoidance regime, which is still to be designed and approved by the end of the year, according to the Government’s intention, to address the risk of Northern Ireland acting as a back door to Great Britain.

The Opposition are also concerned about how the SI will contribute to the weakening of the devolved Administrations’ powers. It must be read alongside the United Kingdom Internal Market Bill, clause 43 of which stops the devolved Governments imposing new kinds of checks or controls on qualifying Northern Ireland goods, and clause 11 applies the market principles of mutual recognition and non-discrimination to qualifying Northern Ireland goods. That means that the Welsh Government could not prevent something from being sold in Wales, or the UK Government could not stop something being sold in England, if it is a qualifying Northern Ireland good. If something is lawfully produced in, or imported into, Northern Ireland, it would have to be allowed to be sold in Wales, or indeed in Scotland or England. I appreciate that that was a principle within the EU internal market, and the Minister will probably cite that, but the issue here is the imbalance. In England, the Government have the power to amend the United Kingdom Internal Market Bill to prevent that consequence from arising, either by modifying the exceptions in the Bill through an SI, or by getting Parliament to legislate. Those options are not available to Wales or Scotland, and therefore an asymmetry undermines the devolved powers. Can the Minister acknowledge that is the case, and whether the Government are content with that, given that it significantly undermines local voices as expressed through the devolved Administrations?

We are also concerned about the impact on standards across the UK. Given that Northern Ireland is essentially within the EU single market for goods, any good allowed to be sold within the EU, as complying with the EU single market, must be allowed to be sold in Northern Ireland. If, for example, Wales decided to exceed the EU environmental standards applicable to vehicle emissions, the combination of the regulations in the SI and the terms of the United Kingdom Internal Market Bill would mean that Wales could not succeed, because a lower-standard vehicle would be on sale lawfully in Northern Ireland and would be a qualifying Northern Ireland good, and the mutual recognition principle in the United Kingdom Internal Market Bill would have effect. Improving standards is an ambition that the Chancellor of the Duchy of Lancaster often espouses—despite the fact that he is refusing to sign up to any kind of safety net in the current negotiations with the EU—and I appreciate that the right hon. Gentleman probably would not want such consequences to arise, but the combination of the protocol, the SI and the internal market Bill make it very hard to see how Great Britain’s standards could ever exceed EU standards in matters such as environmental protection. Is that also the Minister’s understanding? If so, can she explain how the Chancellor of the Duchy of Lancaster will achieve his ambition?

Given that processed goods coming from Northern Ireland may have components originating outside of the country, does the approach outlined in the SI for qualifying goods have wider implications for the UK’s approach to rules of origin with the rest of the world?

I appreciate that the Minister said that further work was ongoing, but the Government have had more than a year since agreeing the withdrawal agreement and the Northern Ireland protocol. Frankly, it is disappointing that the issues I have highlighted have not been resolved by now, so I would be grateful if the Minister could answer my questions.