United Kingdom Internal Market Bill

Richard Holden Excerpts

Tuesday 22nd September 2020 Commons Chamber

This Government took on the responsibility of delivering Brexit, implementing the withdrawal agreement and getting a deal with the European Union that could enable us to enjoy frictionless borders. Britain is waiting. Britain expects the Government to deliver on their promise.

[Mr Richard Holden (North West Durham) (Con)]

I would like to raise two main points on the clauses that are being discussed today. The first is around how the Bill protects our successful internal market through mutual recognition and non-discrimination. It is crucial to protect that internal market from a short-term race to the bottom and from measures being taken by devolved Administrations or even the UK Government to favour certain parts of the country over others. That is why it is so important that we maintain that internal market.

The second thing I want briefly to talk about is state aid. Without state aid powers coming back to the United Kingdom, as my hon. Friend the Member for Stone (Sir William Cash) said, we will not be able to deliver on the Government’s manifesto commitments on levelling up, which are crucial to areas such as mine. He mentioned extensively the coalfield communities and the former steelmaking communities—places that I represent in the now blue wall in the north-east—and it is crucial that we have state aid powers to enable us to deliver on those commitments.

[Jonathan Edwards]

I thank the hon. Gentleman for his comments on state aid, and I also thank the hon. Member for Stone (Sir William Cash)—I did not realise the Tory party was so in favour of state intervention. However, will the hon. Gentleman square this circle for me? The other big driving force of British Government policy at the moment is international trade deals, and the big ambition is the Trans-Pacific Partnership. That trade deal with the 11 countries in that part of the world has very strict conditions on state aid, so how does the hon. Gentleman square the circle with his argument this afternoon?

[Mr Holden]

The hon. Gentleman might not have recognised where the Conservative party has moved to, but I guarantee that a lot of voters across the country did recognise that, especially when they saw us standing up for them at the general election in the broader sense of wanting to bring powers back to the UK from the EU, which has been particularly restrictive. We are looking for international agreements, and there will be debates. For example, we have just seen what has happened with the Japan free trade deal. There are going to be measures around this, and negotiations are going to take place. It is particularly important that, as we look at these things, they are part of a broader picture. However, state aid will be important in helping to level up certain parts of the country. I am sure that debate will go on over the next few years, and it is one we will need to keep an eye on as we see these trade negotiations going through the House in future years.

[Andrew Griffith (Arundel and South Downs) (Con)]

My hon. Friend is a doughty champion for trade and prosperity. Does he agree that, in these difficult times—not eased by today’s announcement—what the businesses of Britain need most are confidence and certainty, and that one thing this House can do today by passing the Bill, with only 100 days to go before the new opportunities to trade prosperously with the wider world, is give businesses confidence and certainty about what our trading arrangements will look like, what our internal market will look like and what our legislative affairs will look like going forward?

[Mr Holden]

I could not agree more with my hon. Friend. We need only to look at the crucial trading relationship that my constituency and others in the north-east have with Scotland. On the Scottish side, the trade with the rest of the United Kingdom is many times the trading relationship with even the European Union, which as a whole bloc is obviously our largest international trading partner; it is many times that within the UK internal market. For most of the companies in the United Kingdom, it is these internal United Kingdom measures that are so crucial, and that is what the Bill really does deliver.

I would like to speak briefly about amendment 89. We have heard a lot over the last few months, particularly from SNP Members, about how they view a lot of what is happening at the moment as some form of Westminster power grab, but I could not disagree with them more. In fact, their amendment, if it were supported, would almost be a power giveaway. It would not only involve those big powers returning from the EU to Westminster and, in some cases, all the way down to the devolved Administrations; it would give other parts of the United Kingdom an ability to change standards. It would give powers away from the Scottish Parliament and away from the United Kingdom Parliament, in which Scotland is represented, to other devolved Administrations, who could then make up rules for other parts of the United Kingdom that could then be imposed on Scotland without any form of Scottish representation at all.

[Carol Monaghan]

The hon. Gentleman talks about standards, but he started his speech this afternoon by saying that this was not a race to the bottom. How does he respond to the concerns of the General Teaching Council for Scotland, a professional organisation underpinned by law, which is now looking at having to accept teachers from other parts of the UK who do not reach the professional standards required to teach in Scotland?

[Mr Holden]

The hon. Lady makes an interesting point, but she does not answer the point that I was making: the amendment that her party is supporting would mean that any part of the UK could impose new restrictions on Scotland or any other devolved Administration. The Northern Ireland Assembly or the Welsh Assembly could pass something and impose it on Scotland without the consent of the Scottish people. In trying to make what is probably a quirky political point with amendment 89, her party is not seeing the larger consequences that could flow from it. Opposition Members need to pay attention to this important point, because the amendment would give power away from the Scottish Parliament to the rest of the devolved Administrations. There is also the potential for more devolved powers, perhaps for the counties and regions of England, which could also be imposed on Scotland without the say of elected Scottish Members. We need to be very careful about this—

[Carol Monaghan]

Will the hon. Gentleman give way?

[Mr Holden]

No, I have already given way to the hon. Lady once on this point.

More broadly, it is crucial that as we leave the European Union we give as much confidence as possible to British business, especially at this time of covid-19. There is a lot of uncertainty at the moment in my constituency—and I am sure in the constituencies of other hon. Members—particularly relating to the covid pandemic, and anything we can do to provide assurance on our important ongoing internal market relationships will be crucial. That is why I shall be supporting the Government and opposing the amendments proposed by the Opposition.

[Caroline Lucas (Brighton, Pavilion) (Green)]

It is a pleasure to serve under your chairship, Dame Rosie. I reiterate my support for amendment 9, which would very effectively put powers back where they belong with the devolved nations.

I turn to my new clause 10 on environmental standards, an issue that has been raised by several hon. Members on the Opposition Benches. I want to start by reminding hon. Members of two Government commitments. The first was in the Business Secretary’s foreword to the UK Internal Market Bill White Paper, which stated that its proposals would

“prevent any part of the UK from blocking products or services from another part while protecting devolved powers to innovate”.

The second was when the Bill was published and the Government website sought to assure us:

“The UK’s existing high standards across areas including environmental standards, workers’ rights, animal welfare and food standards will underpin the functioning of the Internal Market”.

I have tabled new clause 10 because the Bill does not give legislative effect to either of those commitments, and fails to create the proper framework and give the safeguards and assurances needed to ensure that all four nations of the UK will be able to legislate ambitiously, progressively and, indeed, effectively to protect the environment.

As it stands, the Bill allows market access principles to trump the environment, risking, as others have said, a race to the bottom and stagnant, if not actually diminishing, environmental standards. To date, the UK Government and the devolved Administrations have been aligned behind a common baseline of minimum EU standards, and that baseline has been kept high in part by the requirement for environmental measures to aim at a high level of protection. EU law has also provided—crucially, in certain circumstances—scope to go beyond the baseline to protect the environment and human health.

Regulatory divergence already exists in the UK, and there have been several examples from the devolved Administrations of innovative policies that deliver legitimate public policy objectives and, specifically, progressive environmental rules and regulations. I am thinking, for example, of the fact that Wales was the first country in the UK to introduce a charge on carrier bags. I have tabled this new clause because I believe the measures set out in the Bill could affect the ability of all Administrations within the UK to achieve their environmental ambitions and, indeed, to keep improving environmental standards. It could, in other words, lead to a race to the bottom in the absence of commonly agreed minimum standards.

Under the current Bill, while the devolved Administrations are not legally prohibited from introducing new requirements for goods and services, under the market access commitment, these new requirements will be disapplied for incoming goods if standards remain lower elsewhere. That risks rendering such measures ineffective in practice, creating a chilling impact on their creation in the first place. The mutual recognition principle means that the lowest standards legislated for by any of the UK Parliaments must automatically be adopted by all, and that will disincentivise individual Governments from improving existing standards and implementing new higher standards.

The Bill sets out no possibility of exception to mutual recognition requirements for environmental purposes. Mutual recognition can be denied only to prevent the spread of pests, disease and unsafe foodstuffs, and even then only under extremely strictly controlled conditions. The broad scope of the mutual recognition and non-discrimination duties and the lack of grounds to justify local requirements will stifle policy innovation in the devolved Administrations, as well as more routine improvements.

My new clause provides for a wider system of derogations, allowing an individual jurisdiction to refuse mutual recognition on the justification of legitimate public policy objectives and, specifically, on the grounds of measures to protect the environment. This is needed to begin more properly to address the need to improve environmental standards to deal with the climate crisis and nature’s stark decline. It is also needed to support and respect the devolution settlements by ensuring that measures taken by the devolved Governments in areas within their competence will not be undermined by this Bill.

It might be helpful to give a few examples of the difference that this new clause makes. First, on the blight of single-use plastic items, the Welsh Government are proposing to introduce a ban on the sale of nine single-use plastic items, while the UK Government are proposing to ban only three. The mutual recognition principle would mean that the Welsh Government would not, in effect, be able properly to regulate the sale of the additional six products if they were manufactured elsewhere in the UK. Producers in England would be able to sell the six products in Wales, irrespective of the higher Welsh environmental standards. As the Welsh Government have stated, a ban that could apply only to Welsh-produced plastics would undermine the policy and render it ineffective.

Secondly, as this Bill stands, the rules governing packaging would also be classified as a product requirement, and would therefore be fully subject to the principle of mutual recognition. Therefore, imported goods would not have to comply with any new devolved requirements. As Professor Dougan from the University of Liverpool has said—others have already quoted him today—the basic effect of the UK internal market

“would be a powerful disincentive for Scotland to exercise a devolved competence to regulate packaging on environmental grounds, since any new rules would end up applying only to domestic goods, not English imports.”

Finally, a third example is a Department for Environment, Food and Rural Affairs initiative that, without new clause 10, could be negatively impacted by the provisions of this Bill. DEFRA has plans to phase out sales of house coal and wet wood in England. However, if this Bill comes into force before those bans, they will be less effective, since the sale of materials originating from other parts of the UK would not be banned. For example, pre-packaged domestic coal originating in Wales, Scotland or Northern Ireland could be sold in England because the ban will be disapplied in relation to its sale. There will be no possibility of an exception or defence of proportionality, because the Bill does not provide for one.

My new clause 10 would address the Bill’s failure to include the exceptions and derogations vital to enabling all four UK nations to put in place sensible and proportionate measures to protect the environment. It deals with the practical consequences of mutual recognition by requiring suppliers to comply with devolved rules where they relate to the pursuit of environmental protection. The condition under paragraph (b)—that any regulation to which this amendment applies must be a proportionate means of achieving a legitimate aim—will help to ensure that derogation on the grounds of environmental protection cannot be exploited for other policy or market aims.