Northern Ireland Protocol Bill

Sammy Wilson Excerpts

Committee stage
Tuesday 19th July 2022 Commons Chamber

[Stephen Farry]

Indeed, and the dairy sector in Northern Ireland is absolutely clear. The provisions in this Bill are an existential threat to their business model, and we will come shortly to the consequences of that.

[Sammy Wilson (East Antrim) (DUP)]

I thank the hon. Member for giving way; he has been quite generous, but it is important that we scrutinise the amendment. Will he explain to me how the dairy sector, or whatever other sector wished to trade with the Irish Republic, would be disadvantaged if it agreed to dual regulation—in other words, if it complied with EU regulations for the products that it wished to trade with the Irish Republic? Is the EU going to say, “We will not accept your goods, even though you’ve accepted all our regulations, you’re applying those regulations and your goods are safe to enter the EU”?

--- Later in debate ---

[Michael Ellis]

Forgive me, but I must make some progress. I am sure that there will be another opportunity to intervene.

Let me turn to amendment 36, in the name of the right hon. Member for Tottenham (Mr Lammy). I addressed this point previously, so I shall be brief. It would potentially circumscribe the ability to design dual regulatory routes under clause 9 to preserve the unity of the UK’s internal market. Given that there are more than 200 pieces of goods regulation applied by the protocol, those powers are needed to ensure that the regime can function effectively in practice for each class of goods. The dual regulatory regime is necessary to remedy disruption to GB-NI trade, which will only worsen as the EU and UK rules diverge over the course of time. The arrangements will also need to be updated over time to reflect changes in UK and EU regulations, so Ministers will need appropriate discretion to make policy decisions in doing so. The right hon. Gentleman may well not agree with me, but I ask him to withdraw his amendment.

I turn to amendment 28, also tabled by the right hon. Member for Tottenham, who I do not think is in his place. The Government have engaged broadly on the issues created by the protocol with stakeholder groups across business and civic society in Northern Ireland, as well in the rest of the UK and internationally. As the House will know, the Bill provides specific powers to establish a new regime in Northern Ireland, which addresses the issues with the current operation of the protocol. We are engaging with stakeholders on the detail of how those powers are to be used and will give plenty of notice to those affected.

The Government have already begun a detailed programme of engagement to inform the specific design of the regime in Northern Ireland that will be created by this Bill. Furthermore, clause 9 is designed to provide stakeholders in Northern Ireland with certainty that the Government will deliver the solutions that we have outlined to the problems the protocol is causing. It is essential that this power can be used quickly if needed. Although in normal cases the Government will engage with stakeholder groups in Northern Ireland, and already are engaging with them, there may be occasions when the urgency of a situation means that the Government need to act swiftly. The amendment risks tying the Government’s hands behind their back.

[Sammy Wilson (East Antrim) (DUP)]

Does the Minister note that, while the Opposition are now asking for an economic assessment of the protocol Bill, they did not seek any such economic assessment before they voted for the protocol? Even when the economic consequences were evident, they then still pursued the path of supporting the protocol. It does seem a bit hypocritical to ask for an economic assessment of this Bill while ignoring the economic impact of the protocol, which they support.

--- Later in debate ---

[Peter Kyle (Hove) (Lab)]

It is a pleasure to speak under your chairmanship once again, Mr Evans.

I shall start by responding to a point made by the right hon. Member for East Antrim (Sammy Wilson). To clarify, the Labour party and I voted against the protocol when it was before the House. In fact, we walked through the Lobbies together on this issue. I am surprised he does not remember such a memorable occasion—it is quite a rarity, it must be admitted. I hope that when he comes to speak, he will correct the record, because we have a good relationship. It is one that I value and that I hope will continue.

[Sammy Wilson]

For the record, will the hon. Gentleman tell us the stance of his party on the protocol today?

[Peter Kyle]

First, I am slightly disappointed that the right hon. Gentleman did not take the opportunity to correct the record from his previous intervention.

My stance and that of the Labour party on the protocol is very clear: it needs to evolve, to change and to be improved, and that should be done by all lawful means. This Bill is not lawful. Of course, the right hon. Member for Maidenhead (Mrs May), the former Prime Minister, said on the Floor of the House just a few days ago that in her opinion it was unlawful. We heard from a former Attorney General in the last day of debate that he felt it was unlawful.

For that reason, the Labour party believes that although we voted against the protocol in the first place, now that it is in domestic statute and part of an international treaty, the responsible thing to do is to negotiate a way forward. What we cannot do is repeat the debates of previous days. We need to stick to the clauses before us. Today, we are talking about—

--- Later in debate ---

[Peter Kyle]

The hon. Member talks about what I said, but all I did was quote the words of the Dairy Council for Northern Ireland; I was not expressing my views. When I talk about an industry in Northern Ireland, I of course try extremely hard to listen to the people on the frontline who represent that industry. Of course I take into consideration his experience, and the frontline experiences of his family.

My amendment 28 says, “Let’s listen to those on the frontline and get the Government to do an assessment before we do something that could have radical consequences for the sector.” I understand that the hon. Member has first-hand experience of talking to people, and of living in a family of people, who are affected by this. Expert opinion fed to me contradicts that view. What is the logical conclusion? Before we move forward with a set of regulations that could ride roughshod over the dairy industry in Northern Ireland, let us take the time to make an assessment. We should have an impact assessment, lay it before the House, and debate it before we pass a law that could radically impact the industry.

[Sammy Wilson]

The hon. Member has to be very careful in listening to bodies that claim to be representative of an industry; those at the top of the body very often have their own agenda. Let us look at the logic of his argument. A third of Northern Ireland’s milk goes for processing in the Irish Republic. In other words, some businesses in the Irish Republic are dependent on an awful lot of milk, which they cannot produce in their country, from Northern Ireland. If we have a system of dual regulation that ensures that the milk is as safe tomorrow as it was yesterday, and as safe after the Bill goes through as it was before the Bill, does he not think that businesses and Government in the Irish Republic will accept that Northern Ireland milk is essential for those industries, and so would not seek to put a barrier in its way?

[Peter Kyle]

The point I am making is quite clear. There is a difference of opinion here, and I think it is unwise to reject out of hand the representative body for the dairy sector in Northern Ireland. Let us engage with that. I have been very respectful of the right hon. Gentleman’s view, but I make the point that that was the second intervention from him, and I did ask him to correct the record in relation to his previous intervention, when he said something that was categorically untrue about my voting in the past. I hope that when he makes his next intervention he will do the right and honourable thing, which is to correct the record unequivocally and recognise that I voted in the polar opposite way to the way that he said I did.

The best way for us to resolve these issues is to have an independent assessment of the impact on different sectors that might be negatively affected—or certainly affected—by the legislation. It would be irresponsible not to, because there is such a difference of opinion.

--- Later in debate ---

[Sammy Wilson]

First, as the Opposition spokesman, the hon. Member for Hove (Peter Kyle), seems to be very sensitive about any comments I make about his past voting behaviour, may I confirm that yes, of course, he walked through the Lobby with us in opposition to the withdrawal agreement? I am not so sure that his main motive was his objection to the Northern Ireland protocol. I suspect that the evidence since that date, the full support the Labour party has given to the protocol and its ignoring of many of the concerns that Unionists have probably confirm my view, and that of most people in Northern Ireland, that regardless of the initial trip through the Lobby in this House, the Labour party supports the protocol. Indeed, its amendments today would seem to indicate that it opposes any attempts to do away with the protocol. I hope that that is a sufficient assurance to him as to my position on his stance.

I want to deal with the three main amendments that have been debated today. The first is amendment 44 to clause 7, in the name of the hon. Member for North Down (Stephen Farry). It is, no doubt, an attempt to ensure that the process and the concept of dual regulation never takes place. Yet what is the purpose of clause 7? It is threefold. First, it is to ensure that the democratic deficit that exists in Northern Ireland is wiped out. That deficit relates to the EU regulations and laws currently on the statute book as a result of annexe 2 of the protocol and the prospect of any of those 82 pages of laws being changed in the future. Those changes would apply to Northern Ireland without any say from this House, the Northern Ireland Assembly or the business community in Northern Ireland, whether they were detrimental or not.

For the life of me, I cannot see how the continued imposition of that part of the protocol is to the advantage of Northern Ireland. Indeed, I note that some who are opposing the Bill are doing so on the basis that the regulations provided for in the Bill would be implemented by Ministers here, without reference, they say, to the Northern Ireland Executive or Assembly. It seems okay for EU laws to be imposed upon Northern Ireland without any say, but it is an “affront to democracy” when UK Ministers impose regulations on their own country. One has to look at the motives of those who are opposing this clause and ask: are they and do they continue to be the agents of the EU, wishing that we could remain in the EU, even knowing that the people have voted not to remain in the EU? They are trying to circumvent the wishes of the people of the United Kingdom.

Secondly, these regulations apply by and large to firms that will never trade with the EU. Some 95% of firms in Northern Ireland do not do any trade with the EU, yet they are required under the protocol to abide by EU regulations. This Bill genuinely gives the best of both worlds to firms in Northern Ireland, because those that do not trade with the EU will now be freed from having to abide by costly EU regulations, which may even be detrimental to their business.

At the same time, those that wish to trade with the EU will be able to volunteer to accept EU laws, even though those EU laws have not passed through the Northern Ireland Assembly or been subject to scrutiny. Regardless of the fact that those laws have not been scrutinised, or that they may have detrimental effects, they will volunteer to comply with the regulations. If that is the case, that addresses the concern expressed by the hon. Member for North Down and others—here again, the hon. Member for Hove is wrong—[Interruption.] I think the record will show that the hon. Member did say that businesses would be forced to adopt those regulations. No one will be forced to adopt them. They will make a commercial decision: do I wish to trade with the EU? If I do, I will volunteer to comply with the regulations.

One of my arguments about the Bill is that the clause on dual regulation is probably unnecessary. If a firm decides to trade with another nation, by definition it will have to apply the regulations that are required to sell goods in that country. There is no need for a firm such as Caterpillar in my constituency, which sells generators to Africa, China and America, to adopt dual regulation with the countries to which it sells the generators. It simply makes sure that it adopts and includes the relevant regulations when producing its products, because otherwise it could not sell in those countries. Nevertheless, the Government have decided to include this measure, to give an assurance to the EU that firms that trade from Northern Ireland into the European Union via the Irish Republic will be compliant with EU regulations. They will make that decision. People talk about the Government not honouring the protocol, but this is another way in which they have sought to honour an objective of the protocol, namely that the EU single market will be safeguarded. It will be safeguarded because firms will make a conscious decision to abide by the regulations, whether they are manufacturing chairs, sofas, beds or milk.

I am very touched by the concern that the hon. Member for North Down has for the agriculture industry. I wish he would transfer that concern to some of the climate zealots in his own party, who are demanding that we stop eating beef, drinking milk and using dairy products, and that laws are passed to ensure that people cannot enjoy the kind of sunny day we are experiencing today. I wish only that his concern for the farming industry in Northern Ireland was as consistent as he claims it to be, because I do not think it is. Indeed, some of the climate policies that his party has been promoting in Stormont would have devastated the beef industry, the pig industry, the sheep industry, and the dairy industry in Northern Ireland.

Amendment 13 would require a report on dual access. Substantial information is produced on trade across the border. That is why we know that only 0.4% of EU trade comes through Northern Ireland—we have the statistics. That is how we know that only 5% of businesses sell to the Irish Republic, and that five times more of our exports go to GB than to the Irish Republic. There is already extensive reporting, so I do not know why there is any need for further reports. There also seems to be concern about the impact that the measure would have on the European market. Well, I think the role of this Government is to protect the UK market, not to have concerns about what happens in the EU market. The EU can look after its own market—we have left it—and decide what is good or bad for it. This Government do not have a job to promote the EU market; they do have a job to protect and promote the UK market.

Amendment 14 would require that the North South Ministerial Council debate the regulations and come to a conclusion, and then that that conclusion be reflected and supported by the UK Government and the Joint Committee. There are two fundamental flaws in this. First, the North South Ministerial Council does not have a role in dealing with issues that are reserved matters here at Westminster; it only has a role in dealing with those aspects that are under the remit of the devolved Assembly in Northern Ireland and the Irish Government. So this would extend the role and the remit of the North South Ministerial Council by allowing and requiring it to comment on issues that are reserved to the United Kingdom Government. Secondly, the United Kingdom would then be required to reflect and support the view of the North South Ministerial Council. Let us not forget that although people talk about the all-Ireland economy, the Irish Government are in competition with the Northern Ireland economy and with the UK economy. How can we reasonably expect something that may be agreed at the North South Ministerial Council that may be detrimental to the UK economy to be supported by UK Ministers?

[Claire Hanna]

Does the Member acknowledge that the North South Ministerial Council, when it is not being held to ransom, is already a consensus-based forum, and that our amendment speaks to proposals agreed there that would therefore be agreed by his party? Does he not understand how hollow the words about respecting the Good Friday agreement in all its parts sound when a vital part of it, strand 2, is denigrated in this way? Does he further acknowledge, as his party leaders have done, that there are potential mechanisms within strand 2 of the agreement and within the North South Ministerial Council that can give voice to Northern Irish interests?

[Sammy Wilson]

That brings me to my next point—that introducing reserved matters to the North South Ministerial Council would mean that the controversies that have currently stopped it working, and stopped the Northern Ireland Assembly working, would be imported into the North South Ministerial Council so that we would not get the kind of agreement that the Member talks about. Amendment 14 would reinforce the impact that the protocol has had on the current institutions of the Belfast agreement and bring them into the remit of the North South Ministerial Council in future.

New clause 15 goes down the same route of introducing an input for the North South Ministerial Council, and another barrier to the introduction of dual regulation in the Bill, by requiring that the Executive endorse the arrangements—and in a way that, as we have heard, would exclude Unionists because the SDLP has now adopted majoritarianism with regard to the Northern Ireland Assembly.

A comparison was made with Brexit. Brexit was a majority decision. It was not a majority decision in Northern Ireland; it was a majority decision of the people of the United Kingdom as a whole. A referendum was held across the whole of the United Kingdom and it was binding in all parts of the United Kingdom, regardless of pockets where there was a majority for Brexit or a majority against it. If we had gone down the route of consensus on a referendum as suggested by the SDLP—which would of course be impossible—then what would we have done about London or other pockets across the United Kingdom? We cannot make that comparison between the dealings of this Bill regarding the arrangements within the Assembly and a referendum vote.

I hope that the Committee will accept the points I have made and will not vote in favour of those amendments.

[Ian Paisley]

It is an honour to follow my right hon. Friend the Member for East Antrim (Sammy Wilson).

There is no doubt that the Bill before us is a repair job, because Brexit was not completely done. It was not properly done in Northern Ireland, where we were left with a protocol that has caused untold problems, hence why we are back here today. People can say, “Oh, there isn’t really a problem with the protocol. Just get on with it.” However, we have now had I-don’t-know-how-many hours of debate because the protocol is not working. It has broken down and needs to be replaced, and that is the fact of the matter.

--- Later in debate ---

[John Redwood (Wokingham) (Con)]

I welcome the notion of measures that restore our control over VAT and subsidies in Northern Ireland. It is entirely within the spirit and the text of the protocol, which says that both parties will respect the internal market of the United Kingdom. How can we have a proper functioning internal market if we have to have rates of VAT in Northern Ireland that are different from the rest of our internal market? And how can we claim that our country’s sovereignty is respected by this part of the agreement, as the EU originally said it would be, if we are not sovereign to change VAT in an important part of the United Kingdom? It is right that we legislate on this issue, because we took back control and we wish to restore the sovereignty of this Parliament. How can we say that we have a sovereign Parliament properly restored if our Chancellor of the Exchequer cannot change VAT in part of the UK? It is right and it is legal that we legislate within the terms of the protocol and the agreement, and it is essential that we do so. Those who favour a negotiated solution with the EU should recognise that a huge amount of time and talent has been put into negotiating with the EU in recent years on these matters, and it has been unwilling to be reasonable or to respect the spirit and even the letter of the protocol itself. It is time to legislate.

I say to those who favour a negotiated solution and still have this idea that the EU will, in due course, negotiate properly over one that it is far more likely to negotiate in a more sympathetic and realistic spirit if it knows that we have the firm backstop of clear legislation, which means we will do the right thing by Northern Ireland and the whole UK if the EU cannot be bothered to meet us and understand what it means for the communities in Northern Ireland.

The EU should also take on board the good advice from the Democratic Unionist party and other members of the Unionist community in Northern Ireland. The whole fabric of the Good Friday agreement rests upon the consent of both communities. The EU says it fully signs up to that and sees it as of prior importance to the protocol, so the EU has to understand that there is no cross-community consent for the current position. The sooner we legislate to sort that out, the better.

[Sammy Wilson]

Although the proposer of the amendments, the hon. Member for Hove (Peter Kyle), has said that these are complex issues, for people in Northern Ireland they are very simple. First, simply the inclusion of Northern Ireland under the VAT regime of the EU means that when there are tax changes that can apply to the rest of the UK, they cannot apply to Northern Ireland. I know that he has placed considerable faith in the willingness and ability of the EU to negotiate its way around some of these obstacles, but the fact of the matter is that despite two years of negotiations, these obstacles have not been removed. When it comes to the kinds of things that the Government may wish to do, and which he would like the Government to do, for example, on VAT on electricity bills, the action required is not something to be done some time in the distance future; it is something that is essential now, because people are facing the high fuel and energy bills now. Frankly, many people in Northern Ireland, where fuel poverty is higher than it is in most parts of the UK, would find themselves disadvantaged for not weeks or months but perhaps even years while negotiations went on as to whether or not the EU would be prepared to permit the UK Government to exercise the fiscal freedoms that we thought we had obtained when we left the EU and to apply them to Northern Ireland.

I believe that this Bill and this clause are necessary. I also believe that the wording is correct, with the Government deeming the issue “appropriate” rather than “necessary”, because it could be argued that in some instances although it might be good to change the VAT rate, it is not necessary to do so; it could be argued that it is not necessary to keep in line with the rest of the UK and that particular circumstances pertain in Northern Ireland that do not make it necessary. That is why I believe the threshold of appropriateness is correct.

When it comes to state aid, the issues are also not complex—they are very simple. They have implications for the constituents of all Members of this House, because let us not forget that the state aid provisions refer to any state aid and any support that the Government may give to industries or firms anywhere in the UK if it impacts on trade between Northern Ireland and the EU. That is what article 10 says about any respective measures that affect trade between Northern Ireland and the Union, and that are subject to the protocol. Annexes 2 and 5 of the protocol contain lists of the kinds of sectors that would be impacted by that.

That means that the Government are always looking over their shoulder when they seek to give support to businesses. That support may be peripheral—for example, if the Government decide, as they have done, to support the production of batteries for motor cars in a factory in GB. If those cars are selling in Northern Ireland and, as a result of the subsidy and support, cars made in GB would have an advantage on the Northern Ireland market—compared with French cars, for example—that could be an area where the EU Commission would say that state aid rules apply, and the Commission and European Court would make a decision on that.

That is why it is appropriate that the Government have such a provision, because we cannot define or be sure at what stage the EU may say, “The support you have given that industry will impact on and give a Northern Ireland seller an advantage on the EU market, and therefore we wish to interfere in the support that you give to industry.” That is not just about Northern Ireland, because state aid provisions do not just apply specifically to Northern Ireland firms; they apply to those firms that may sell in Northern Ireland and get support elsewhere in the United Kingdom. That is why it is correct that Ministers have the ability to make a decision on whether something is appropriate.

Secondly, Ministers should have the flexibility to consider circumstances and issues that may emerge, and actions that the EU may wish to take. Those actions cannot be foreseen now, but we might have to act on them quickly in future. For that reason, I hope the amendments will not be pushed to a vote, and that Labour Members will see that rather than being complex, these are simple issues that require the kinds of actions already included in the Bill.

[Stephen Farry]

I will be brief, as I have just a few short points. First, I recognise that there are genuine concerns about state aid and VAT. We want to see those issues resolved, but that resolution has to be via negotiation with the European Union. On state aid, it is worth reflecting that companies will be operating across the service and goods sectors, and this is where things become incredibly complex, given the different nature of the regimes and how that applies to the European Union. State aid rules are not an absolute barrier, and prior to leaving the European Union, all parts of the UK would routinely apply to the European Commission for permission in that respect.

We should desire a situation where there are reduced rates of VAT in line with wider UK policy, and allow various incentives for people to do activities or help people with bills. We have the option of negotiating again with the European Union. Application to Northern Ireland is not barred under the protocol, but it does involve the UK Government making an application to the Commission. I have spoken to Maroš Šefčovič in that regard, and the door is open for those discussions.

There was a lot of cynicism about what was announced by the Chancellor in his spring statement on VAT and renewables, and this was seen as a major cause célèbre for why the protocol had to be addressed and fixed. In practice, the actual value of that measure to Northern Ireland per annum, based on the Treasury’s figures, was only £1 million, yet a huge drama was built up around it. Of course it was open to the Government to talk to the European Commission about the measure’s application in Northern Ireland. I asked the Treasury a question towards the end of April, and the answer was, “We’ve had no such discussions with the European Union in that regard”, and that it would be part of wider discussions on the Northern Ireland protocol. Rather than actually addressing the issue when a solution was readily available, the Government were more interested in using it as something with which to bash the European Union about the head, and to create a narrative of crisis.

--- Later in debate ---

[Sammy Wilson]

Does my right hon. Friend accept that this is an issue not just for us Unionists? It should be an issue for the whole House that the Chancellor of the Exchequer cannot apply his or her decisions to the whole United Kingdom, which this Government are supposed to have gained sovereignty over. That should be a concern for everybody who is elected to this House and believes that this House is the body that makes decisions for the United Kingdom.

[Sir Jeffrey M. Donaldson]

My right hon. Friend is right, of course. That goes to the heart of what Brexit is about. The mantra was “Taking back control.” That meant taking back control of our borders, our money and our laws. Her Majesty’s Government and the Chancellor of the Exchequer cannot apply a benefit designed for the whole United Kingdom to one part of it, Northern Ireland. That highlights a flaw in the final Brexit arrangements: in respect of Northern Ireland, we do not have control over our money, our laws or, sadly, our border. That is a fundamental point.

I respect the fact that the hon. Member for North Down speaks from a particular perspective, and I in no way mean to diminish its validity, but many of his constituents are solid Unionists. I have been in North Down since becoming leader of my party and have met many of those Unionists, who are affronted that their sense of identity and of belonging to the United Kingdom is undermined by the protocol, and that there is no proper recognition of that reality. That goes to the heart of why we have the current political problems and instability, and why our political institutions are not functioning properly.

[Sammy Wilson]

There is the argument that says, “Well, you could negotiate this. We should go back to the EU and negotiate to allow the VAT reduction to be applied to Northern Ireland.” Does my right hon. Friend accept that that is even more demeaning? The Government claim to have taken back control; the argument is that they should go cap in hand to a body that we left because we no longer wanted it to have control over decisions made in the United Kingdom, and ask, “Please can we apply tax changes that we made for England, Scotland and Wales to Northern Ireland?” That is even more demeaning than saying, “At least we’ve got back control for the rest of the UK.”

[Sir Jeffrey M. Donaldson]

My right hon. Friend makes a valid point, but the matter goes further than that. It is not just that our Government cannot apply their own policies and economic and financial initiatives to Northern Ireland in the same way that they can to the rest of the United Kingdom; it is that those restrictions imposed by the European Union are restrictions over which none of us on the DUP side has any control. They are regulations and rules on VAT brought forward by the European Union, on which we have no say whatsoever.