United Kingdom Internal Market Bill

Stephen Farry Excerpts

Monday 21st September 2020 Commons Chamber

[Mr Walker]

As my right hon. Friend knows well, the withdrawal agreement was negotiated by the UK and the EU and agreed with a view that certain elements would be resolved by the Joint Committee. I think there was a reasonable expectation on both sides that the Joint Committee would have made more progress on those issues, but unfortunately we have heard some harmful interpretations over the past few months. The point of these Government clauses is to ensure that we can rule those out and put in place the appropriate legal default.

[Stephen Farry (North Down) (Alliance)]

Surely the Government’s approach is self-defeating in the following respect? Ministers rightly outline that a range of issues are still to be resolved through the Joint Committee. For that, we need to prove to the European Union that the UK can be trusted if various derogations are granted to the UK, but if we pass legislation that still contains even the merest threat of breaching the existing agreement, why would the EU be flexible and give us that trust as we will not have shown the ability to follow through with other previous agreements?

[Mr Walker]

I have to say to the hon. Gentleman that we have consistently followed through with our agreement. We have done that with the delivery of protocol requirements when it comes to the legislation for the dedicated mechanism and to citizens’ rights, and we will do so regarding EU state aid rules applying in Northern Ireland in respect of goods and electricity as agreed.

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[Gavin Robinson]

I do agree. I know that the Minister went through a number of the amendments we have tabled and said, “Look, there are provisions about direct and non-direct discrimination and those still apply.” However, where a business is competing in a sector for which there are state subventions and subsidies in England, Scotland and Wales but where those same subsidies and subventions are precluded in Northern Ireland, there will be discrimination. There will be an unfair playing field in the economy of this internal market, and that square is not circled in this Bill. There are no satisfactory answers from the Government to say, “If we run with the implication of EU state aid rules in Northern Ireland, and if we support businesses in GB but not in Northern Ireland, how is there not unfair competition? How are there not direct or indirect discriminatory outworkings of the provisions of this arrangement?”

I want to draw the Minister’s attention to a useful document, which I hope he will spend time considering. I refer to the Northern Ireland stakeholder response to the UK’s research and development road map consultation, which considers clearly some of the things the Government could do under clauses 46 and 47 in providing financial support for sectors in Northern Ireland. We hear an awful lot in this Chamber about doubling down on levelling up. We know that research and development support across the UK is hugely uneven, and that the majority of that money goes into the south-east of England, to London and to the east of England, and that Northern Ireland and other regions throughout the UK do not get their fair share.

The stakeholder response is a collaborative piece of work by Belfast City Council, Belfast Harbour, Queen’s University, Ulster University and Catalyst Northern Ireland. It asks that the Government ring-fence R&D support, with a minimum of £250 million per year for Northern Ireland; that they create bespoke arrangements that allow for flexibility of funds for the Northern Ireland economy; that they appoint regional delivery partnerships; and that they are considering an ARPA—advanced research projects agency—for the cyber-security hub in my constituency, our FinTech hub, the advanced and high-end engineering and manufacturing in my constituency, and the aspirations of a digital free port in Belfast. That ARPA opportunity is well worth considering and it is well worth showing that even though we may have an uneven playing field, our Government are serious about doubling down on levelling up and will extend support to Northern Ireland.

I would love to go through a lot of the amendments, but I am conscious that I have gone over my self-imposed timeline, so I will just discuss the importance of amendment 68, which proposes a change to clause 40. It proposes that Northern Ireland Assembly consent would be required for any new arrangements or requirements for goods traded from GB to NI, and new requirements would not come into force unless they were agreed with the consent of the Assembly. It would also provide that:

“No additional official or administrative costs”—

arising from new requirements—

“may be recouped from the private sector.”

The Minister referred to the trader supporter service, and we know that the Government have said that there are going to put £355 million into that service at this stage. Huge questions remain unanswered for businesses in Northern Ireland, which have heard that they have unfettered access to the UK internal market. Some understand that that promise is one way; some understand that that promise is NI to GB. Some do not understand that there are huge constraints on GB to NI trade, because the Government gave that power away in the withdrawal agreement. They passed it to the Joint Committee and therefore they are only half of the equation. We know that the Joint Committee is considering what goods are at risk, but businesses are trying to access goods in the rest of GB and their suppliers are saying, “Are we able to send this to you? Will we be able to sell you these goods? Will we be required to file exit declarations? Will there be a cost for us doing business with you in Northern Ireland, one that we are not prepared to meet or you are not prepared to pay?” If that is the case, it makes a whole nonsense of this internal UK market.

[Stephen Farry]

Will the hon. Gentleman clarify for the record whether, if the amendment were to proceed and the consent of the Northern Ireland Assembly were required, that would constitute a unilateral breach of the protocol in how that consent would be given? Could a petition of concern be lodged against it, thereby giving his party and anyone else—Members of Traditional Unionist Voice, for example— a veto over the way forward?

[Gavin Robinson]

The first aspect of that question is the intended breach, and the answer is clearly no, because amendment 68 talks about “new requirements”, and if the hon. Gentleman reads the content of the amendment, he will see that. The Northern Ireland Assembly has cross-community voting mechanisms not to provide vetoes but to encourage consensus. The hon. Members on the Benches to my left know exactly why those provisions were brought in, and they know the importance of them, but they tend to believe that they are worthy of use only when there is an issue for which they wish to use them. That is hugely regrettable. When I talk about the consent of the Northern Ireland Assembly, I know that there are cross-community mechanisms to ensure that we get to a place of consensus. I do not believe in stalemate or in logjams. I have spent my political life trying to resolve them. I hope that when I contribute on issues in this House, people respect the fact that, although I do not necessarily agree with everyone, I try to get to a place where we can agree.

Businesses in Northern Ireland that buy from GB and wish to sell to GB want to know what their trading position will be. They were promised the best of both worlds, yet day after day they are learning about the bureaucratic and administrative burdens that are going to be placed upon them. They want answers. I know that the Minister will respond thoughtfully to the debate, and that he will pick up on some of the additional issues that I have raised on amendment 68. I hope he does that. I hope he offers some clarity and comfort for businesses in Northern Ireland, and I hope he outlines just how the Bill will assist them. I believe that it will not do so, however, so I hope that he gives us some clarity as to what steps the Government are prepared to take in the Finance Bill to resolve these overarching and burdening issues, which remain unresolved, through the Joint Committee.

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Leaving the European Union does not mean becoming a client state of the European Union. That is why I voted three times against the first version of the withdrawal treaty, and that is why I am backing this Bill in the Lobby this evening.

[Stephen Farry]

It is a pleasure to follow the right hon. Member for Chipping Barnet (Theresa Villiers). Although I fundamentally disagree with her on Brexit, I certainly recognise her work in Northern Ireland when she was Secretary of State. I refer, in particular, to her work on the Stormont House agreement, though I think it is worth noting that that is another agreement that the Government are in the process of breaching as well.

I primarily want to speak to the amendments of which I am the lead sponsor—amendment 41 and new clause 6—but also to make wider reference to part 5 of the Bill. In brief, amendment 41 seeks to ensure that everything in part 5 is consistent with international law obligations and also with the Good Friday agreement in all of its parts, though it would be preferable to strike clauses 42 to 45 from the Bill in their entirety, but, at this stage, amendment 41 is a catch-all to try to ensure that it is compliant insofar as that is possible. New clause 6 is about putting into law the correct approach to addressing the issue of export declarations and other exit procedures in terms of trying to get a good resolution through the Joint Committee.

I want to make some general comments about the threat to international law that is contained in part 5 of the Bill and to echo that the Government amendment is essentially cosmetic. It does not address the issue. I am someone who is usually a gradualist and who will bank progress, but this is not that type of situation. This will not convince anybody of the UK’s good intentions. In essence, the threat to breach international law will still be codified in the legislation and that is not a basis on which any state can do business internationally. It will undermine the ability of the UK to manage its existing agreements, and also to conclude future agreements. The reputation of the UK internationally will fall with very serious consequences. Our ability to hold other regimes to account for breaches of democracy, human rights and the rule of law will be compromised; and the UK does have a strong record in that regard, or at least had a strong record up until this particular point in time.

More specifically, part 5 will undermine the ability of the UK to conclude a future relationship arrangement with the European Union. That will have severe consequences for the UK economy. To me, it seems as if a dead-end approach is being adopted by those who claim to want such a deal, and I am not quite sure how that will be a sustainable position.

Even beyond that, the prospects of a US-UK trade deal are very much called into question. For those who have the fantasy of an Atlanticist approach to replace the relationship with our nearest neighbour, I really struggle to understand how they believe that the approach they are taking will actually allow that dream to be realised. Of course, we should all want a deal with the United States, albeit one that we negotiate from a position of strength—people have some genuine concerns about that—but I am not sure that people fully appreciate whow difficult that will be, particularly in terms of Congress and what Speaker Pelosi and indeed some members of the Republican party have said. This is an ultimate dead end, and Members who still believe it is doable need to reflect very seriously on what has been said to them.

I will also comment on what I think is a major misunderstanding, or lack of understanding, in some parts of the House with respect to the Good Friday agreement. At times, I get the sense that the Government are almost twisting the understanding of the Good Friday agreement to fit their particular political objectives. It is important that Members understand that a fault line runs right through Northern Ireland. Anyone familiar with history will well appreciate why I am saying that. Northern Ireland is both a divided society and a contested space, particularly with regard to the latter in that there are different constitutional aspirations for the future of that part of the world. We have been on a journey through the Good Friday agreement, but the work of building integration and promoting reconciliation is still very much in progress. More needs to be done.

It is true—this is where the Government are placing all their emphasis—that the principle of consent is a core aspect of the agreement. I concur with that, and indeed it is recognised fundamentally within the withdrawal agreement, although people may have different aspirations regarding where that goes in due course. However, the agreement is also about the interlocking relationships, the internal dynamics in Northern Ireland, the north-south relationship and the east-west relationship, and the wider context of the improvement of Anglo-Irish relations, which gave rise to the agreement in the first place and which, up until now, have been working to try to ensure that the agreement stays on course.

[Paul Girvan (South Antrim) (DUP)]

Will the hon. Member give way?

[Stephen Farry]

Yes.

[The Temporary Chair (Sir Graham Brady)]

Order. It is not possible to speak from those Benches. The hon. Gentleman must find another place in the Chamber.

[Paul Girvan]

Thank you, Sir Graham. The hon. Member mentioned the protectionism in the Belfast agreement. That is its name: the Belfast agreement. Unfortunately, from a Unionist perspective, the protections that we were sold as ensuring and enshrining our right to be part of the United Kingdom until such time as the people of Northern Ireland decided otherwise are being eroded from below our feet by the withdrawal agreement and the clause associated with Northern Ireland. That has to be recognised. Do you recognise, as a Unionist, that this does not give you much comfort?

[Stephen Farry]

I am grateful to the hon. Member for his intervention. I think his question was aimed at me, rather than you, Sir Graham. First, just to give Members some encouragement, Members from Northern Ireland can sort out some choreography at times in terms of speaking, so all is not lost entirely, but it is important that the hon. Member appreciates a number of points.

As I said, the principle of consent is hard-wired into the withdrawal agreement. At the same time, however, I think it is naive not to accept that what had been a relatively stable situation in Northern Ireland around the constitutional question has become much more fluid in recent years, to a large extent because of the fallout from Brexit. Whichever way things emerge over the coming months there will be some degree of political instability in that respect, and it is incumbent on us all to try to come to terms with that, to manage that and to keep people on board, making Northern Ireland work over the months and years to come.

I also stress to the hon. Member that another way of looking at the agreement is that it was, in essence, a grand bargain. We are approaching the centenary of Northern Ireland next year. For most of its history, Northern Ireland was a contested state and some people did not accept its legitimacy. We had a situation, for example, where the Irish constitution had a claim on the territory of Northern Ireland through articles 2 and 3.

With the Good Friday agreement, arguably for the first time we had a sense that the vast majority of people on the island of Ireland accepted the legitimacy of Northern Ireland as an entity, albeit with the ability to change recognised as part of that agreement. That was a major win, particularly for Unionism. At the same time, there was a recognition of the interlocking relationships—in particular, the north-south aspect—on the island of Ireland. The problem is that Brexit has come in and destabilised that. In particular I have to say to my Unionist colleagues that their charge headlong into Brexit, given that grand bargain, was most irresponsible and short-sighted.

It would not have been possible for the Good Friday agreement to be concluded if the UK and Ireland were not simultaneously part of the European Union—in particular, the customs union and the single market. The protocol is a product of the UK’s decisions, choices and red lines on Brexit, so if there are concerns, grumbles or complaints about it, it is a product of decisions taken primarily by people in this Chamber over the past number of years.

In essence, there is a trilemma at the heart of this: the UK set out three mutually incompatible objectives, only two of which can be realised at any one time. The first was that there would be an open border on the island of Ireland, the second was that the whole of the UK would leave the customs union and single market, and the third was that special measures for Northern Ireland were ruled out. The first has been a given for the best part of four years, and was rightly recognised at the start of the Brexit negotiations. The second was the determination of this House, which ruled out a softer version of Brexit, with the entire UK remaining part of the customs union and single market—an outcome that would still have been consistent with the referendum result. The third is something that the UK has essentially had to concede through the protocol.

Whatever way we look at this, when a decision was taken to leave the customs union and single market, some sort of interface was going to have to be managed with the European Union’s single market and customs union. The backstop was the first attempt—I believe it was much maligned and a missed opportunity. The protocol was the next alternative, and the Prime Minister bought into it last October. It is an attempt to square an impossible circle, but we have to do our best in that regard; there will not be a neat and easy solution. The protocol is imperfect, but it represents the bare minimum of what is required to address the particular challenges and circumstances that Northern Ireland faces.

Like the hon. Member for Belfast South (Claire Hanna), I do not want to see any borders anywhere inside these islands, but we have to face the reality that some line will have to be drawn on a map, and wherever it is, some political, emotional and psychological implications will arise from it. It is easier to manage that down the Irish sea than on a land border, as a purely pragmatic analysis of the situation. As has been said, there are seven crossings down the Irish sea, and potentially more than 200 on the land border. People talk about the value of east-west trade, and I certainly recognise that, but the counterpoint to that is to recognise the sheer number of movements on the island of Ireland. The opportunity to have some degree of regulation is more readily applied on the Irish sea interface because there is more dead time, in terms of air and sea travel, than there is on the land border, with land-based transport and much more just-in-time delivery. Those are the sad choices that we are being asked to face up to in Northern Ireland.

We need to make the protocol as light touch as we can to move from what is essentially a solid line on a map to a dotted line. We need to work through the Joint Committee to address the outstanding issues and agree the future relationship. That would make the application of the protocol much easier. To make progress in both respects, the UK has to build up the trust and confidence of the European Union. Essentially, the UK is asking the EU to take it on trust that certain procedures that would otherwise be rigorously required under the terms of the protocol can be disapplied, with flexibilities and modifications shown. The situation with the UK threatening to breach the very withdrawal agreement that gives rise to the protocol will not give the European Union confidence that the UK will honour any flexibilities that it chooses to grant through the protocol.

New clause 6 sets out perhaps one example of the type of situation I am referring to. In essence, the protocol reflects the fact that Northern Ireland remains part of the UK’s customs territory, but the EU customs code is applied down the Irish sea. That was the compromise—I stress that—worked out last year by the Prime Minister, among others.