United Kingdom Internal Market Bill

Paul Scully Excerpts

Tuesday 15th September 2020 Commons Chamber

[Lucy Powell]

This might be where we differ, as I was going to come on to say, because we believe that the ultimate arbiter of the UK internal market would need to be the UK Parliament. Our amendments seek to ensure that negotiations through common frameworks are conducted in good faith and given proper time and that this would need to come back to the UK Parliament in primary legislation, rather than secondary legislation, as is proposed.

Labour supports the need for some kind of independent body to arbitrate the effectiveness of the internal market. However, we want to ensure that this body is fully accountable to the views of England, Northern Ireland, Scotland and Wales and, crucially, has proper teeth to be able to do what it needs to do. New clause 3 would therefore place a legal obligation on the CMA to monitor, to report and, most importantly, to consult with the devolved Administrations when discharging its new and enhanced duties.

I turn to the amendments tabled by the Scottish national party. While I agree with much of what the hon. Member for Inverness, Nairn, Badenoch and Strathspey (Drew Hendry) said, it appears from the amendments that the SNP does not want a functioning internal market; it wants to frustrate one. I am afraid that some of its amendments would, in essence, give a veto to the Scottish Parliament of the internal UK single market. We cannot support that. We believe that the UK Parliament has to be the final arbiter of a functioning internal market because we believe in the UK, and the SNP does not. Its amendments would clog up the process and effectively offer one Parliament a veto.

As MPs, we have a responsibility and a duty to protect the interests of this country. The rule of law and the safety and security of our nation should be paramount. For the Conservative and Unionist party—let us remind ourselves of that name—to propose legislation that breaks the law and threatens the Union by putting rocket boosters under those campaigning for independence is near unthinkable. We hope that Ministers will accept our amendments to strengthen the Bill and to respect devolution as it stands and that they will table amendments at the next stage to strengthen the Bill further, so that we can keep our Union intact, get Brexit done, get the deal that this country was offered and move on.

[The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Paul Scully)]

It is a pleasure to serve under your chairmanship, Mr Evans. I would like to thank all Members who have spoken today. Before I proceed to discuss part 4 in some detail and the amendments that have been tabled, I want to put the Bill into context, so that we can see where it sits. I would particularly like to thank my hon. Friends the Members for Stone (Sir William Cash), for Rother Valley (Alexander Stafford), for Hertford and Stortford (Julie Marson) and for Beaconsfield (Joy Morrissey) for their support of the Bill. This is an economic Bill to ensure that UK companies can trade unhindered in every part of the UK, and their focus on the core issue of ensuring that free trade must be commended.

The United Kingdom’s internal market has been the bedrock of our shared prosperity for centuries. It has enabled businesses and individuals to thrive and has been the source of unhindered and open trade across the country. It has helped to demonstrate that, as a Union, our country is greater than the sum of its parts. The economies of our four nations within one United Kingdom are forged as one. Around 60% of Scottish and Welsh exports are to the rest of the UK, which is around three times as much as the exports to the rest of the EU. About 50% of Northern Ireland’s sales are to Great Britain. In some local authorities in Wales, over a quarter of workers commute across the border. So when we leave the transition period at the end of this year, and the laws made in Europe can now be made across the UK, hundreds of powers will flow from the EU to the devolved nations and the UK Government in an unprecedented transfer of powers. It is really important to remember that we are devolving powers down to those devolved nations.

The Bill will not limit the devolved Administrations from innovating, as some Members have suggested. If an Administration wanted to introduce minimum alcohol pricing laws in the future, as was mentioned earlier, our proposals in the Bill would have no effect on them as long as the rules did not have a discriminatory effect on goods from other parts of the UK. Nor would our proposals do anything to prevent any Administration from introducing rules and regulations on how and where products could be used, including bans on smoking in public places. As these powers return to the devolved Administrations and as we recover from covid, we must ensure that our economy is stronger than ever. That is why the Government have brought forward this legislation to guarantee the continued functioning of our internal market and to ensure that trade remains unhindered in the UK.

Our manifesto committed us to maintaining and strengthening the integrity and smooth operation of our internal market, and eight weeks ago, my right hon. Friend the Secretary of State for Business, Energy and Industrial Strategy presented to Parliament a White Paper that set out plans to preserve our internal market after the transition period. Since then, we have spoken to hundreds of businesses and business representative organisations across the UK to gather views and feedback on our proposals. Overwhelmingly, businesses supported our approach. For example, the British Chambers of Commerce stressed that a fragmented system would create additional costs, bureaucracy and supply chain challenges that could disrupt operations for firms across the UK. As these proposals progress, business communities will want practical considerations, not politics, at the heart of the debates on shaping solutions. I want to thank those businesses, along with colleagues across the devolved Administrations, for their engagement on the White Paper.

Turning now to the independent body that will be created by the provisions in part 4, we consulted on how to ensure that an independent monitoring and advice function could uphold the internal market. In response, to oversee the functioning of the internal market, the Bill sets up the Office for the Internal Market within the Competition and Markets Authority. In some of the contributions today, Members have talked about who will serve in the Office for the Internal Market. I must remind people that the Competition and Markets Authority sits aside from Government and the directors of its board can be seen on its website. It is open to everyone to see their expertise in their fields. These are not people who are passed on through grace and favour; these are technical roles and it is really important that we have the greatest expertise in that body.

[Tim Farron]

I do not think that any of us doubt the integrity of the people on the board or on that body. We doubt their powers to be able to ensure that there is equity. Does the Minister not understand that there is a real difference?

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[Paul Scully]

I take the hon. Gentleman’s point, but prior to his contribution, other Members did raise the point about how these people were being recruited and for what reasons.

This measure means that each devolved Administration will be fully and equally involved in the oversight of the UK internal market. It minimises the need to seek court action, thus ensuring the continued smooth operation of the UK internal market that businesses crave. The provisions set out in the Bill provide broad oversight on an equal basis for all Administrations. The new Office for the Internal Market will be able to provide non-binding, expert reporting, technical monitoring, regulations and proposals, which will provide robust evidence on the actual or potential impact of regulatory measures, thus ensuring enhanced transparency and accountability for decision making across all the Administrations, including the UK Government acting on behalf of England. It is important that by doing this, the Office for the Internal Market will add an extra economic impact assessment that could otherwise just boil down to a political debate, which would not provide the consistency and coherence that businesses are seeking at this time.

I turn now to the amendments, starting with amendment 28 to clause 28. The clause is important because it defines those regulatory provisions on which the CMA will report and advise. This will ensure certainty and transparency for Administrations, businesses and the general public. Regulatory provisions are in scope if they set requirements for the purposes of mutual recognition and non-discrimination principles in the Bill for the sale of goods and equivalent services, as well as recognition of professional qualifications, and if they apply to one or more nations but not the whole of the UK.

As we have heard, amendment 28 seeks to exclude Scotland from the benefits of the new Office for the Internal Market. It would carve out regulation that applies only in Scotland from the definition of regulatory provisions across this part of the Bill, which basically means that the Scottish Government could not proactively request advice and its regulatory measures could not be included in the regular monitoring of impacts and trends in the UK internal market. If the functions of the new Office for the Internal Market applied asymmetrically, as is suggested, its work would be severely undermined from the outset.

Full UK-wide coverage and relationships with all four Administrations will be vital in gaining and maintaining the confidence of stakeholders, so I strongly question how the office could effectively fulfil the functions given to it by the Bill if it cannot assess impacts across the UK internal market as a whole. Parity is a central principle in how the office for the internal market will conduct its affairs. It will be of service to all four nations of the UK, but in turn it will legitimately expect to consider the impacts of regulatory measures across all four Administrations. The clause empowers the Scottish and Welsh Parliaments, as well as the devolved Administrations.

Equally, the amendment would deny Scottish Government policy makers an important support system for the development of regulation following the transition period. The expertise and analysis of the Office for the Internal Market, offered to all Administrations equally, should not be rejected in this way. Finally and most importantly, since this provision plays a key part in ensuring there are no trade barriers, businesses across the UK would suffer.

To ensure the ongoing smooth operation of the UK internal market, clause 29 will ensure that emerging trends and developments in the market are independently reviewed by the CMA. The CMA has a strong reputation for independence and impartiality, which the Government have striven to preserve in setting out the functions of the office for the internal market. The UK Government have no role in what I have described: the function of the office in reporting to this House, the other place and devolved legislatures, discussing such topics as intra-UK competition, free access to goods and services, and the impact of diverging regulatory conditions in different parts of the UK.

My hon. Friend the Member for North East Bedfordshire (Richard Fuller) raised other areas that the office could look into. It is important to know that the list is not exclusive; there are other areas, and the CMA has a great track record in championing the consumer, so the consumer point he raised is covered.

I said that there was no role for the UK Government in what I have just described. Truly independent scrutiny is crucial if anyone is to have faith in the office’s pronouncements on the health of the UK internal market, especially our business community at a time when those same businesses find themselves stretched thin by the impact of the coronavirus.

[Jonathan Edwards]

If the office for the internal market writes a report that says, for instance, that a regulation passed by the Northern Irish Assembly—if it was functioning—was contrary to the principles of the Bill, would there be legal recourse if a company was affected by that policy?

[Paul Scully]

As I say, the office will put forward non-binding reports to each devolved Parliament, but then there are the existing provisions for working intergovernmentally. We also have the common frameworks arrangement, as has been described, which has already provided good collaboration and co-operation, which I will come back to in a second. Ultimately, yes, the courts are there as a last resort, but if we have the inter- governmental relationships and build on those, as trusted partners, we will not have to resort to that.



The hon. Member for Kirkcaldy and Cowdenbeath (Neale Hanvey) said that minimum alcohol pricing, procurement, health and tuition fees would be undermined or constrained by the OIM’s functions. That is just not true. None of the clauses set out in part 4 precludes the devolved Administrations from introducing policies in any of those areas. The OIM will not be empowered to bind Administrations or veto regulations. It will only be concerned with assessing the economic impact of regulation, never its merit.

When not acting at the request of an Administration for reporting or advice, the OIN would only ever be concerned with monitoring the health of the UK’s internal market, such as the flow of trade, the impact of regulations on intra-UK competition and investment, or the ready availability of goods and services for all our citizens. The CMA, which the OIM will be established within, already operates at a strict arm’s length from the Government and all devolved Administrations. It has built up a wealth of expertise and experience, and has a global reputation for promoting competition. That is why it is a natural fit. As my hon. Friend the Member for Stone mentioned, the Bill clearly sets out that the OIM would be required to provide access to its reports and advice to all four Administrations on an equal basis, enhancing transparency and accountability.

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[Stephen Doughty]

The Minister is doing his best job to front this up and to give some of the detail that the Prime Minister was not across yesterday, but does he not have the slightest bit of doubt when his own colleague, the legal representative on the Welsh Conservative Benches in the Senedd, David Melding, resigned saying that this Bill poses dangers to the Union and that those have been gravely aggravated by the decisions of the Prime Minister? When somebody of that standing has criticised the Bill in this way, does the Minister not have any qualms about what he is doing?

[Paul Scully]

That is why I am going through the clauses and amendments at Committee stage to keep the focus on what is so important—what businesses expect us to do. I will not go through all the clauses, for reasons of brevity, but I am happy to follow up with anybody who wants to do that as we go through the rest of the Bill’s stages.

Amendment 30 would require the Secretary of State to obtain the agreement of the devolved Administrations before the Secretary of State specifies the level of financial penalties in secondary legislation in cases of non-compliance with the information-gathering requirements of the CMA. I am happy to reassure the Committee that the Government are committed to not taking any steps to bring the financial penalties into effect by commencing the clause until there is clear and credible evidence that there is a need to do so to enable the CMA to fulfil its internal market functions under the Bill. The amendment would also require the Secretary of State to consult with other relevant persons before making the necessary regulations. I want to confirm that the devolved Administrations would be consulted as other persons the Secretary of State considers appropriate, so they do fit within that.

On new clause 2, we are committed to maintaining high standards across the UK. That is absolutely vital. There are effectively two strands of this debate: first, the devolved Administrations; and secondly, concern—understandable concern—about standards. We have said repeatedly that we are committed to maintaining high standards across the UK, so I am pleased to have the opportunity to set out how we are already working with the devolved Administrations to ensure that this will be done.

I thank the hon. Members for Nottingham East (Nadia Whittome) and for Cynon Valley (Beth Winter) for their passionate remarks in favour of common frameworks and the high standards that we have here in the UK. The new clause, though, seeks to fundamentally alter the nature of the common frameworks programme, the design of which was agreed by the UK Government and devolved Administrations in October 2017 at the Joint Ministerial Committee on EU Negotiations. The principles agreed made it clear that the common frameworks are based on consensus and are designed to establish continuing dialogue between the UK Government and devolved Administrations. This dialogue facilitates policy development in a range of policy areas where powers returning from the EU intersect with devolved competence.

My hon. Friend the Member for North East Bedfordshire rightly asked what underpins those common frameworks. Common frameworks provide an agreed approach to ensuring regulatory coherence across the UK in specific policy areas where powers are returning from the EU and intersect with devolved competence. The Bill, on the other hand, works alongside these common frameworks to provide a broader structural underpinning, and offers additional protections to the status quo of UK trade, ensuring certainty for businesses and investors in the form of a backstop—if I may say that—of regulatory coherence. The UK Government continue to work closely and constructively with the devolved Administrations. It would not be appropriate to create a legislative underpinning for UK common frameworks because this is about consultation, collaboration and working together with the Administrations rather than legislating to push them to do so.

In conclusion, in the debate we have had today, we started off with some misunderstandings about common frameworks—we have five frameworks coming before Christmas, including for food standards. We have talked about whether water and the national health service were at risk in Scotland, both of which are not within the scope of the Bill. This is really important: when one starts reading the Bill, one has to get to the last page, because that is where the schedule of exclusions is. It is important to do that, before we posture here in this House about something. As I say, businesses are crying out, “Do not do the politics. Let us trade across the UK.” That is what they are crying out for. That is what they want. So I hope that the amendments will be not be pressed and then we can get on with getting this Bill through the House.

[Drew Hendry]

Mr Evans, it is a pleasure to serve under your chairmanship. I must admit I am still reeling somewhat from the irony of the Government opposing amendment 29 on the basis of political intrusion.

We have heard today from those who support independence and from those who are diehard Unionists in this Chamber. We have heard the concerns of the Welsh Government. Can I say that it is not a manufactured grievance to have these concerns from the Welsh Government, because they are genuine concerns? But that is true for Scotland, too. These are not manufactured problems; these are real-world problems.

I have to say that the Labour Front-Bench speech was warmly welcomed by those on the Conservative Benches today. The party that brought devolution in—the party of John Smith—undermining devolution in the way it did during that speech deserves some proper reflection.

In this debate, we have heard some warm words, but again, we have had absolutely no detail on how this is actually going to be protecting devolution. It is not. We have had no detail on the Office for the Internal Market. Who is going to be in that unelected body? How can we vouch for the integrity of anybody when we do not know who is going to be on that body and who is going to elect them—or who is going to appoint them, I should say?

The Minister talked about alcohol minimum pricing, which by definition is a discriminatory policy in Scotland. How can that possibly be protected under these measures? It cannot be. If we choose in Scotland and if the Scottish people vote for policies aimed at public health that cause the problem, the Bill still undermines the ability to do that.

The Government are determined to continue with their programme of overriding the Scottish Parliament and its elected representatives, and this underlines the fact that Scotland will never be seen as an equal member of the UK. We do not accept this. The people in Scotland are saying, and it is reported in poll after poll, that the only way to protect our Parliament is to be an independent nation.

Mr Evans, I press our amendment 28.

Question put, That the amendment be made.

The Committee proceeded to a Division.