United Kingdom Internal Market Bill

Baroness Noakes Excerpts
Committee stage & Committee: 2nd sitting (Hansard) & Committee: 2nd sitting (Hansard): House of Lords
Wednesday 28th October 2020

(3 years, 9 months ago)

Lords Chamber
Read Full debate United Kingdom Internal Market Act 2020 View all United Kingdom Internal Market Act 2020 Debates Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: HL Bill 135-III Third Marshalled list for Committee - (28 Oct 2020)
Lord German Portrait Lord German (LD)
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My Lords, I have added my name to Amendment 21 to which the noble Baroness, Lady Finlay, has spoken. It seems to me that the clarification that the amendment is seeking is to understand whether, where a statutory regulation, rule or law is passed in a devolved Administration, that would exist until such time as the UK Government decided something different. Whether or not that is the intention of the Government, I do not understand.

The difficulty that I face in trying to work out the logical progression and the sequencing of what is happening in this Bill is correlated with the issue that we had on the common frameworks. It seems to me that the Government are moving down a dual carriageway in which one road is the internal market Bill and the other is the common frameworks progression, and between them is a brick wall. I do not understand how you can cross over between one and the other. That is the understanding that I got from the discussion we had in the earlier days in Committee.

The problem is that by the end of this year—I will use this as an example, which I would like the Minister to respond to at the end, if he would—the framework on emissions trading, which is a legislative framework, will be completed. I understand that it is with Ministers for final sign-off, but it has been agreed. If that emissions trading legislative framework is agreed, presumably there will then be legislation. I would like to understand where that legislation fits within the context of this Bill. Clearly, that has been reached by agreement—it has been agreed by all parts, including the United Kingdom Government, that there will be a legislative approach to this particular area of work. Then, of course, there will be a piece of legislation that sits either within this Bill or without it. I would like to know where that legislation will occur: will it be stand-alone legislation or will it be an amendment to the Bill we are discussing today?

There are two other frameworks—one on nutrition and one on hazardous substances—that are also virtually complete. They are non-legislative, and I understand that they will be agreed by Christmas. Take those three areas: on one side we have a legislative proposal and on the other we have a non-legislative proposal that the Government have agreed will be a non-legislative proposal and will therefore not require other legislation. And it will not require this legislation, because that is what the Government have agreed. Perhaps the Government could explain how the two are interconnected.

I understand that the reason for turning down a frameworks-only approach is because there are gaps, but we are yet to find out what the Government have established is a gap. We have asked for a current example that we can use, and I hope that, over the past few days, the Minister has found a current example that he can give us.

It seems to me that the fundamental principle that Amendment 21 is trying to establish absolutely is that, where there has been a legislative agreement or legislation that has been passed by either Wales, Scotland or Northern Ireland, when the Government introduce new legislation or regulations on the back of this legislation, such legislation will look only at the future and not the past and will have no retrospective effect.

Baroness Noakes Portrait Baroness Noakes (Con)
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My Lords, I would like to remind the Committee of two things about this Bill. First, the Bill is to facilitate trade between all parts of the United Kingdom, not make it harder. Secondly, businesses favour barrier-free trade. That was the very clear message that came from the consultation on the White Paper during the summer. We should be trying to minimise the possibility of barriers being put up to trade within the United Kingdom.

If we allow exclusions of goods from mutual recognition, that will inevitably lead to higher costs. This is analysed in quite considerable detail in the internal market White Paper. Costs generally end up being borne by consumers. Excluding goods can also result in businesses deciding to withdraw from certain markets, which can in turn restrict consumer choice. I know the noble Baroness, Lady Hayter, is keen on consumer protection; she reminded us of that on the first day of Committee. Restricting trade tends to operate against consumer interests, so we should be very careful in trying to put amendments to the Bill that make trade more difficult. I also remind noble Lords that restricting trade is more likely to hit the devolved Administrations’ economies because of their greater dependence on exporting to the rest of the United Kingdom.

I want to comment on a couple of the amendments in this group, Amendments 7 and 8. The noble Baroness, Lady Hayter, said that Amendment 7 was a probing amendment, but by seeking to exclude imports into any part of the United Kingdom we are reducing the internal market rules to a very parochial interpretation. It seems to ignore the plain fact of commercial life, which is that there are complex supply chains and complex distribution logistics. It is of course the way we have been living in the EU; at the moment, we are quite accustomed to importing in one place and those imports being accepted throughout the rest of the community.

It also seems to me that the noble Baroness’s amendment would, in effect, impact exports between different parts of the United Kingdom. For example, if something was exported to Wales and imported to England, it would stop it then being imported into Scotland with the protection of the internal market Bill. That does not seem to make any kind of sense. It is pretty clear from the impact assessment that Wales and Scotland in particular are reliant on intermediate goods coming from other parts of the United Kingdom.

The noble Lord, Lord Rooker, spoke to Amendment 8. I did not follow what he said about pig semen because I do not think that, by any definition, pig semen is an animal feedstuff. I did have a chance to check the definition of “animal feedstuff” while he was speaking, and it is not. Perhaps we can put that to one side. We have to understand that if we try to exclude food and animal feedstuffs from the UK internal market mutual recognition rules, this will again potentially impact the devolved Administrations the most, given their import and export profiles. For example, if you look at Wales’s agri-food chain, you will see that 48% of agricultural inputs to Welsh food manufacturers come from the rest of the UK and 31% of food and drink sold in Wales comes from the rest of the UK. We should be thinking really hard about who we are likely to hurt when we put amendments such as this in the Bill, which restrict barrier-free trade.

Lord Hope of Craighead Portrait Lord Hope of Craighead (CB) [V]
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My Lords, I support Amendment 7 in the name of the noble Baroness, Lady Hayter, and Amendment 21 in the name of the noble Baroness, Lady Finlay.

I shall start with Amendment 7. First of all, I entirely agree with the noble Baroness, Lady Noakes, that importing and exporting goods is part of the commercial life of this country. That applies across all parts of the United Kingdom, and one can well understand the point that she makes about the importance for the devolved Administrations of maintaining that system with as little interference as possible. However, the point to which Amendment 7 draws attention is a matter of real concern to the devolved Administrations. As she explained, its effect appears to be to deny them any involvement in decisions on the importation of goods from overseas, to which they might wish to take objection. Various horror stories are of course passed around as one discusses this issue, but I am not concentrating on them so much as I am on the simple lack of ability to contribute to a discussion as to whether or not these goods should be imported.

If one was talking about legislation, I suppose one would say the Sewel principle would apply and consultation would take place, but there appears to be nothing that allows for that. The effect of the way the provision is worded is that something that comes in can take the benefit of the principles and pass without any kind of control to the devolved Administrations, without their having any say. That is of real concern. This is a probing amendment, but it requires some explanation of what place, if any, the devolved Administrations have in trying to resist the importation into, and transmission across borders within, the UK of goods to which, for one reason or another, they might wish to take exception.

That covers Amendment 7. As for Amendment 21, I was attracted by what the noble Lord, Lord German, said about the dual carriageway—the parallel lines—for a particular reason, which I have not mentioned before but must be emphasised. The common frameworks are living arrangements. There is no point at which one can strictly say that a framework has come to an end, although I confess that my own amendment suggests that it could happen. These frameworks are open to subsequent discussion and revisiting as things change. For example, much of the UK emissions trading system is based on EU law and treaty arrangements that could change. If that happened, the framework would be revisited, and, no doubt, different policy decisions may need to be taken. The same is true of the hazardous substances framework.

One has to bear in mind these are two living instruments working side by side: the UK internal market and the common frameworks system. The fact that, as the Bill has it at the moment, there is no means by which they can communicate with each other, is a matter of real concern, because it affects the whole structure of how these things co-operate and will co-operate in the future, in ways we cannot yet predict. That underlines the importance of trying to find a solution to the point I drew attention to on Monday of making some arrangement whereby the decisions taken, based on common framework decisions, to legislate in the devolved Administrations are protected against the effect of the market principles, particularly the non-discrimination principle, which has very broad reach indeed.

The great value of the amendment of the noble Baroness, Lady Finlay, is that it has drawn attention once again to that very real problem. It requires some response from the Minister so that we can have some idea of how he thinks these two parallel carriageways, stretching out into the future, will ever meet and co-operate with one another.

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Baroness Boycott Portrait Baroness Boycott (CB)
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My Lords, it is a great pleasure to follow the noble Lord, Lord Teverson. I thank him and the noble Baroness, Lady Jones of Moulsecoomb, for supporting this amendment. I very much agree with what the noble Lord, Lord Young of Cookham, said. I also agree with the noble Baroness, Lady McIntosh, when she said that, if this internal market Bill does not align with the Agriculture Bill, then something is wrong and we are missing a trick.

I have tabled Amendment 52, which seeks to introduce a derogation from the market access principles to allow all four nations to put in place proportionate measures to protect the environment, support the progressive improvement of environmental standards and tackle climate change. My concern is that, in the absence of an agreed common framework, we will not be able to protect existing high regulatory standards in cases where one nation wants to introduce something new and higher, in the environmental sense, for a particular good or service—although not legally prohibited from doing so, it could be disincentivised from doing so. Under the market access provisions in the Bill, goods from other parts of the UK would not have to meet those requirements if standards elsewhere were lower. Other Peers have spoken about this. It is about protecting us against a race to the bottom in setting environmental standards or measures to tackle climate change.

At Second Reading, the Parliamentary Under-Secretary of State, the noble Lord, Lord Callanan, said of the Bill:

“It will protect our common causes, such as the setting of high standards in our economy”.—[Official Report, 19/10/2020; col. 1285.]

But the Bill does not give legislative effect to these commitments. It fails to create the proper framework and fails to deliver the safeguards and assurances needed to ensure that all four nations of the UK can legislate ambitiously, progressively and effectively to protect the environment. Currently, the Bill provides for exceptions only in a limited range of circumstances, such as preventing the spread of diseases or pests. Even then, this is only under very strictly controlled conditions.

Environmental matters generally fall within devolved competence. Regulatory divergence already exists within the UK and there have been a number of examples of really innovative policies which have delivered legitimate public policy objectives—and specifically progressive environmental rules. I know that this has been mentioned before, but Wales was the first country in the UK to introduce a charge on carrier bags. It is atrocious to think that that could somehow have been denied.

Amendment 52 would allow an individual nation to refuse mutual recognition on the grounds of measures protecting the environment or tackling climate change. To give a practical example of why this is so important, there have been mounting calls to ban the sale of horticultural products that contain peat. This is obviously to protect biodiversity, but also to avoid the extraction of peat and the release of high levels of soil-based carbon. If one of our four nations’ Governments decided to ban the sale of products containing peat, this could potentially be undermined by the failure to match those efforts in other jurisdictions, where producers could continue to actively sell these products in a market where they would otherwise be banned.

My amendment would require suppliers to comply with these devolved rules where they relate to the protection of the environment or tackling climate change, meaning that even if regulation in England were to fall behind, say, that found in Wales, those supplying the Welsh market would still have to comply.

At Second Reading, the Minister, the noble Lord, Lord True, responded:

“commerce, services and professions must be enabled to operate freely across the whole United Kingdom. That is … demanded … by business”.—[Official Report, 20/10/20; col. 1426.]

However, business coalitions such as the Aldersgate Group have commented that the objectives of frictionless trade and encouraging a race to the top for environmental standards do not contradict one another. A fully functioning and innovative internal market should strive to both reduce unnecessary costs and uncertainty and protect all four nations’ right to regulate in the public interest.

Finally, protection of our environment and tackling climate change really are not an option anymore. If you listen to Christiana Figueres, who set up the Paris Agreement, you will know that we have 10 years in which to try to get ourselves to 50% of carbon emissions. That means reducing by about 7% to 8% a year. Not to do this is a complete abdication of our rights as legislators because, if we do not put policies in place in this Government and this Parliament, then we will be left pretty legless in the fight ahead.

As the noble Lord, Lord Teverson, said, we cannot do business as usual; we have to do business in a new way. We have many excellent Bills before us that can make this happen, and I commend my amendment to the House.

Baroness Noakes Portrait Baroness Noakes (Con)
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My Lords, as noble Lords who have attended this Committee to date know, my role is occasionally to get up and give a minority perspective on the amendments before us. There are 20 amendments in this group and, one way or another, each of them would allow barriers to trade to be erected by one or more of the devolved nations. The effect of the amendments is to restrict the amount of trade to which the market access principles will apply and thereby reduce the extent to which barrier-free trade can take place throughout the UK’s internal market. I say to the noble Lord, Lord Anderson, that that is not an argument against devolution; it is an argument for trade and economic success, which I hope that we all want to achieve for the United Kingdom.

I will not repeat all of what I said on the earlier group, but the more that laws relating to trade in goods and services diverge between the component parts of the UK, the more likely it is that costs will rise and choice will diminish for consumers. Barriers to trade are also likely to result in lower GDP, as the impact assessment analysed, and we need all the GDP that we can get at the moment, given the impact of lockdown and similar anti-Covid measures. I am sure all those noble Lords who support and voted for devolution did not vote to become poorer through devolution.

The amendments give very considerable cover to the devolved Administrations to erect trade barriers under the guise of higher standards but, actually, on grounds of protectionism. At the very least, I predict that there will be massive scope for lawyers to argue for a very long period and to mount legal challenges. That may well be good for the fees of the legal profession—and for the noble and learned Lord, Lord Falconer of Thoroton—but the important thing I want to stress is that it will result in uncertainty for business. If there is one thing that is bad for business, it is an uncertain business trading environment.

Therefore, while I understand the desire for higher standards—and many noble Lords have spoken to this in respect of the particular varieties of relaxation that they are seeking in the Bill—at the end of the day, they can result in trade barriers. We really should be very careful not to wreck the UK’s internal market before it has even started.

Lord German Portrait Lord German (LD)
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My Lords, I shall address Amendment 54 in my name. As the noble Baroness, Lady Finlay, said in moving her amendment, it harks back to debates we have had on the mysterious absence of common frameworks from the Bill. As your Lordships will know, common frameworks are a way of doing business that is supported by the CBI. The amendment would insert a new schedule into the Bill. It may look arcane, or like an obscure pub quiz question, so perhaps noble Lords would like to answer the question: what unites ozone-depleting substances and Caerphilly cheese? The answer is that the list in the schedule is the list of subjects where all four Governments in this country have agreed that legislative common frameworks are necessary. However, this is not intended as an exhaustive list. It would be possible to add to this by secondary legislation if new areas emerge that require a common framework.

I concede that it would not have been necessary to have such a schedule if the dual carriageway with the brick wall in between the two approaches that the Government are taking—this Bill and the common frameworks—were guaranteed to coincide and meet. Both approaches are progressing and have the enthusiasm of the Government behind them. This amendment would be a way of ensuring that those approaches coincided and met. The amendment would help, since it identifies common frameworks without using the name.

One of the more striking aspects of the Bill, as noble Lords and Ministers keep telling us, is that common frameworks on their own cannot guarantee the integrity of the entire UK internal market. They are sector-specific and not intended to address the totality of economic regulation. In answer to every question asked, there has been a real silence from the Government, who have failed to identify any areas where the integrity of the internal market might be threatened that are not covered by common frameworks. We had reference to the threat to the sale of barley from English farmers to Scotland, which has proved an issue already resolved by the common framework. There is also the wholly hypothetical example of a devolved Government wishing to legislate for additives to flour, which is already in one of the common frameworks on nutrition.

We therefore have to manage this problem of having two-track approaches to the internal market. The amendment proposes a way of creating that gateway between the two and ensuring that there is a link between them, so that we know that we are on the same course for a functioning internal market.