United Kingdom Internal Market Bill
Lord Callanan ExcerptsMonday 2nd November 2020
(3 years, 6 months ago)
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Lord Callanan
“(d) in relation to any part of the United Kingdom, the profession of patent attorney or trade mark attorney.”Member’s explanatory statement
This amendment would add patent attorney and trade mark attorney to the list of legal professions the regulation of which is excluded from Clause 22.
The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Callanan) (Con)
My Lords, Amendments 107 and 108 in my name aim to clarify the scope and application of the professional qualification clauses of the Bill. Amendment 107 adds patent attorneys and trademark attorneys to the list of legal professions excluded from the application of the automatic recognition principle in Clause 22. As well as work related to trademarks and patents, trademark and patent attorneys may carry out broader regulated legal activities which require an understanding of the underpinning legal system in the part of the UK in which they practise. Accordingly, we are bringing them into line with the other legal professions to ensure that they are not caught by the automatic recognition provisions of the Bill. These exclusions ensure that access to these professions is not affected in any way by the recognition provisions of the Bill. Part 3 will not affect how these professions are regulated, nor will it change what activities trademark and patent attorneys are able to perform.
Amendment 107A has been tabled by the noble Baroness, Lady Bowles, in response to this government amendment and seeks to probe the effects of the amendment in respect of authorised reserved legal activities under the Legal Services Act 2007. In respect of this amendment, I reassure the noble Baroness, Lady Bowles, that nothing in the recognition provisions of the Bill, or in the government amendment, changes how reserved legal activities are authorised under the Legal Services Act 2007, and her amendment is therefore unnecessary.
Amendment 108 is a technical amendment to provide clarity on the type of qualifications and experience requirements to which Clause 22 applies. It ensures that where qualification requirements are attached to specific activities, those requirements are disapplied by automatic recognition only if they apply to activities that are essential to the practice of the profession in question—in other words, if they amount to a barrier to access to the profession as a whole. This will ensure that Clause 22 does not apply to qualifications or experience requirements for activities which are not essential to the practice of the profession, such as optional service activities which professionals may choose to offer.
I recommend that government Amendments 107 and 108 be accepted, as they provide clarity on the scope and application of automatic recognition principles. I regret, however, that I am unable to support Amendment 107A, for the reasons I gave earlier. I hope that the noble Baroness will feel able not to press her amendment. I beg to move.
Baroness Bowles of Berkhamsted (LD) [V]
My Lords, I am a retired patent attorney, which is what made me curious about Amendment 107. I guess that is an interest of some kind, though no longer pecuniary.
In this group I have tabled Amendment 107A, which is intended to clarify what has become a confused situation. It can accurately cover all the legal professions named in Clause 25, although the confusion relates only to patent and trademark attorneys. Essentially, it says—as I think the Minister agreed—that there is no change to the status quo under the Legal Services Act 2007, which was the Government’s intention all along.
The background to this is that patent and trademark attorneys may be in the unique situation of being regulated and qualified on a UK-wide basis, while, through their sectoral professional qualifications, also engaging in four specific English and Welsh reserved legal activities, no matter where in the four nations of the UK they qualified, reside or practise. They do this as patent attorneys or trademark attorneys, not as lawyers.
The purpose of that unusual provision is, broadly, to enable conduct of litigation for all in the specialist England and Wales Patents Court, and for associated matters such as deeds and oaths to be dealt with. That unique construct does not fit within the definition of Clauses 22 and 23 for the professions when they are identified as patent attorneys or trademark attorneys because you cannot work it out so that there is a relevant part and the other part. Noble Lords are welcome to try—it takes quite a few pieces of paper. The point is that it is the same for all patent and trademark attorneys, wherever they are.
However, somewhere the niggling thought arose that perhaps it was confusing, or that the mutual recognition would apply notwithstanding that Clause 22 did not apply and would somehow extend the enjoyed England and Wales reserved activities to Scotland or Northern Ireland courts, deeds or oaths. Amendment 107 has, therefore, been proposed. It has the effect of defining patent and trademark attorneys as a legal profession in Clause 25, thereby putting them into Clauses 23 and 22 and simultaneously taking them out again. This hokey-cokey amendment was meant to stop confusion. It has, however, also created its own confusion, perhaps best illustrated in an explanation from the Ministry of Justice that said:
“If trademark and patent attorneys were not excluded from the UKIM bill, then one of your practitioners authorised to conduct litigation in Northern Ireland, for example, could potentially argue that under the automatic recognition principle IPReg must also allow them to conduct litigation in England and Wales without meeting the normal IPReg authorisation requirements for doing so”.
However, that does not fit the present circumstances that I have just explained. The patent or trademark attorney in Northern Ireland is qualified to conduct litigation in England and Wales but, actually, not to conduct litigation in Northern Ireland—and that is not the only wrong explanation that has been offered. Indeed, a few moments ago, the Minister referred to attorneys being qualified in respect of the part of the UK in which they practise. There is no such provision for patent and trademark attorneys. They just have that extra bit of add-on, no matter where they practise, which relates to being able to access the England and Wales Patents Court. That is quite fundamental, because that is where you would see appeals from the comptroller and so on.
I believe that a true analysis of the facts ends up as I have said, that these particular professions were not in the original construct, but some people might have been confused. Now they are defined as in and out again but, unfortunately, this leads to other confusions, suggesting divisions in the profession that do not exist but which have just been replicated in the words of the Minister. If the Minister and an MoJ official can get it wrong, who else might? A wrongful accusation, no matter that it can be refuted, is still damaging. My amendment clarifies that the status quo is maintained. It neither adds nor subtracts anything, other than giving clarity—something to point to on the same page as the confusing hokey-cokey.
Lord Falconer of Thoroton (Lab)
My Lords, intellectual property lawyers, patent agents and attorneys are incredibly important for the future. I thoroughly endorse the remarks made by the noble Baronesses, Lady Bowles and Lady Neville-Rolfe, and my noble friend Lord Smith of Finsbury.
Honestly, confidence in this Bill was weak to start with. That mess-up just then on patent attorneys was appalling, and it made me look at the rest of Part 3. Could the Minister first of all identify what the problem is that Part 3 is dealing with? We had a clue between 11.30 pm and 11.45 pm on Wednesday evening when the noble Baroness, Lady Scott of Bybrook, who sadly is not in her place, said the following:
“The purpose of the professional qualification provisions in the internal market Bill is to ensure that professionals can, in most cases, access their profession in all parts of the UK, by ensuring that there is an overarching system for recognition.”—[Official Report, 28/10/20; col. 375.]
Clause 22 says that where you are qualified in one place, you can be qualified in another, while Clause 25 says that Clause 22(2) does not apply to existing provisions. Let us be clear what is happening here: the Government are saying that we are not making any change to the existing position in relation to professional qualifications, and as far as I am aware—and this is nothing to do with the EU—there is absolutely no problem about the current position. The effect of Clause 25(3) is that these provisions do not apply to any change in the future. Am I right about that? They are making no change for the past but they are bringing in these provisions in relation to the future. Why is that, when there is no problem about the past or the future? The Government are causing problems everywhere with this. I ask them to explain to the House and the wider public why on earth they are doing it. They have messed up the one area that we have looked at so far. Why should anyone have any confidence in this Bill?
On a separate point, I refer the Minister to what the noble Lord, Lord Dunlop—on the government side—said on day one in relation to this matter:
“The timetable for the Bill appears to be predicated on the end of the transition period on 31 December this year, but what is the real risk of regulatory divergence between then and the completion of the common frameworks process in 2021? The House is aware that the European Union (Withdrawal) Act 2018 already confers on Ministers so-called Section 12 powers to freeze devolved competence in relation to EU retained law.”—[Official Report, 26/10/20; col. 88.]
So, if there is any problem about this, it can be dealt with by the Government’s Section 12 powers. That applies not just to this but to wider issues.
Why are the Government bringing forward such an obviously unthought-out Bill that is doing damage to what—and I say this with respect to the noble Lord, Lord Naseby—even the noble Lord, Lord Naseby, thinks is a mess-up, and he is a supporter of the Government’s Bill? Why on earth are they messing everything up like this? Could they please give an answer to what the noble Lord, Lord Dunlop, said on day one? Is he right? If so, the urgency goes.
Lord Callanan (Con)
I thank all noble Lords who have spoken in this short debate on this important subject. I shall start by replying directly to the noble and learned Lord, Lord Falconer, and the noble Lord, Lord Clement-Jones, who spoke about Part 3 and why we felt the need to bring these proposals forward. The Bill is intended to ensure that divergence in professional regulation between the four nations of the UK does not increase barriers for professionals living and working in different parts of the UK. As our economy continues to develop and new sectors emerge, it is possible that new regulated professions will be created and there may be changes to existing qualification requirements that could make it more difficult to access the profession in another part of the UK. These new professions may well be crucial to the UK’s economic future. As in other areas, we do not want barriers to trade across the UK in these sectors. Internal market provisions will apply where part of the UK regulates a new profession, access to which is limited to those holding certain professional qualifications or experience. The provisions will also apply to existing professions where there are changes to the requirements for the qualifications or experience needed in order to access the profession concerned. Currently, while the recognition of professional qualifications between the four nations can and does occur, there is no overarching framework that ensures that it does. The Bill creates such an overarching framework to guarantee that recognition of qualifications between the four nations will be possible and barriers will be minimised.
I am happy to give the noble Lord, Lord Smith, and my noble friend Lady Neville-Rolfe the specific assurance they asked for: nothing in the recognition provisions of the Bill, including the exclusion, affects the current situation. IPReg will continue to be able to decide whether and how trademark and patent attorneys should be allowed to carry out the regulated legal activities that it is designated to regulate in all the different parts of the UK.
The government amendment aims to bring patent and trademark attorneys in line with other legal professions and to place them outside the scope of the recognition provisions of Clause 22 of the Bill. Legal professionals have been excluded from the scope of the provisions on the recognition of professional qualifications in acknowledgment of the different legal systems that exist in the UK. This will ensure that the regulation of and access to these professions, including trademark and patent attorneys, are not affected in any way by the mutual recognition provisions of the Bill and will be completely unaffected. That is why we need Amendments 107 and 108.
Lord Falconer of Thoroton (Lab)
The noble Lord, Lord Callanan, referred to the idea of new professions being invented. If this happened, there would be a professional body that would need government recognition in some form. Could he give us an example, perhaps, of a new profession emerging without a professional body in relation to which there is a substantial risk? If there is no such example or evidence, it is incredibly unconvincing. The second and separate example he gave was an existing profession giving rise to a particular requirement that would create a barrier to entry in one part of the United Kingdom for another. Could he give an example of when that has happened in the past?
Lord Callanan (Con)
By the very nature of it being a new profession or qualification, it is quite hard for me to give examples of what might happen in the future. There are all sorts of new technologies; even in the noble and learned Lord’s legal profession, there may be new technologies, ideas and proposals that will come forward. There is the whole world of artificial intelligence or gene editing—there is a massive range of new and potential professional areas, bodies and qualifications that may come forward. That is the point: we want the current situation in many of these professions to be unaffected, but, in the case of new professions, it is entirely possible that the individual nations of the UK might seek to regulate them differently, and we want no new barriers to trade to emerge.
Lord Fox (LD)
My Lords, with all due respect to the Minister, I am sure he understands how unsatisfactory that answer was. My noble friend Lord Thomas of Gresford talked about the gobbledegook of future-proofing, and this is gobbledegook. First, could the Minister tell your Lordships’ House what past examples lead the Government today to this conclusion? Secondly, why is there a problem with bringing any future issues to the Government and your Lordships’ House bespoke in the event that the Minister proves correct and something turns up? To seek to produce a Bill that covers all of the unknown unknowns that are going to happen in the history of time seems overambitious.
Lord Callanan (Con)
I think we are just going to have to differ on this one. We do not want to be returning to the House to create unnecessary difficulties and disagreements in the future; we want to ensure that, before any of these difficulties arise, we have put in place, as in the rest of the Bill, a framework that covers the whole of the United Kingdom to regulate how we will manage and control these issues in the future. That is all we are seeking to do. I understand the points that noble Lords are making. There are differently regulated professions in some parts of the UK already; we accept that and that the status quo is there, but we think that, in future, these things are best regulated on a UK-wide basis, and we want no new barriers to trade to emerge.
Lord Purvis of Tweed (LD)
My Lords, this has nothing to do with powers repatriated from the European Union; it has everything to do with our internal United Kingdom approach. When was the last time that a professional body regulated by law was established where the Government considered there to be major barriers across the United Kingdom?
Lord Callanan (Con)
The noble Lord will be well aware that there is European directive on this subject, and mutual recognition of professional qualifications, so, even in the EU law space, it is accepted that the nations of the EU have different ways of recognising different professional qualifications. I commend Amendments 107 and 108 to the House.
Lord Callanan
“(1A) Provision that limits the ability referred to in subsection (1)(a) to individuals with certain qualifications or experience falls within section 22(1) only if the activities affected by the provision are, in a significant number of cases, essential to the practice of the profession in question.” Member’s explanatory statement
This amendment would provide that provision imposing qualification requirements on particular professional activities falls within Clause 22 only if the activities are, in a significant number of cases, essential to the practice of the profession in question.
Lord Callanan (Con)
My Lords, I thank everyone who has participated in this group. I will seek to take forward the suggestion of the noble Baroness, Lady Hayter, that letters be copied around—I have another batch on my desk to approve once we have finished this debate, many of which, I am sure, are to my Liberal Democrat colleagues. I will ensure that they are circulated to all the protagonists. They are not particularly secret; they just help to clarify and explain the Government’s role and answer the many questions that we have been asked. I hope that is helpful.
I will start with Amendment 110, which seeks to replace Clause 28 with a new clause on the establishment of the Office for the Internal Market. As noble Lords will know, this Bill will create an Office for the Internal Market within the Competition and Markets Authority to carry out a set of independent advisory, monitoring and reporting functions to support the effective operation of the UK internal market. The proposed new clause seeks to create a new and separate public body that reports to the BEIS Secretary of State. The effect would be not to establish the Office for the Internal Market within the Competition and Markets Authority.
Let me say in response to my noble friends Lady Neville-Rolfe and Lord Naseby and the noble Baroness, Lady Hayter, that the Government did consider a wide range of delivery options for the advisory, monitoring and reporting functions of the UK internal market, as set out in the Bill. We concluded that the Competition and Markets Authority is best suited to house the OIM to perform these functions. The CMA is an independent non-ministerial department that currently operates at arm’s length from the Government. It is sponsored by BEIS and Her Majesty’s Treasury and—to answer the question posed by my noble friend Lady Neville-Rolfe—Ministers will be responsible to Parliament in reporting on the work of the CMA and the Office for the Internal Market, even though they operate at arm’s length.
The Competition and Markets Authority has built up a wealth of expertise and experience that makes it a natural fit to take on these additional functions. It has a global reputation for promoting competition for the benefit of consumers and for ensuring that markets work well for consumers, businesses and the wider economy. It will also build on the CMA’s existing technical and economic expertise, which will now support further development of the UK internal market.
I should also explain that it is government policy that new arm’s-length public bodies should be only set up as a last resort and when consideration of all other delivery options has been exhausted. Other delivery options that should be considered include utilising existing bodies in order to deliver any new functions. New public bodies should be created only if there is a clear need for the state to provide the function or service through a public body and if there is no viable alternative—effectively establishing new public bodies as a very last resort. For the reasons that I have set out, we are not able to agree with this amendment. I hope that my noble friend Lady Neville-Rolfe will feel able to withdraw it.
Regarding Clause 28 stand part, this clause defines regulatory provisions on which the CMA, through the OIM, will monitor and provide reports and advice. The purpose is to set out the areas where the OIM will perform functions under the Bill, in order to ensure certainty and transparency for Administrations, businesses and the general public in connection with the effective operation of the UK internal market. Regulatory provisions are within scope if they set requirements for the purposes of the mutual recognition and non-discrimination principles of the Bill for the sale of goods and the equivalent for services. Moreover, regulatory provisions are within scope if they apply to one or more nations but not the whole of the United Kingdom. Clause 28 as it stands forms an integral part of the provisions for the OIM to carry out its independent, advisory and reporting duties in respect of the UK internal market. For these reasons, therefore, I am unable to accept the proposal that Clause 28 should not stand part of the Bill.
On Clause 29 stand part, removing Clause 29 would remove the Competition and Markets Authority’s objective when exercising its functions as the Office for the Internal Market. This clause designates the CMA, in its capacity as the OIM, as having a specific role in the operation of the UK internal market. It is additionally important to note that this clause establishes the statutory objectives of the CMA in its capacity as the OIM. This clause will ensure that the CMA in its OIM role is able to operate effectively as the monitoring body for the internal market, and will ensure there is no confusion between the pre-existing powers of the CMA and those newly conferred upon it as the OIM. Distinct objectives will prevent any operationally problematic blurring of functions. Clause 29 as it stands forms an integral part of the provisions for the OIM, and therefore we are unable to leave it out of the Bill.
Moving on to Clause 41 stand part, removing this clause would leave out vital definitional provisions. This clause provides key definitions for the purposes of this part of the Bill. This includes a definition of the Competition and Markets Authority itself and sets out how widely the operation of the internal market in the United Kingdom should be understood. This clause also defines “Relevant competence” in Part 4 as meaning both reserved and devolved competence so that executive and legislative competence in each territory is included. Clause 41 as it stands forms an integral part of the provisions for the CMA in its capacity as the Office for the Internal Market: it ensures legal clarity and certainty on technical terms used throughout this part. For all those reasons, therefore, I am unable to accept the removal of this clause.
Amendment 111 would require the CMA to not engage in any form of dispute resolution while fulfilling its responsibilities as outlined in Part 4. This addresses the points made by the noble Lord, Lord Palmer. In cases of disagreement between one or more Administrations, the OIM, within the CMA, could be called upon to provide a non-binding report to support intergovernmental discussion. An assessment of economic impacts will ensure a technical underpinning to an otherwise political discussion.
Ultimately, the OIM only supports the resolution of disputes among the Administrations politically, and it does not adjudicate. The Government believe that building upon existing intergovernmental arrangements is the best approach to resolving any potential disputes, and this includes mechanisms such as common frameworks and intergovernmental relations, according to a clear and agreed process. The OIM will have its role in disputes between individuals and businesses, but businesses can request that the OIM consider disputes as part of its regular reporting. It is under no obligation to do so, nor will it have the authority to adjudicate on the specific issues.
Amendment 113 would prevent the necessary flow of information from the Competition and Markets Authority to the Secretary of State as the policy’s sponsor. The clause in question allows the CMA to alert the Government when it thinks adjustments may be needed to the way it fulfils its statutory functions, or it wishes to raise issues of particular concern. This is in line with precedent for similar public bodies and mirrors provisions in the existing legislation underpinning the CMA. Removing this provision would hamper the necessary communication between the Government and the CMA across all the other provisions in Part 4. For that reason, we are unable to accept the amendment.
Amendment 155 would make it an explicit statutory duty of the CMA, under its existing duties within the Enterprise and Regulatory Reform Act 2013, to protect and promote the interests of consumers in respect of the internal market. The clause in question establishes the statutory objective of the Competition and Markets Authority in its capacity as the OIM. It will ensure that the office is able to operate effectively as the monitoring body for the internal market and that there is no confusion between the pre-existing powers of the CMA and those newly conferred upon it. Distinct objectives will prevent any operationally problematic blurring of functions. The OIM will operate for the benefit of all those with an interest in a smoothly functioning internal market, be they regulators, businesses, professionals, the four legislatures or consumers. Explicitly narrowing its focus to consumers would, in our view, be to the detriment of all the other stakeholders I have listed. Therefore, I am unable to accept the amendment.
The Deputy Chairman of Committees (Lord Alderdice) (LD)
I have received a request to speak after the Minister from the noble Lord, Lord Fox.
Lord Callanan (Con)
I see the request has the enthusiastic endorsement of the noble Lord, Lord Foulkes. Therefore, as his biggest fan in the House, I am obliged to follow the idea put forward. I will of course write to the noble Lord, Lord Fox, on that.
Baroness Neville-Rolfe (Con)
My Lords, this has been a good debate on an important group of amendments. We are not all agreed, but most of us are doubtful about the decision to allocate the office for the internal market to the CMA in the way the Bill proposes. I favour an office with ministerial leadership—there is a parallel with the EU’s single market commissioner, which has worked well in many ways.
The noble Baroness, Lady Bowles, made an expert and very strong case from a different perspective. She rightly pointed to the huge powers and penalties involved in giving this role to the CMA, and explained useful background as to why it ended up in the CMA, linked to an earlier time when state aid rules were going to be part of the portfolio. She also highlighted a concern about how the arrangements will work for the devolved Administrations, which the noble Lord, Lord Palmer of Childs Hill, developed in more detail and which was referred to by the noble Baroness, Lady Hayter.
Lord Callanan (Con)
I thank all noble Lords who have spoken in the debate so far. At the risk of agreeing with the noble Baroness, Lady Hayter, I can say I have been listening very carefully to what everyone has had to say in this debate. We take these matters extremely seriously.
Let me respond directly to the question from the noble Lord, Lord Purvis. No: the CMA did not respond formally to the consultation when we issued it, but as you would expect, there has been extensive, official-level discussion on the design and development of the OIM proposal with the CMA.
Before addressing the individual amendments, I shall set out why Clause 30 and Schedule 3 should stand part of the Bill. I have set out the purpose of the office in previous groupings, and noble Lords will be delighted to hear I will not repeat that here.
The purpose of Clause 30 is to introduce the office for the internal market panel and task groups and allow those task groups to carry out all the functions set out in Part 4 of the Bill on behalf of the Competition and Markets Authority. This will ensure that the CMA, through the OIM, can carry out a set of independent, advisory, monitoring and reporting functions to support the development and effective operation of the UK internal market on an ongoing basis. Building on existing governance arrangements, it allows the CMA to authorise the task groups to do anything that the CMA can do under Part 4. This would include delivering specific pieces of reporting, such as annual health of the market reviews or requested monitoring on the intra-UK trade impacts of specific regulations.
To fulfil those independent functions, Schedule 3 sets out the constitution of OIM task groups, to which functions of the CMA may be delegated by virtue of Clause 30. Schedule 3 also provides for the establishment of a panel from whose members such groups may be selected. In performing its role, the OIM will have the ability to gather market intelligence from UK businesses, professionals and consumers to develop its evidence base. The effect of removing Schedule 3 would be that no public body undertook those independent advisory, monitoring, and reporting functions to support the smooth running of the UK internal market. The Government believe that this outcome would be detrimental to the future health of the internal market and to the benefit of every region and nation of the UK. Thus, it is crucial both Clause 30 and Schedule 3 stand part of this Bill.
Amendment 116 would insert a new clause seeking to ensure that the creation of the OIM was subject to a memorandum of understanding being agreed between the Secretary of State and Ministers in the devolved Administrations. It also seeks to set out how the OIM should handle and use information that it requires to fulfil its functions. It proposes that the office for the internal market panel and task group members should include nominees from the English regions and devolved Administrations. It also proposes who should be members of any internal market work undertaken by the CMA if it undertakes such work separately from the OIM. I will respond to these latter points later, as they are referenced within other amendments.
The Government have considered a wide range of delivery options for the advisory, monitoring and reporting functions for the UK internal market as set out in the Bill. We have concluded that the CMA is best suited to house the OIM to perform these functions. This option was strongly supported by a wide range of stakeholders during the White Paper consultation earlier this year.
The Government have sought to work closely with the devolved Administrations. For example, I would like to say how much the engagement with the Welsh Government to date on this Bill has been appreciated. I believe these conversations have helped enormously to ensure that the purpose and effect of the OIM is understood. The Government are committed to continuing to engage constructively with the devolved Administrations on the establishment of the OIM and how it operates in future in fulfilling its functions as set out. In recognition of the keen interest of the devolved Administrations in the operation of the UK internal market, these appointments will be made following consultation with Ministers from all three devolved Administrations. This will ensure that the panel comprises members who all represent the interests of stakeholders in all parts of the UK. For the reasons I have set out, I am not able to accept the amendment by the noble Baroness, Lady Bowles.
I turn to Amendments 117, 121, 122, 123 and 124. Amendment 117 would allow each devolved Administration to appoint a CMA board member, with Amendments 121 through to 124 setting the terms and conditions of those appointments. The CMA is an independent non-ministerial department with a global reputation for promoting competition for the benefit of consumers and ensuring that markets work for consumers, businesses and the economy. Ministers have no day-to-day involvement in its operations. It is for these reasons that the CMA is a natural choice to take on the functions of the OIM.
The noble Baroness, Lady Randerson, asked how it is that the CMA deals with reserved matters but the OIM can address devolved issues. The statutory objective of the OIM in Clause 29 is designed precisely to draw a distinction with the current CMA objective and functions. This is wholly compatible with operating effectively and independently in relation to devolved matters, with a difference in focus on devolved and reserved matters respectively.
So that the advice and outcomes of the CMA’s work and the members undertaking such work are trusted and continue to be seen as impartial, it is clearly important that board members and the appointments process are seen to be trusted. As my noble friend Lady Noakes said, board members must be seen as capable of overseeing the promotion of competition throughout the entire United Kingdom, rather than as a representative of any one individual nation. It would therefore be inappropriate to risk politicising the CMA’s board by accepting this amendment.
Having different routes to the appointment, resignation and removal of CMA board members would be at odds with the UK-wide remit of the CMA and would have the effect of creating two categories of member. I recognise the keen interest of the devolved Administrations in the appointment process for the CMA board given that the proposed OIM panel chair will, by extension, become a CMA board member. We have stressed during engagement and written into the Bill that devolved Administration Ministers will be consulted on appointments ahead of the OIM becoming operational.
Amendments 118, 119 and 120 propose devolved Administration consent mechanisms for appointing the chair and panel members of the OIM. The first two of these amendments would require the Secretary of State to seek the consent of the devolved Administrations before appointing the OIM’s chair and panel members. As it stands, the Secretary of State appoints the CMA board chair and will appoint the OIM panel members and chair with full and mandatory consultation of the devolved Administrations. The priority will be ensuring that each appointment is on the basis of the relevant range of expertise and, crucially, is someone who can serve the interests of the whole of the United Kingdom.
During this consultation and the appointment process, the Secretary of State will aim to work closely with the devolved Administrations to ensure that their interests and comments are taken fully into account before decisions are made on who should be appointed. These amendments, on the other hand, would encourage a narrowing of expertise and risk the effective establishment of the panel. Consent would give each Administration a veto, which could delay and politicise appointments, which would undermine the OIM from the outset. For those reasons, I cannot accept these amendments.
Amendment 125 would require CMA’s proposed and finalised annual plan and annual report to be laid before each Parliament of the devolved Administrations. I assure noble Lords that the Government share the concern of the noble and learned Lord, Lord Thomas, that adequate opportunities for debate and scrutiny of the CMA’s annual report and other documents exist for the devolved legislatures. The Enterprise and Regulatory Reform Act 2013 requires arrangements to be made to lay the annual plan and report to Parliament; in practice, they are also laid before each devolved legislature. I assure noble Lords that this will continue in future. Should this reassurance be insufficient, the CMA’s annual plan and report are made public, allowing each legislature to scrutinise and debate them if it sees fit. In the light of those reassurances and reasons, I hope that noble Lords will not move their amendments.
Amendments 126, 128 and 129, and subsections (2)(b) and (4) of the new clause proposed by Amendment 116, would require either the OIM panel or task groups to have representatives from each of the four nations of the United Kingdom. This amendment could lead to members of the relevant task groups placing regional or political interests ahead of the CMA’s UK-wide mandate. This would harm the OIM’s ability to monitor the internal market effectively. All panel members chosen to be on each task group should represent the UK as a whole when undertaking reporting for the OIM. For that reason, I am unable to accept these amendments.
Amendment 127 would increase the mandated size of an OIM panel group from three members to five. Having consulted the CMA carefully on this and other points, the Government are confident that three members are sufficient to provide the range of expertise necessary to undertake the work of a task group. Since the panel may need to be able to form multiple task groups at a given time, increasing above this number would reduce the resilience of the panel as a whole and create additional unnecessary expense. For this reason, I hope the noble Lord will not press his amendment.
Lord Purvis of Tweed (LD)
My Lords, I apologise for detaining the Committee; I know I spoke at length on this group. Can the Minister clarify something that he said at the outset? I heard him say that responses to the consultation supported the Government’s proposals for the CMA having this role, but I have the White Paper and the consultation in front of me. No one asked; the Government did not ask. The CMA is not mentioned at all, as I think the noble Baroness, Lady Noakes, indicated. In fact, questions 3 and 4 do not refer to the CMA, and in the entire section the CMA is not mentioned. To resolve this, would the Government publish the consultation responses before Report, or can the Minister clarify in his remarks that he may have inadvertently misled the Committee?
Lord Callanan (Con)
I will certainly check that, and of course I will respond to the noble Lord if that proves incorrect. We obviously proposed the creation of the office for the internal market in the White Paper and said that we were interested in views—the noble Lord, Lord Purvis, shakes his head but I think we did. I will clarify that for the noble Lord in writing, in one of the many letters that I will be sending him. I definitely remember having discussions at the time of the White Paper with many noble Lords whom I spoke to during the consultation. We certainly discussed at the time how the creation of a new body would best monitor the function and effectiveness of the UK internal market process in the context of the White Paper, but I will certainly clarify that for the noble Lord in writing.
Baroness Bowles of Berkhamsted (LD) [V]
My Lords, we have had an extensive and thoughtful debate, and I thank all noble Lords who have taken part. I thank my noble friends Lord Palmer and Lord Purvis for supporting my amendments, and indeed others who have mentioned them; one who springs to mind is the noble Baroness, Lady Altmann. As ever, the major constitutional issue has taken pride of place over technical issues. I am sure that noble Lords have realised that I am rather interested in the technical issues too, but we will end up having to come to grips with them, so I will not reiterate now.
To comment on some of what has been said—I cannot do justice to all speakers—my noble friend Lord Palmer said that there needed to be much more clarity to the OIM, and that we needed to resolve the ambiguity of its structure, flesh out how it works and find out what it meant in real terms. I think that is also the basis for a lot of other thoughts, whether they are technical or to do with devolution. What comes out loud and clear is whether all parts of the UK will feel that they have voice or ownership. My noble friend Lady Randerson led with the proposals that others have also spoken on and which have the support of the Welsh Government. It is all about having a structure that is workable for everybody and not part of something working inside the UK Government.
The Minister says that the CMA is independent. I accept that to a large extent that may be true, but there is still the problem that its strategy can be directed or steered by BEIS. That is just not the way to give the devolved Administrations confidence when, as has been outlined, the hybrid role of UK Ministers leaves us in the rather unsatisfactory situation of the same person trying to arbitrate. It is like the referee in the rugby match that my noble friend Lady Randerson referenced. Indeed, the noble Lord, Lord Wigley, said that basically the referee cannot be the manager of one of the teams—which rather seems to be the situation that we have here.
Some very valid points were made by the noble and learned Lord, Lord Thomas of Cwmgiedd, who said that judges had to be drawn from the different parts of the United Kingdom who understood everything vis-à-vis their specialist knowledge. I would not hold myself out at the level of a judge. I am not bad when it comes to negotiating things internationally, but I am English and would never hold myself out as being able to represent the positions of the devolved Administrations. I know that there are known unknowns that I do not know, and that is the situation we have to recognise. Whatever the integrity of the people on the CMA, you just do not know that the background is there unless they are drawn from a diverse field. I am very much one of those people who says that you cannot have sectoral interests, but this is different. I do not consider that devolution is political in that sense—we are all trying to get on together.
The noble Baroness, Lady Finlay, made a very interesting point when she suggested that it could perhaps be an interim measure because it has all been brought together very quickly. The noble Lord, Lord Hain, investigated the governance of the CMA and came up with many of the same conclusions as others. The noble Baroness, Lady Bennett, echoed that it is all about a voice for the legislatures and how to keep devolution alive.
As I said, I share with the noble Baroness, Lady Noakes, the view that the CMA is meant to be a UK-wide body and that nominees are not always the best people, but what is good enough for judges is, I think, good enough for the OIM. Yes, perhaps you always have to compromise, but my compromise comes down on the side of voice and ownership; otherwise, the body will never be trusted, as the noble Lord, Lord Empey, said. You have to have the confidence of knowing that people are properly at the table. I acknowledge that we have had rather haphazard devolution but, just because we have left the EU, that cannot be solved with “Whitehall knows best” and by taking back things that properly have been devolved.
The noble and learned Lord, Lord Hope, supported consensual Motions and said that consultation is not a guarantee. The noble Lord, Lord Cormack, warned us of the danger of a broken United Kingdom, emphasising again that there was a need for more time to be taken and for more confidence. The noble Lord, Lord Judd, had a good point in suggesting that we need a federal UK. That would perhaps make things easier, but we are not able to resolve that now—so, as he said, it comes back to understanding separate identities and to ownership.
The noble Baroness, Lady Altmann, supported some of my amendments and wanted the proper involvement of all parties. She also felt that the CMA was the wrong home, and really was not a viable place or a viable alternative to constructing a new body, because of the strategic involvement of BEIS and HMT, and because of it not being sensitive to matters of small businesses and diversity.
The noble Baroness, Lady Ritchie, was I think the first to bring forward the same points about needing a degree of independence and embracing the devolved legislatures, and also the fact that the Constitution Committee had also asked, “Why the CMA?” This was echoed by the views of my noble friend Lord Purvis. I agree with him; I could not find the flagging up of the CMA. It may be that one respondent said “a body such as the CMA”, but I did not see any consultation on it being the CMA or whether it was appropriate. The noble Baroness, Lady Ritchie, and other noble Lords also pointed out that the CMA is used to dealing with private business and enterprise and has a BEIS strategic influence.
I cannot begin to summarise what was said by my noble friend Lord Purvis, but the fact is that the CMA is left trying to analyse hypothetical benefits. It is true that we do not really know how this is all going to work out. If noble Lords follow the logic of my noble friend’s argument, they will find that he concluded by asking what incentive there was for this body to be used by the devolved Administrations. It is not intended to stir up wars between the devolved parts of the UK and the centre, but my view is that, by its set-up, it is likely to stoke rather than resolve concerns.
As I said before, the noble Lord does not like looking to the EU for examples, but it is a bit like when the Commission comes out with a proposal. It always wants to harmonise everything to make it easier and then the member states, notably the UK, get stuck in. You then get down to the nitty-gritty and you solve it. At the moment, we have this sort of overview coming from the Government that gives the devolved Administrations no room to manoeuvre—yet, when they get down to the nitty-gritty in the common frameworks, what happens? You can reach a conclusion.
The Deputy Chairman of Committees (The Earl of Kinnoull) (Non-Afl)
Does the Minister wish to add anything?
Lord Callanan (Con)
I thank noble Lords who have taken part. They have asked for a lot of information on the various clauses and whether they should stand part, and I will provide it.
I start with Clauses 31 to 37 and why they should stand part. As we have discussed previously, Part 4 of the Bill creates the office for the internal market within the CMA, charged with carrying out a set of independent advisory, monitoring and reporting functions to support the effective operation of the UK internal market. Clause 31 defines a regulatory provision for the purposes of the CMA’s UK internal market reporting, advisory and monitoring functions, as well as stating which of these provisions are within scope. The purpose is to establish that the CMA may undertake monitoring reviews on an ad hoc basis, either of its own volition or at the request of other parties, including the UK Government and the devolved Administrations and legislatures. This monitoring will focus on cross-border competition, investment and trade, as well as access to goods and services.
There are two categories of monitoring and reporting that the CMA must undertake. The first is an annual health of the market assessment that will set out trends and developments in the internal market, including levels of integration across different sectors and nations. The second is a review of the impact of the measures in Parts 1 to 3 of the Bill, dealing with the internal market system itself, to be published at least every five years. Both types of report will be published and laid before both Houses and all the devolved legislatures.
Clause 32 sets out the provision for the CMA to advise on a regulatory proposal prior to it being passed or made in law. If an Administration in one part of the UK wishes to do so, it may request non-binding advice from the CMA on an approach to regulation it or any other person proposes to make in the relevant part of the UK. This is on a voluntary basis but will help support effective policy development. The advice, or report, from the CMA will examine the potential economic impact of the proposal on areas such as competition and trade distortions, the impact on prices and the choice and quality of goods and services for consumers. To ensure transparency, all advice will be published and shared with all four Administrations.
Clause 33 details the CMA’s reporting procedure on regulatory provisions already been passed or made in law. The request may be made by one or more Administrations and must concern a regulatory provision applying to its part of the UK and within its legislative competence. Similarly, to ensure transparency, the CMA will publish the report soon after it is provided to the requesting Administration. The noble Baroness, Lady Bowles, asked about this clause. The clause sets out that it is for the national authority seeking the report from the OIM to consider and determine whether another body could provide advice. This is not a technical term and is simply intended to make it clear that the OIM is not intended to displace other bodies that might in theory provide more relevant advice on the same matter and, in doing so, make the best possible use of public funds.
Clause 34 sets out the reporting procedure that the CMA will undertake for regulatory provisions that are already enacted in any part of the United Kingdom and are considered to have actual or anticipated detrimental impacts on the internal market. The CMA may produce reports upon the request of a Minister in the UK Government or a Minister in any devolved Administration. The CMA must provide copies to all other Administrations in other parts of the United Kingdom, laying the report before each House of Parliament and all devolved legislatures, as well as making it public.
Clause 35 sets out the process that the CMA, the UK Government and the devolved Administrations must follow once a report has been produced by the CMA and laid before the legislatures under Clause 32. The process requires the Minister in the Administration responsible for implementing the regulatory provision that was the subject of the report, and the Minister in the Administration who requested the report, to make a Written Statement in their relevant legislature. This supports effective parliamentary oversight, as well as prompting legislatures to determine the most appropriate subsequent course of action.
Clause 36 allows the CMA the discretion to exclude particular categories of information from its reporting on impacts on the internal market. The discretion to exclude some categories is not novel or contentious, and is used by public and private organisations to protect commercial and private information about an organisation or a person. This discretion is necessary in specific circumstances to provide assurances for business and individuals’ interests.
Clause 37 requires the CMA to publish general advice, information and guidance about how it expects to approach the exercise of its monitoring, advisory and reporting functions under Clauses 31 to 34. This mirrors existing requirements in the Enterprise Act 2002 to publish documents, as the UK’s competition authority, on how it works to promote competition for the benefit of consumers, both within and outside the UK.
I turn to Amendment 134, which seeks to delete the phrase “from time to time” from Clause 31(1), which deals with the CMA’s ability to produce ad hoc reports on matters it considers relevant to the effective operation of the UK’s internal market. The Government agree that it is essential for the CMA to undertake reviews and report on matters it considers relevant to the effective operation of the internal market. However, the Government believe that it is also important that, as an independent body, the CMA should not be under pressure to frequently produce ad hoc reports, which is what removing this phrase “from time to time” would imply. As Clause 31(5) and (6) make clear, the office for the internal market will produce regular reports on the health of the internal market; it will therefore be well placed to make the right judgment on the need for the production of other reports.
Amendments 135 and 137 would require the CMA to conduct reviews only into what are called “important” matters, and that only the UK Government and devolved Administrations may request a review from the CMA. The Government appreciate the intention of these amendments, which is to ensure that the CMA is not overburdened by expectations in relation to reviews. However, the CMA is experienced in the matter of reviews and should not have its work impeded due to debates as to what constitutes a “matter of importance”. Furthermore, it is important that all stakeholders with an interest in the internal market should be able to request that the CMA undertake a review. This in turn will help to maintain stakeholder confidence in the independence of the OIM from the UK Government and the devolved Administrations.
Amendment 144 seeks to amend Clause 32 by inserting the word “entirety” to ensure that the Secretary of State can request advice and a report from the CMA on matters relating to the whole of the UK, not just a part of it. The current wording of Clause 32 aims to capture that reporting made possible by the clause is limited only to devolved regulatory competence. In the case of the Secretary of State, this would mean England-only legislation by the UK Government would be in scope of Clause 32. The effect of the amendment would be to extend the scope of Clause 32 to capture powers being exercised for the whole of the UK by the UK Government. To support the effective operation of the internal market, the office will need to focus its reporting and monitoring on areas of regulatory divergence across the UK. If regulatory measures apply UK-wide, the same risks to the functioning of the internal market will not feature. It is therefore vital to narrow the focus of the reporting in question to regulation that covers only a proportion of the UK and could pose an issue to the functioning of the market.
I turn to Amendment 145. The purpose of Clause 33 is to enable the CMA to produce reports on the impact of regulatory provisions which have already been passed or made into law. This procedure is voluntary and can be requested by an Administration, solely or jointly, in all parts of the United Kingdom, in relation to a regulatory provision applying to the relevant part of the UK and within its legislative competence. The Government understand the concerns around transparency, but the aim of subsection (2) is to ensure that the requesting Administration consider whether any other person or body is also qualified to provide an independent report on the matter before a request to the CMA is made. It is important to consider whether any work done by another person or organisation would put the CMA in a better position to provide advice to an Administration and for this to be taken into account and considered before a request to the CMA. This is a pragmatic and wholly sensible approach and ensures that the CMA’s resources are best directed at requests for advice, monitoring and reporting where it has the relevant expertise.
Amendment 146 advocates for the removal of subsection (4) within Clause 35. This clause requires the national authority responsible for implementing the regulatory measure that was the subject of the CMA’s report to then make a written statement in the relevant legislature. This amendment would remove the obligation of laying a copy of a written statement before each House of the UK Parliament. This would clearly result in inconsistency between the UK Government and devolved Administrations in accountability to their respective legislatures. We believe that this change would result in a democratic deficit and the loss of accountability towards both Houses of this Parliament.
Amendments 147 and 148 would require the CMA to consult stakeholders before preparing advice and information about how it expects to approach the exercise of its functions and revising or withdrawing any advice or guidance. Clause 37 mirrors existing requirements in the Enterprise Act 2002 to publish documents, as the UK’s competition authority, on how it works to promote competition for the benefit of consumers, both within and outside the UK. As a matter of good practice and maintaining effective working relationships with a range of stakeholders, the CMA already undertakes extensive consultations with stakeholders in respect of its existing statutory duties before publishing advice and information. The CMA will be maintaining this approach in respect of the advice, information and guidance it publishes under Clause 37. In light of this reassurance, and to safeguard the independence of the CMA, the Government do not think it is necessary to compel the CMA to do this, as proposed by the amendment.
Amendment 151 seeks to amend Clause 39 to explicitly require the CMA to consult the UK Government, the devolved Administrations and other relevant persons in preparing or revising its statement of policy in relation to the enforcement of its information-gathering powers. Clause 39 allows the Competition and Markets Authority to take actions in response to non-compliance with the information requests described in Clause 38. To ensure that its penalties regime is fully considered and proportionate, the CMA will be required, as it already is now under its existing statutory functions in relation to the Enterprise and Regulatory Reform Act 2013, to consult other parties as it sees fit when developing or revising its approach. I can assure noble Lords that, in practice, the UK Government and the devolved Administrations would always be consulted as a duty on the CMA as it stands in the Bill. The noble Baroness, Lady Finlay, asked about compelling devolved Administration Ministers to give information. We can give DAs information notices, but they cannot, of course, receive any penalties for non-compliance.
Lord Stevenson of Balmacara (Lab) [V]
My Lords, it will be interesting to hear how the Minister responds to this request, which has been well described as a bit of a coda. On the other hand, it also contains teeth, which would be there to be used, if someone wished to. It is important to get this right and understand, if it is rejected, why it is. I look forward to that.
Ministers know that we on the Labour side think that the common frameworks are at the centre of the managed divergence that we want to see and allow to happen across the devolved Administrations. It is important that the process continues and that is at the centre of the Bill, because it is not at the moment; it is hardly mentioned, except in passing. If that is the case, we look for some additional reassurance from the Minister that the powers that might be available to the Government, when they feel the common frameworks are not working, are not used too early or vicariously just to show the devolved Administrations who is in charge. As we were reminded by the noble Lord, Lord Dunlop, on day one, the Government already have powers to deal with any default they feel is present in the common frameworks. The questions raised by this amendment are important, and I look forward to hearing the Minister’s response.
Lord Callanan (Con)
I thank those hardy souls who have stayed for this brief debate. Amendment 143, tabled by the noble Baroness, Lady Finlay, is concerned with a proposed role for the CMA in the laying of regulations on the application of the market access principles. It builds on the earlier Amendments 6, 78 and 104, which concerned the scope within which the UK market access principles proposed in the Bill will apply. I understand that the noble Baroness has tabled this amendment on behalf of the Welsh Government, and I thank the Welsh Government for their positive engagement on the Bill so far. The UK Government look forward to continued and constructive future engagement with them on more aspects of these proposals.
Before I turn to the detail of this amendment, I note the previous discussion on similar amendments also tabled by the noble Baroness, Lady Finlay, which would have narrowed the scope of the market access principles. As I set out then, those amendments would, in combination, prevent the market access principles from applying in time, at the end of the transition period. Earlier, I set out that the lengthy process the amendments put in place before the principles can apply, including the need to exhaust the framework discussions first, would mean a considerable delay in securing business certainty that trade can continue unhindered within the UK’s internal market. Amendment 143 would add an additional layer of bureaucracy to that process.
In our view, it would also problematically risk bringing the CMA into potentially contentious decision-making and mean its role was weighted towards supporting the Secretary of State over the devolved Administration counterparts. This contrasts sharply with our vision for this, which is to ensure that the OIM’s expert reporting is available to all four administrations equally. Above all, however, the advice provided by the OIM will be economic in nature. Its panel will have expertise across intra-UK trade, regulatory impacts on business and competition effects, which is one reason why the Government chose to establish it within the CMA. We had that debate earlier.
The office for the internal market will not be equipped, therefore, to opine on matters related to animal welfare or environmental protection. To lay this obligation on the OIM would bring a significant risk of duplication of the remit of other public bodies, which would cause considerable confusion for the many stakeholders in this field. For these reasons, and the uncertainty and confusion that this and other related amendments would generate for businesses and citizens, the Government regretfully cannot support them, and I hope the noble Baroness is able to withdraw.
Baroness Finlay of Llandaff (CB) [V]
My Lords, I am grateful to the Minister for recognising the staying power of some noble Lords, because we have had three days of this debate. I am most grateful to the noble Lord, Lord Fox, for going through some of the aspects of this amendment in more detail and clearly pointing out that its aim is to establish a level playing field, at every level. There has to be a level playing field, because it is the only way in which the four nations will eventually be able to work together properly.
I echo the words of the noble Lord, Lord Stevenson, and I am grateful to him for stating that there is a need to have common frameworks at the centre of the Bill. This is something to which we will return on Report, because the Bill, as it is written, does not make this clear at all. In the way it is written at the moment, it looks as if the common frameworks are almost disposable. We need to come back to that.
I am glad that the Government recognise the involvement and commitment of the Welsh Government to have positive discussions, and I know that from the Wales end that that is true. They want to engage and come to a good solution. They want business certainty just as much as anyone else; they want less bureaucracy just as much as anybody else, but they need to know there will be a level playing field and fairness at the end of the day. That is why the common frameworks were so attractive, and why people have worked so hard towards them and are committed to carrying on working towards them.
Having said that and knowing that we need to have further discussions on this and that we will return to this on Report, I beg leave to withdraw the amendment.
Covid-19: Small Businesses
Lord Callanan Excerpts(3 years, 6 months ago)
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The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Callanan) (Con)
My Lords, the Government have introduced an unprecedented and comprehensive package of financial support, with a total fiscal response of close to £200 billion. The measures introduced, including government-backed loan guarantee schemes, grant funding and the Coronavirus Job Retention Scheme have been designed to be accessible to most businesses and sectors across the UK. We continue to keep this support under review, with further measures announced by the Chancellor that build on the significant support already available.
Lord Cotter (LD)
Coming from a small business background as I do, I thank the Minister for the Answer. I shall quote my local paper’s warning from local stores:
“Use us or lose us”.
Business rates are a real burden these days, as before. May I urge the Minister to look at these issues with renewed emphasis?
Lord Callanan (Con)
I totally agree with the noble Lord’s sentiments. As he is probably aware, we have launched a fundamental review of business rates, which will build on the changes that we are making to the system, worth more than £23 billion to businesses over the next five years.
Lord Haskel (Lab) [V]
My Lords, I welcome the job support schemes mentioned by the Minister but they are short-term solutions. They load many companies with debt, which limits their ability to invest in the skills, digitalisation, resilience and restructuring essential for our longer-term recovery. Will the Government set up a system that allows debt for equity, perhaps with progressive undertakings regarding corporate governance? Several schemes to do that have been put forward. Will the Government run with one?
Lord Callanan (Con)
The noble Lord is right to say that these schemes are essentially short-term but we are doing an awful lot to kick-start the economy. The Prime Minister has referred to the need to build back better and we are investing substantial sums. However, we of course keep these matters under constant review.
Lord Flight (Con)
What support are the Government considering providing to businesses set to face lower demand during the winter because of Covid-19 restrictions?
Lord Callanan (Con)
Our winter economy plan builds on the significant support available, with the extension of the coronavirus loan guarantee scheme until 30 November, the introduction of the job support scheme from November and the extension of the self-employment income support scheme.
Baroness Bowles of Berkhamsted (LD) [V]
One-third of the self-employed, including sole directors of limited companies and the newly self-employed, are still completely excluded from the self-employed income support scheme. Why can the Government not devise help for them, especially the smallest, who are not in the tax-dodging territory of payment by dividends?
Lord Callanan (Con)
The noble Baroness makes an important point, but we have paid out more than £11 billion to more than 900,000 small businesses, and some small businesses that are ineligible for the SEISS grant extension may still be eligible for other elements of the scheme.
Baroness Verma (Con)
My Lords, will my noble friend look at councils that rent their properties out to small businesses, so that those businesses do not receive demands to pay their rent at this very difficult time? Leicester has been in a second lockdown since June, and small businesses are struggling. Will my noble friend also look at not re-adding VAT to PPE? I refer noble Lords to my interests as set out in the register.
Lord Callanan (Con)
My noble friend makes an important point, and I hope that councils, in particular, being part of the public sector, will be sympathetic to the plight of many small businesses at this time. I am sure that my noble friend will understand, however, that I cannot predict what the Chancellor might have to say, on VAT or any other matters, in his future Budgets.
Lord Bird (CB)
My Lords, I declare my interests as set out in the register. I am the recipient of a very generous bounce-back loan: thank you very much indeed. It is very useful for a social business in difficult times, and I would like to see more of that coming down the line. But what concerns me is that the only way to help small businessmen is to get control of Covid—and what alarms me, and a lot of people in the country, is that there does not seem to be unity in Parliament. Is it too early or too late—or too wrong—to call for some kind of national Government to bring us together, so that we can dismantle the biggest crisis we have ever faced in the history of our country?
Lord Callanan (Con)
I am pleased that the noble Lord has been able to take advantage of one of our loan schemes. He made an interesting suggestion about a national Government—but I hope he will accept that that is way above my pay grade.
Baroness Wheatcroft (Non-Afl) [V]
My Lords, in the time of Covid, small businesses are having to rely increasingly on internet platforms such as Amazon and Google to market their products. The digital services tax, which was supposed to ensure that these platforms pay their fair share, is being passed on to those small businesses, which cannot afford to pay the extra 2% they are being asked for. So will the Minister revisit the digital services tax, which is clearly not working as it was supposed to?
Lord Callanan (Con)
Again, the noble Baroness is tempting me to enter the territory of the Chancellor. We have been clear that the digital services tax is temporary, and businesses are liable to it only when they have worldwide revenues of more than £500 million, and more than £25 million of those revenues is derived from UK users. So it applies only to the very largest businesses.
Lord Stevenson of Balmacara (Lab) [V]
My Lords, the AAT reports that during the pandemic more than 50% of businesses have seen an increase in late payments, and nearly one-third admit to delaying payments that are contractually due. The Government have taken emergency powers, so this is a matter for BEIS, and these powers do help businesses. The FSB says that sorting the scourge of late payments would be a huge boost in these difficult times, and would aid the recovery when it comes. Will the Government act?
Lord Callanan (Con)
I totally accept the noble Lord’s point; he raises an important issue. But accepted payment terms vary from sector to sector, and a one-size-fits-all approach is not, in our view, the best way to deliver a culture change. Government would be restricting businesses’ ability to negotiate terms, which could have a negative effect on the UK economy by making business more difficult to do.
Lord Roberts of Llandudno (LD) [V]
Many of the small businesses in my area of course are linked with the holiday trade: Llandudno and the Conwy valley are well known for that. After the pandemic eases, people will not be able to travel very far into the European continent, so home holidays will become more attractive, but the holiday industry—cafés, hotels and venues—need help to tide them over the interim period. Can the Government think of any way—say, with tax, or helping with other things such as rents and rates—to make it easier for those who are desperately struggling to survive in the tourist industry to come through this epidemic?
Lord Callanan (Con)
The noble Lord highlights an important issue. Of course we want to encourage as many people as possible to take advantage of our excellent local tourist industry—an important industry, including in Wales, to which the noble Lord referred. There have been a number of schemes to help small businesses: we have introduced business rate holidays, plus all the various grant schemes to try to keep those businesses afloat.
Baroness Blackwood of North Oxford (Con) [V]
My Lords, UK life sciences is not only one of our most innovative and productive sectors, it also benefits the whole country, with two-thirds of its jobs outside the south-east. Its thriving is crucial not only to our exit from Covid but to our economic recovery. However, life sciences SMEs say that they struggle to access data responsibly, that clinical research remains too slow, and that scale-up investment can be a challenge. In the upcoming CSR, will the Minister not only deliver on the £200 million life sciences investment programme but also invest in health data infrastructure and accelerating clinical research set-up?
Lord Callanan (Con)
The noble Baroness is a powerful advocate for the life sciences sector, so of course we will look at many of the suggestions that she has put forward.
Lord Browne of Ladyton (Lab) [V]
My Lords, since lockdown I have raised with Ministers the issue of the market failure of pandemic risk insurance five times. Each time I have been told that in due course the Government strategy on it will be revealed. For many businesses, the unavailability of business interruption insurance for pandemic risk is an issue for now, and it soon could be decisive in whether a large number of businesses will be able to trade. This is an issue of transparency and accountability. What, precisely, is the Government’s plan for this market failure?
Lord Callanan (Con)
The noble Lord highlights an important problem. This is a difficult issue, but insurance contracts are a matter of commercial negotiations in the market, and it is hard for the Government to interfere in what is, essentially, a commercial decision between the person issuing the insurance and the person taking it out. But we are certainly aware of the problem, and we are looking to see whether there is anything we can do in this field.
The Lord Speaker (Lord Fowler)
My Lords, all supplementary questions have been asked. We now move to the next Question.
Clean Growth Fund
Lord Callanan Excerpts(3 years, 6 months ago)
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Baroness Benjamin (LD)
My Lords, I beg leave to ask the Question standing in my name on the Order Paper and I declare an interest as a member of the Peers for the Planet group.
The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Callanan) (Con)
My Lords, the £40 million Clean Growth Fund was launched in May 2020 as a commercially run venture capital fund managed by Clean Growth Investment Management. The fund manager has had over 400 expressions of interest from SMEs and intends to make several investments in UK companies this financial year. The Clean Growth Fund will develop a broad portfolio of companies investing in software and hardware across the power, transport, industry, buildings and waste sectors.
Baroness Benjamin (LD)
My Lords, I thank the noble Lord for his Answer. We have to invent a way out of the critical climate change emergency that we are in. Thankfully, innovation is playing a major role in finding ways of reversing the unbelievable level of pollution that human activity produces. This is a global problem, though, and it is clear that international co-operation is vital if we are to solve it. Does the Minister not agree that the budget for the Clean Growth Fund should be prioritised, be more transparent and have its remit expanded to work more closely with similar organisations around the world if we are to save our precious planet?
Lord Callanan (Con)
I agree with the noble Baroness and we will work closely with many other funds. The fund will make direct equity investments in UK-based companies that want to scale their promising green technologies.
Lord Moynihan (Con)
My Lords, I am always sceptical of government picking winners, especially where the issue is not a shortage of private sector investors but too few profitable projects to finance. That said, will my noble friend maintain the Government’s focus on sustainable and resilient supply chains for energy, food, water and raw materials and transparently provide clarity with their co-investors on the criteria that cannot be met exclusively through private sector funding mechanisms?
Lord Callanan (Con)
Of course, my noble friend is correct to be sceptical, but we want to capitalise on the opportunity presented by the growing low-carbon global economy and we want to capitalise private investment into the UK clean growth sector.
Baroness Lane-Fox of Soho (CB) [V]
I declare my interest as a director of the Peers for the Planet group. A Resolution Foundation report out today states that 20% of 18 to 24 year-olds are likely to face unemployment, yet there are huge potential opportunities for employment in the clean energy and climate crisis innovation areas. What are the Government doing to make sure that these young people are able to have the skills that they need to take up what will be an enormous amount of potential job opportunities?
Lord Callanan (Con)
I agree with the noble Baroness that there are tremendous opportunities, but we have a number of other government funds outside of the one that we are discussing today. For instance, the Green Homes Grant scheme has a training element within it, with several million pounds of grants allocated to training providers to provide jobs in exactly the sector that she mentions.
Lord Grantchester (Lab)
The managing partner of the Clean Growth Fund, Beverley Gower-Jones, has said that the fund will hopefully invest in two companies before the end of the year. This is from among hundreds of applications. Can the Minister explain how the aim of only two companies is reflective of the UK’s bold climate ambitions? How will the taxpayer share in any return and when might that opportunity materialise?
Lord Callanan (Con)
That is two companies this financial year; a number of other companies are in the pipeline. I am sure that the noble Lord would agree that it is proper that the fund manager does the appropriate due diligence to check that the money is well spent and invested properly. There have been 400 expressions of interest and the duration of the fund is over 10 years. It is a commercially driven fund and we hope to get our money back at the end of the day.
Baroness Bakewell of Hardington Mandeville (LD)
Can the Minister say how many local authorities applied for grants from the £2 million from the Clean Growth Fund allocated for improving air quality? How much has gone to London councils and how much has gone to areas outside London?
Lord Callanan (Con)
With respect to the noble Baroness, that is not the subject of the Question that we are dealing with, so I will write to her separately on that.
Lord Sarfraz (Con)
My Lords, I declare an interest in venture capital, as set out in the register. The Clean Growth Fund is one of several government-sponsored initiatives to support early-stage technology entrepreneurs. Can my noble friend the Minister advise if efforts are being made to share best practices across government departments, so that these initiatives do not operate in entirely independent silos?
Lord Callanan (Con)
My noble friend makes a good point. The BEIS team have been engaging with cross-Whitehall colleagues as the Clean Growth Fund has been developed and launched, including in the Department for International Trade, the Department for Environment, Food and Rural Affairs and the Foreign, Commonwealth and Development Office.
Lord Singh of Wimbledon (CB) [V]
My Lords, while schemes such as the Clean Growth Fund are helping to boost the supply of solar and wind power, less is being done to use heat in the earth as a source of green energy. Geothermic energy is derived from the natural heat of water piped from several thousand feet deep in the ground and is sometimes used for heating homes and offices. Will the Minister look into the possible expansion of its use?
Lord Callanan (Con)
The noble Lord makes a good point: there is great potential from geothermal energy. A number of promising trial projects are going on with such innovative technologies and of course I will look further into it.
Lord Wigley (PC) [V]
My Lords, when the Clean Growth Fund was launched, the scheme was said to be open to all UK-based companies. Can the Minister confirm that it is indeed open to SMEs in Wales, for which the scheme is very relevant, and can he give an indication of how many of the 400 firms that have expressed an interest are from Wales?
Lord Callanan (Con)
I can reassure the noble Lord that it is open to UK companies. I am pleased to say that Wales is still part of the United Kingdom, so all Welsh companies will be able to benefit. I do not have the precise number of Welsh companies that expressed an interest, but if that information is publicly available I will write to him with it.
Lord Bradshaw (LD) [V]
Can the Minister tell us whether the Clean Growth Fund will take into account only companies that are commercially viable, or is it expected to take into account net gains to society, such as reduced emissions or biodiversity gain?
Lord Callanan (Con)
I can reassure the noble Lord that the fund is indeed targeted at companies that are commercially viable. It is run by a commercial fund manager and there are private sector investments alongside government investment. The Government play no role in allocating investments, but the fund is looking for commercial investments that will provide a return.
Lord Lilley (Con)
My Lords, I draw attention to my interests in the register. I sincerely hope that the fund will succeed in investing in companies that grow without subsidy, but does my noble friend recall that, in the Government’s Cost of Energy Review, Professor Dieter Helm concluded that the best part of £100 billion spent so far on renewables has been wasted because, as he warned, Governments are not very good at picking winners, but
“losers are very good at picking governments”?
Lord Callanan (Con)
That is indeed a good quote and I agree to a certain extent with my noble friend, but this is a commercial investment, run by a commercial fund manager. My noble friend will be pleased to know that the Government are playing no role in the selection of the investments. There are private sector investors alongside us and the fund manager is running the fund on a commercial basis.
Lord McColl of Dulwich (Con) [V]
My Lords, as we have limited funds, why do not the Government use the Clean Growth Fund in their efforts to clean up the pollution of the air and the ocean and rid us of the enormous amount of destructive plastics? As our economy is in dire straits, is it not the time for these expensive green plans to be postponed until the economy improves?
Lord Callanan (Con)
The noble Lord makes a good point—we should indeed seek to clean up our environment as much as possible—but, as I said, that is not the purpose of this fund, which is to invest in early-stage green technologies, where a proven funding gap has been shown to exist.
The Lord Speaker (Lord Fowler)
My Lords, all supplementary questions have been asked and we now move to the next Question.
United Kingdom Internal Market Bill
Lord Callanan ExcerptsWednesday 28th October 2020
(3 years, 6 months ago)
Lords ChamberRead 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)
The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Callanan) (Con)
I thank everybody who has contributed to what has been, as always in this House, a fascinating debate, ranging far and wide, from cattle droving in the 1700s, through to the immense knowledge of the noble Lord, Lord Liddle, on current EU matters. It is good to see him again to take up cudgels across the Dispatch Box. As he knows, I do not agree with him, but I always enjoy debating these matters. I hope that noble Lords will have patience today. I have quite a lot to say—many points have been raised and I intend to go into a lot of the detail. I apologise if my remarks are a little long.
Amendments 7, 8, 20, 21, 22, 26, 32, 45 and 61, all seek to alter or change the application and scope of mutual recognition and non-discrimination for the internal market and goods. The workings of mutual recognition and non-discrimination as applied in this Bill have been carefully designed to suit the UK’s unique constitutional and legal arrangements. We consulted widely on this, based on the Government’s proposals set out in the White Paper in June.
The noble Baroness, Lady Finlay, wanted to know in detail about the consultation. We published for her benefit, a response in full to the White Paper consultation on 9 September and I would be happy to send her a copy. The consultation demonstrated that UK businesses and industry representatives are overwhelmingly supportive of the measures to prevent discriminating behaviours within our internal market. I will set out the rationale why I cannot accept these amendments. I am happy to explain how mutual recognition and non-discrimination work in greater detail.
We have been clear that the UK will do nothing to diminish its reputation as a leading nation when it comes to setting and expecting high standards of its domestic businesses and international trading partners. I know this is a concern that the noble Baroness, Lady Hayter, has expressed on other Bills that we have discussed in relation to EU exit and is what she seeks to address in Amendment 7, but I contend that this simply will not arise.
Removing imported goods from the mutual recognition principle would mean that those goods, simply because of where they were sourced, could not benefit from the same regulatory treatment as goods produced in the United Kingdom. Even when produced to identical specification and quality as domestic products, this discriminatory impact would put imported goods at a conspicuously unfair disadvantage. Under such a discriminatory approach, we would be likely to be in clear breach of our World Trade Organization commitments to treat imports from other countries no less favourably than similar products produced domestically.
This amendment would also create continued uncertainty for importers. Those businesses whose supply chains rely on overseas sourcing could find themselves at a competitive disadvantage. This amendment would not tackle the issue it seeks to address and would have significant negative consequences for the UK if included.
There was considerable discussion of Amendment 8, tabled by the noble Lord, Lord Rooker, which would ensure that food and animal feedstuffs would not fall within scope of the mutual recognition principle. Like my noble friend Lady Noakes, I was slightly struggling to understand the relevance of his comments about pig semen. I think he asked whether pig semen across the island of Ireland would be affected by Clause 2, but I am happy to confirm for his benefit that pig semen will be subject to the same rules as other goods across the island of Ireland and only when it moves from Northern Ireland to Great Britain will it be subject to any checks. On pigswill, I am happy to confirm for him that the Government will not allow the reinstatement of its use.
This amendment could have serious consequences for the food supply chain, as foods sold in one nation could not be sold in another if there were different regulatory requirements, creating significant barriers to trade within the UK. As I have said, the Government remain committed to maintaining the highest standards in food and feed safety. The UK internal market approach will not change the approach to determining food and feed safety and hygiene policy. I can put at rest the noble Lord’s mind and that of the noble Lord, Lord Purvis: Schedule 1 to the Bill contains an exclusion to the market access principles to continue to enable the UK Government and the devolved Administrations to take appropriate risk-management measures to prevent or reduce the movement of unsafe food or feed from one part of the UK to other parts. I will have more to say about that later.
Turning to Amendment 20 and the consequential Amendment 22, tabled by my noble friend Lady McIntosh and relating to the exclusion of certain existing statutory requirements from the mutual recognition principle, Clause 4 ensures that pre-existing regulatory differences within the UK are excluded from the scope of mutual recognition. This is a forward-looking Bill that seeks to ensure that businesses can continue to enjoy the benefits of our well-integrated internal market after the transition period ends on 31 December. Businesses already live with and have adapted to any regulatory differences that currently exist, so mutual recognition does not need to apply retrospectively. In line with this objective, Clause 4(2)(b) ensures that this exclusion is specifically targeted at those areas in which regulatory differences have previously emerged.
This amendment would widen the exclusion to include any statutory requirement that existed prior to the relevant day set out in the Bill, regardless of whether there had been divergence in that area. However, this is not necessary. Mutual recognition has a practical effect only in areas where requirements differ across the UK, which is why the exclusion is targeted at those areas. Regulatory requirements, which are currently harmonised across the UK, do not need to be specifically excluded as the application of mutual recognition will not make any difference to the status quo. Of course, if the existing requirements excluded by Clause 4 are amended in a way that changes the effect or outcome of the legislation, they would then come within the scope of mutual recognition.
Amendment 21 is consequential on Amendment 6, which we discussed previously as part of a wider discussion on market access principles. It would amend the exclusion of pre-existing requirements from the mutual principle if Amendment 6 is also adopted. My noble friend Lady Bloomfield addressed Amendment 6 yesterday in the fifth group but, in brief, these amendments in combination would enable harmful regulatory divergence within the UK internal market into 2021 and beyond. This could lead to new barriers for businesses trading within the UK, instead of clarity and certainty.
The noble Lord, Lord German, and the noble and learned Lord, Lord Hope, asked about any follow-on emissions trading scheme. This is a non-market framework, so it would not be captured by the market access principles as it does not relate to a good or service.
The noble Lord, Lord Purvis, raised a number of questions about fertilisers. I shall give him a detailed reply. To exclude from the principle of mutual recognition as proposed by the Bill the safeguarding decisions of Administrations in relation to the placing on the market of fertilisers would allow each Administration to ban the sale of a fertiliser or impose conditions on that fertiliser in their jurisdiction in response to a risk to the health and safety of humans, animals, plants and the environment. We think it necessary to retain the current ability for the individual nations to take local circumstances into account and immediately to take a fertiliser deemed unsafe off the market in their territory without the risk of that product finding its way back into that territory via another nation. Without that amendment, it could take some time formally to ban a product through legislation—perhaps a couple of years.
The noble Lord also asked about pesticides. Decisions on which pesticides can be authorised to be marketed and sold in each part of the UK are already within devolved competence. All four Administrations work closely together, supported by HSE, and most decisions can be taken jointly by consensus. However, retaining the ability of each Administration to take its own decision where necessary is important, for example, if merely to consider locally specific factors, such as environmental or farming conditions, which can differ across the UK. This has worked well for many years where there has been occasional divergence between different parts of the UK and has not, so far, caused problems. This amendment therefore maintains the current position.
Amendment 26, tabled by my noble friend Lady McIntosh, seeks an explanation of the meaning of Clause 5(3), which I am happy to give. Clause 5(3) will operate so that any future requirements that fall within the scope of the non-discrimination principle will be of no effect to the extent that they are discriminatory. For the benefit of the lawyers, this does not mean that the requirement is to be treated as if it never had any legal effect. Rather, it allows the continued operation of the requirement, except to the extent that it has discriminatory effects. This aims to ensure that businesses can continue in their trade and goods can continue to be sold, despite protectionist measures that might treat goods from one part of the UK more favourably than goods from another. As the Bill deals with trade across the whole of the United Kingdom, the intention is that this will apply to all legislation: secondary legislation, primary legislation passed by devolved legislatures and legislation passed by the UK Parliament.
We believe that this does not require further elaboration in the Bill and is clear that only changes to existing legislation that affect the outcome are in scope. The amendment in question could cause confusion as there may be amendments that are considered “significant”, but do not change the outcome or effect of legislation. Fundamentally, however, the drafting in this clause will allow businesses to continue following the same regulations as they have been accustomed to, as our desire is not to disrupt their operations. That flexibility is important, because we want this provision to catch legislation only to the extent that it produces discriminatory effects. If something is not law, it cannot have any effect. As I said, we want to create a presumption that future Acts of Parliament are subject to this rule, which the current drafting allows.
My noble friend Lady McIntosh also asked whether, if the FSA and FSS had different rules, that would impact on the free movement of goods. The principles of mutual recognition and non-discrimination will apply to goods, including food, feed and animal products. This means that a good that can be lawfully sold in one territory can be lawfully sold in the other territories without having to comply with that other territory’s requirements. The only exclusion from this, as I said earlier, is set out in Schedule 1, which provides for exclusion in emergency scenarios where specific criteria are set out.
Lord Purvis of Tweed (LD)
The Minister did not explain why services from the Isle of Man to the rest of the United Kingdom will be considered within the United Kingdom internal market, but goods coming from the Isle of Man are outside the single market. There are many service providers from the Isle of Man. In fact, financial services are probably a bigger part of the Isle of Man economy than goods for export. I would be grateful if the Minister could explain this. The Minister did not respond to my point about whether these regulations apply to the services that citizens receive for higher education. This is very important within Scotland.
My point to the Minister, I believe, justifies my argument on the good working relationship across the four nations on fertilisers and pesticides. The Minister referenced the justification for the government amendment about the need to work in emergencies. Paragraph 1 of Schedule 1 already has exclusions from market access principles for threats to human, animal and plant health. Emergencies were already covered. The amendment that the Government brought forward was not on emergencies; I looked at the regulations that it covers, which are in paragraph 9 of Schedule 1 on fertilisers and pesticides. The Bill will allow the Scottish Government, and a Welsh Government or UK Government acting for England, to make a different judgment on the advice they get from the single regulator about the safety of a pesticide for, as the Minister Paul Scully said, “movement and use”.
So, if English farmers, under the authority of the regulations in the Bill, decide to use fertilisers on crops—barley—that are unsafe in the view of the Scottish Government, the Bill will allow the Scottish Government to prevent that barley from being used in Scottish distilleries. The Minister said that the whole purpose of the Bill was to prevent that from arising. So he has managed to undermine the entire intent of his argument at Second Reading, which was that the purpose of this legislation was to prevent a barrier from a different decision being made on safety grounds. If this amendment, which the Government brought forward, allows for different decisions to be made on the safety of pesticides used in different parts of the UK, I hope the Minister will reflect on what he said about the justification for the Bill.
Lord Callanan (Con)
I understand the point the noble Lord is making, but I think we are talking at cross purposes. It would allow provisions on unsafe products, but the provisions would be based on advice from the common regulator—so presumably the authorities in England would draw the same conclusion. It does not allow a Minister to dream up a definition of “unsafe” and implement provisions on that.
On the noble Lord’s first point, if he will forgive me, I will write to him.
Baroness McIntosh of Pickering (Con) [V]
My Lords, I am struggling to understand the Minister’s reply on Amendments 26 and 45. I am particularly concerned about Amendment 26, which is a probing amendment and simply asks for greater clarity, which I do not think we have had. Is he saying that the statutory requirement has no effect? Does he mean that it is valid or not? Is it enforceable? I am trying to avoid a situation where there is any doubt whatever, and court action might be taken. I do not quite understand his answer that the possibility of court action is excluded if, in the view of others, a statutory requirement has effect and could, therefore, be actionable.
Lord Callanan (Con)
No, it does not mean that the requirement is to be treated as though it never had any legal effect. Rather, it allows the continued operation of the requirement, except to the extent that it has discriminatory effect.
Baroness Hayter of Kentish Town (Lab)
My Lords, I think I am Baroness Hayter of Confused. I did not understand that last reply. I thank the Minister for attempting to answer the question, though I have to warn him that I think he is in trouble with the boss. I think he admitted that there would be checks at the border between Northern Ireland and Great Britain on pig semen. The boss said, “No checks, no extra paperwork”. I am now hearing noble Lords say, “New checks”. That is not what the Prime Minister said at that reception. He said, “If there’s a piece of paper, send it to me and I’ll throw it away”. I shall make no comment on semen causing particular problems, but it seems that there would be checks on it.
I shall try to be brief because a lot of points have been raised. I thank all noble Lords who have spoken, particularly those who support the line we are taking. I fear that many of these questions flag up the problem that the Bill was drafted without the full involvement and agreement of the devolved authorities. We may not be where we are if those discussions had taken place beforehand. I think it was the noble Lord, Lord German, who talked about parallel tracks between the common framework and this Bill. It loses not only the consensus approach to the common frameworks that we have discussed before, but the flexibility that the noble Lord, Lord Purvis, mentioned. We want to build on this. I hope the Minister will hear some of these questions and see whether he can give a response that ensures clarity for business, as well as for those operating in this area.
The Minister did not answer on universities and I am not sure he answered about the all-Ireland agreement. A lot of other points were raised about animal feedstuffs and pesticides. It would help if some of those dialogues could continue before we get to Report. It is also worth listening to what my noble friend Lord Liddle said. The Government should stand up and say that they support the maintenance of the devolved settlements, and that they recognise and want to keep diversity where it would still enable us to have an internal market. That sort of statement would be helpful.
I am sorry that the noble Baroness, Lady Noakes, is now not allowed to come back at me for what I am going to say. I partly agree with her. We want trade and believe that it is good, but not at any price—not at the price of safety or the environment. This does not mean that we are not in favour of greater trade with all the benefits that it has brought. I also agree with her that, of course, we favour free, and barrier-free, trade. That is why some of us want a deal with the EU, which has no tariffs or checks, and we wanted to stay as close to it as possible. I know it was not her view that we should stay in. I think I once heard her say—I am happy to correct this at the end if I am wrong—that trading on WTO terms would not be the end of the world. Good, the noble Baroness is nodding, so she confirms that she said it. That, of course, would mean a lot of checks and a stop to free trade.
The issues raised in this debate need further consideration. We have to resolve the question that the noble and learned Lord, Lord Hope, asked. Will there be any input by the devolved authorities into importation by, particularly, the English Government? They will need some comfort over that. I beg leave to withdraw the amendment.
Lord Callanan
Member’s explanatory statement
This amendment would clarify that the purpose of Clause 3 is to identify what are the relevant requirements that apply to a specific sale of goods (the word “sale” being defined broadly in Clause 14).
Lord Callanan (Con)
I apologise in advance if noble Lords are in for more technical explanations. We will take together the minor technical amendments in my name to Clauses 3 and 4. All involve drafting improvements or clarifying technicalities. None of these amendments results in a change of policy, but they need full and proper scrutiny in this Chamber and noble Lords deserve an explanation of the improvements that they make to the Bill.
First, I turn to Amendment 9. This clarifies Clause 3 by identifying what is a relevant requirement in relation to a specific case where particular goods are sold. Without this amendment, there could be ambiguity as to whether a requirement needs to apply to all sales of all goods to be a relevant requirement. For example, where a business has produced a tin of biscuits in Scotland and seeks to rely on the mutual recognition principle to sell them in England, this amendment makes it clear that the relevant requirements are those that would apply to the sale of the biscuits in England and to the equivalent, hypothetical sale of the biscuits in Scotland, Northern Ireland or Wales. Requirements that apply to other sales of other goods—for example, requirements that apply to the auctioning of a painting—would not be relevant requirements in this context. Without this amendment, there is a risk of legal uncertainty over which requirements are relevant. This could create confusion, costs and inconvenience for businesses.
Amendment 10 provides similar clarification. It emphasises that subsection (2), which defines and therefore enables one to identify a relevant requirement in relation to a particular sale, makes relevant requirements only in relation that sale. Requirements are not relevant in any general way; they are relevant only in relation to the sale in question.
Amendment 18 clarifies that Clause 4(1)(a) refers to a specific sale of goods, rather than a hypothetical sale of goods. It makes clear that we are referring to an actual sale of goods and not to a hypothetical sale. As a result, the amendment removes any potential ambiguity around which existing statutory requirements are excluded from the mutual recognition principle. This amendment also ensures consistency with Clause 3(1), as proposed to be amended by Amendment 9—also in my name. Once again, we are considering requirements which apply specifically to a particular sale—for example, the requirements that would apply to the sale of a tin of biscuits in England, as per my previous example, but not all requirements that might apply to any other sales of goods. This makes clear which statutory requirements might be excluded, if the conditions in Clause 4(2) are met.
Amendment 19 corrects a small drafting error in Clause 4(1)(a). This paragraph refers to “a” part of the United Kingdom when it should refer to “the” part of the UK mentioned in the opening words of the subsection. It removes any ambiguity around which part of the United Kingdom is being referred to in Clause 4(1)(a), so that there can be no doubt that when we are considering English requirements, we are considering how they apply in relation to a sale in England. Without this amendment, there could be confusion over whether we are referring to just those requirements which apply in England or to requirements which could apply in any part of the UK.
Finally in this group, Amendment 23 aligns the language used in Clause 4(2) and 4(5). Both provisions refer to a hypothetical sale on a particular day, rather than to an actual sale. These subsections set out the conditions for when an existing requirement will be excluded from mutual recognition. Both should refer to a hypothetical sale on the relevant day. This amendment clears up the ambiguity by making it clear that both subsections refer to a hypothetical sale, rather than to an actual sale. Aligning the language in this way will make the drafting of this clause clearer and will avoid any confusion over why the wording is different in Clause 4(2) and 4(5) when both should refer to a hypothetical and not to an actual sale.
Taking again the example of the sale of a tin of biscuits, Clause 4(2) and 4(5) refer to the statutory requirements around the sale of biscuits, which would have been enforced in different parts of the UK on the relevant day, which is the day before this Bill comes into force, if the tin of biscuits had been sold on that day. This means that we will always be talking about a hypothetical sale here, and the amendment to Clause 4(5) makes this clear. Without this amendment, it is not clear that Clause 4(5) is referring to a hypothetical sale, which may cause confusion. I beg to move.
Baroness McIntosh of Pickering (Con) [V]
My Lords, I am interested to know why the Minister felt that these amendments needed to be moved at this time; what provoked that? Furthermore, who decides—and in what circumstances—what is a hypothetical sale, as opposed to a real sale?
Lord Stevenson of Balmacara (Lab) [V]
My Lords, I have mainly technical, minor drafting points, which do not require much discussion. The Minister was consumed during his speech because of the hypothetical tin of biscuits that he brought into play. I am so glad that we do not have details of what pig semen is carried in. I much prefer us sticking with the tin of biscuits as our main metaphor in these issues.
Like the noble Baroness, Lady McIntosh, I wonder why these amendments are being tabled now. After all, the Bill has been through the other place and been republished. Only now are we getting evidence of “scrubbing the text” to ensure that the sorts of issues raised in this group of amendments will not get into the final version of the Bill. It is a minor criticism of a very minor issue, and I am happy to await the answers to the questions raised by the noble Lord, Lord Purvis, which would bear substantial response and will need to be dealt with at the appropriate time.
Lord Callanan (Con)
My Lords, I apologise to noble Lords for hesitating in my answer earlier. There is a danger of this “tin of biscuits” example assuming the same significance that the maiden aunts of the noble Lord, Lord Lisvane, did, during the EU withdrawal Bills. I see smiles from noble Lords who were involved in those debates. However, I am not sure that we should pursue the “pig semen” argument of the noble Lord, Lord Stevenson.
To answer my noble friend Lady McIntosh, these are technical changes relating to drafting errors that became apparent in further studying the text following amendments tabled by noble Lords. Following further examination by government lawyers, the Bill was drafted fairly speedily over the summer. Our intention was to avoid government amendments, but we wanted to hear the replies to the consultation and the White Paper. They are technical and legal clarifications that change none of the policy intent.
I assure the noble Lord, Lord Purvis, that the minimum unit alcohol pricing policy is unaffected, because it is an existing measure that is excluded, and because it is specifically excluded in addition to that, via various clauses. I will write to reassure him of that. Regarding his points about gin and vodka, I am not an expert on the Scottish measure, but I think it affects the retail price of the sale and not wholesale prices, and therefore the product would need to be sold at a different price, as specified in the Scottish measure. However, I consulted officials when we first debated this legislation and was assured that the Scottish measure would be unaffected by this legislation. I am happy to write reassuring the noble Lord on that point.
The Deputy Chairman of Committees (Baroness Fookes) (Con)
I have received a request from the noble Baroness, Lady McIntosh of Pickering, to speak after the Minister. My apologies; I gather that is not the case.
Lord Callanan
Member’s explanatory statement
This amendment would clarify that a statutory requirement that meets the conditions in paragraphs (a) and (b) of Clause 3(2) is a relevant requirement in relation to the sale mentioned in Clause 3(1).
Baroness Hayter of Kentish Town (Lab)
My Lords, there is little to add to what my noble friend Lady Andrews and other members of the hard-working, thorough and thoughtful DPRRC have said, along with the noble Lord, Lord Fox, and others who have spoken in the debate. However, I would remind the noble Lord, Lord Thomas, whose party has been in government more recently than we have, that I do not recall any reluctance on the part of the coalition Government to reach for secondary powers when it suited them—but perhaps his memory is rather shorter than mine.
I should say to the Minister that these amendments are pretty much bound to be accepted by the House on Report. That, of course, will leave the Government having to try to defend in the House of Commons in more detail than they have had to thus far why they should gift themselves the most remarkable and far-reaching powers, none of which, as has been said, have they sought to justify by purpose, urgency or anything else. Rather than repeat what the 24th report sets out and what has just been set out so eloquently, I urge the Minister to listen to the wise words and, either after discussion or of his own accord, take these unnecessary and worrying powers out of the Bill.
My noble friend Lord Liddle touched on the powers in Part 5. Obviously we will take those out, but of course the Government might try to put them back in again. We should remember that this group of amendments covers regulations that would, if they manage to keep Part 5 in or return it, be made in some areas of Part 5. These regulations are really serious, due to the current Clause 47(2)(a), which, as everyone will know, gives the status of primary legislation for the purposes of the Human Rights Act to secondary legislation. Inexplicably and extraordinarily, those pieces of secondary legislation would therefore not be able to be struck down if they breached convention rights, rather they would have thrown around them the protective ring that is normally used only for primary legislation. But those measures are regulations that will not have been through the legislative process. They would be introduced as secondary legislation by regulation, but would suddenly be preserved as if having been given the status of primary legislation. That is set out in Clause 47(2)(a)—I hope I have got that right; I have my learned friend next to me, in case I have got it wrong.
Needless to say, the Joint Committee on Human Rights had rather a lot to say about this constitutionally unacceptable ruse. Its members have tabled an appropriate amendment to remove it when we get to Part 5, and quite right too. The Government seem to want to legislate by regulation—unchallengeable in court, therefore —giving it primary status that goes even further than the other Henry VIII powers which were considered by the DPRRC. I have a feeling that the committee met before the insertion of this clause in the Commons—I think I am getting a nod from behind me—which is presumably why the Delegated Powers Committee did not discuss it.
I add a further comment that goes beyond the Bill but is a reflection of what has already been mentioned. I have spoken in the House previously about the book, How Democracies Die, which lists institutional forbearance —along with the rule of law, respect for the opposition and a free press—as a fourth vital element of what the authors call quadrilles, which go beyond democratic elections, on how to have a robust and fully functioning democracy. Institutional forbearance is an interesting term and is defined in the book as,
“the action of restraining from exercising a legal right”,
thereby perhaps avoiding actions which, while within the law, violate its spirit. It is what my former supervisor, the noble Lord, Lord Hennessy, would call the “good chaps” theory of government. I agree that regulation-making powers can be donated to Ministers but the purpose of that was to enable small adjustments to the policy of an Act to be finalised or tweaked without primary legislation. It was not meant to gift big policy decisions—especially not of the sort included in the Bill, which I heard today was hurriedly written over the summer—to the Government with effectively no parliamentary scrutiny or agreement.
Therefore, like my noble friend Lady Andrews, and the noble Lord, Lord Fox—whose extremely useful quote from the noble and learned Lord, Lord Judge, I have not heard before—I am concerned about the extensive, unnecessary and quite unjustified use of Henry VIII powers, not simply in this Bill but in others. It is a worrying pattern that this House has a duty to curtail. I hope that this is the last occasion on which we have to remind Ministers that they should carry out the primary laws as passed by Parliament, not take to themselves powers to make their own laws.
Lord Callanan (Con)
My Lords, I have a sense of déjà vu about this debate. The noble Lord, Lord Liddle, will well remember our debates on the EU (Withdrawal) Bill. These amendments relate to delegated powers included in Parts 1, 2 and 5 of this Bill. I should probably decline the kind opportunity afforded to me by the noble Lord, Lord Thomas, to comment on the parentage of Henry VIII, apart from saying that the noble Baroness, Lady Bloomfield, who is an expert on all these matters, tells me that his parents were Henry VII and Elizabeth of York—officially, at least.
I should say in answer to the noble and learned Lord, Lord Hope of Craighead, and his comments on the Sewel convention that the Government are fully committed to that convention and its associated practices for seeking consent. These powers are purely there to ensure that the legislation works properly and is future proof. There is no intention whatever to use the powers to avoid Sewel processes.
I should like to take this chance to emphasise the importance of these powers for the ongoing dynamism of our internal market, and to emphasise that the Government will not take lightly their responsibility in administering these powers. I am of course listening carefully to what your Lordships say but it is important for me to explain how we intend to use these powers.
The Bill aims to ensure a smooth transition for businesses as they are no longer subject to EU constraints. However, we recognise that this is an ambitious new system and the Government want to make sure that it works as well as possible for businesses and for devolved Administrations. As the system embeds in the functioning of law and trade, we will of course be monitoring this. We will speak to stakeholders and devolved Administrations to ensure that it works as well as possible within our constitutional framework. Where it does not, the Government need to be able to make necessary amendments to the system for the benefit of all parts of the UK. In line with normal arrangements for secondary legislation covering devolved matters, we will of course engage with the devolved Administrations in the spirit of the devolution memorandum of understanding. This system has worked well for 20 years and continues to do so.
Lord Callanan (Con)
I thank everyone who has spoken in what has been another excellent debate. Most of the points have been valid. I will disagree with many of them but noble Lords made their points well.
Before I start, the noble Baroness, Lady Jones of Moulsecoomb, knows that I have tremendous respect for her: we do not often agree, but I have tremendous respect for her views. However, talking about an “extremist ideology” and “hypercapitalism”—whatever hypercapitalism is—does not aid her cause; I would prefer that noble Lords address the issues in a better and more constructive manner.
The scope of the market access principles and the areas of regulation included in Schedule 1 have been carefully designed to avoid unnecessary barriers within the UK’s internal market while ensuring that the devolved Administrations and the UK Government can act to preserve the proper functioning of certain policy areas. This is where I part company with the noble Lord, Lord Fox, because when he talks about the principle of uniformity in an internal market, that is, of course, the EU system, and I do not recall the Liberal Democrats having much of a problem with that in years past. The system of mutual recognition does allow diversity, but while not discriminating against other countries’ goods. The principle of mutual recognition and market access principles allow diversity of policy. The EU system, of which the Liberal Democrats were previously particularly fond—as far as I am concerned—does not because you have common standards and common principles. I understand the argument about the so-called race to the bottom, et cetera, but that is the system that the Liberal Democrats happily signed up to and defended loyally for many years—indeed, it is still their policy that we should rejoin the EU and assume a further application of common principles. I do not agree with it, but it is a view.
I am listening carefully to what many noble Lords are saying this evening, but it is important, so I will take the time to explain why we have taken the approach we have to the application of the market access principles and the exclusions from these principles. Amendments 35, 36, 37, 39A and 95 seek to alter the list of legitimate aims for the disapplication of indirect discrimination against goods and services. The current list of legitimate aims for indirect discrimination against goods contains
“the protection of the life or health of humans, animals or plants”,
which will, of course, align in many cases with the protection of the environment. It also contains
“the protection of public safety or security.”
I agree with my noble friend Lady Noakes that expanding the list of legitimate aims beyond the current list would increase the grounds on which goods from one part of the UK could face discrimination in another—maybe in small, incremental steps, but with each addition steadily eroding the benefits that we all enjoy of the UK internal market. Expanding the list would also make discrimination easier to create and implement within the internal market, which would contradict our policy objectives.
I am of course aware of the comparisons that have been made to the EU system and its list of legitimate aims. The UKIM Bill and non-discrimination principle have been designed to take account of the UK’s unique circumstances, reflecting that our market consists of four highly integrated, highly aligned parts. Conversely, EU provisions deal with 27 countries, all with diverse histories, cultures and competing market priorities. It is therefore right that the list of legitimate aims in the Bill is more narrowly focused. Should a need to amend the list be identified, the Bill allows for the Secretary of State to add, vary or remove additional legitimate aims.
Let me deal with the points raised about legitimate aims by my noble friend Lord Young and the noble Lord, Lord Faulkner, as well as, on a number of occasions, the noble Lord, Lord Purvis, with regard to minimum alcohol unit pricing. I reiterate that policies such as minimum alcohol unit pricing and other innovative pricing policies are not covered by mutual recognition, unless they result in disguised prohibition. It would also be possible to enforce them regardless of what is on the list of legitimate aims or indirectly discriminatory measures, as long as they are non-discriminatory.
The noble Baroness, Lady Randerson, mentioned air guns. All the existing requirements will be out of scope—as I have said, the Bill is forward looking—unless they are amended significantly. Other than that, the air gun restrictions would have to create a significant adverse market effect for indirect discrimination to apply. That is before any consideration of whether that meets a legitimate aim. On her point about unfettered access for Northern Ireland goods, this is an unequivocal commitment from the Government precisely to take account of the possibility of divergence. It precludes qualifying Northern Ireland goods from being subject to new checks and controls and it protects their access to the whole of the UK market, no matter what the legislative regime is in Great Britain.
Amendment 39A is a more nuanced version of Amendment 38. It aims to limit the Secretary of State’s regulation-making powers to only add or broaden a legitimate aim—the Secretary of State would not be able to vary or remove a legitimate aim. Again, I appreciate the nuance of the amendment, but I must emphasise the importance, as we see it, of ensuring that the Government have the ability to adapt and improve the list of legitimate aims to address any challenges that arise—for example, during the implementation phase. We will of course listen attentively to businesses and to consumer stakeholders and may employ the powers that the amendment seeks to remove to ensure the UK internal market’s continued smooth functioning. To clarify another matter about which some have asked, Her Majesty’s Government and the devolved Administrations are not constrained by the rules against indirect discrimination when they need to take reasonable action to protect the life or health of humans, animals or plants, or to protect public safety or security.
Amendment 95 has a dual purpose. It seeks to remove the list of legitimate aims for indirect discrimination against services in Clause 20 and, as such, it would also remove the Secretary of State’s ability to amend that list. The list of legitimate aims covers a limited range of necessary objectives for regulators, which would justify a requirement that may have a discriminatory effect. The legitimate aims are the protection of the life or health of humans, animals or plants, the protection of public safety or security and the efficient administration of justice.
The inclusion of the list of legitimate aims is in our view vital, as it clarifies whether a requirement should be considered indirectly discriminatory and thus whether it is justified to put an affected service provider at a disadvantage compared to a similar provider from another part of the United Kingdom. To allow the flexibility to adapt to potential changes in circumstance—for example, in relation to future types of services regulation—a power for the Secretary of State to add, vary or remove additional legitimate aims is crucial and has therefore been included in the Bill.
I turn now to Amendments 50, 51, 52, 52A and 56, which seek to add in new clauses before and after Clause 10 of the Bill. The proposed new clauses would introduce a new set of conditions that would need to be met in order for an exclusion to be applied. Exclusions have been tightly defined to areas where the market access principles would adversely affect, or prevent the proper functioning of, the UK internal market. For example, we have made it possible for authorities to continue to consider local environmental conditions when authorising a chemical for use in a particular part of the UK.
Turning to Amendment 52, the protection of the environment and tackling climate change are vitally important, and something that the Government are, of course, already committed to. The UK leads the world in environmental standards and tackling climate change. We were the first major economy in the world to set a legally binding target to achieve net-zero greenhouse gas emissions from across the economy by 2050. The EU is only just now catching up with us. We have also been quick to take action against single-use plastic, with our ban on the supply of plastic straws, drinks stirrers and cotton buds having come into force on 1 October this year.
Moving on to Amendment 52A, broadening exclusions from market access principles could result in significant challenges for the UK’s internal market. These are intentionally narrowly drafted to ensure that there are no unnecessary trade barriers that would ultimately increase costs to businesses and consumers while reducing choice. These amendments also do not take into consideration the impact any exclusions might have on unfettered access and Northern Ireland’s place in the UK’s internal market.
Amendments 33 and 34 are both consequential on Amendment 50, which I addressed above. Amendments 55 and 56 are consequential on Amendment 50 as well. Taken together, these amendments would replace the existing schedule of exclusions with a significantly wider exclusion process. The proposed process is not sufficiently targeted and would increase the potential for trade barriers to emerge. For these reasons, I ask noble Lords not to press their amendments.
Amendment 47A limits the Secretary of State’s regulation-making powers to only add to or broaden the exclusions in Schedule 1. The Secretary of State would not be able to vary the meaning of the exclusions in Schedule 1, nor to remove the exclusions entirely under the amendment. This might make it impossible for the Government to respond to business and wider stakeholder feedback and to act rapidly to adjust the list of exclusions if implementation shows the need for a review. While we are committed to retaining this power in the Bill, we are also fully committed to ensuring that the use of this power is subject to effective oversight and scrutiny.
First, any use of the power would, of course, require an affirmative regulation to be made in Parliament. This would ensure that MPs from all parts of the UK would be able to scrutinise and vote on any changes, along with Members of this House. Secondly, in line with normal arrangements for secondary legislation covering devolved matters, UK Government officials will engage with the devolved Administrations in the spirit of the devolution memorandum of understanding. This is a system that has worked well for 20 years and continues to do so. I hope, therefore, that noble Lords will agree that it is not appropriate for us to accept that amendment.
Turning to Amendment 54, the proposed new schedule is related to the new clause in Amendment 6, to which I responded on Monday. These amendments would, in combination, prevent the market access principles from applying in time at the end of the transition period. The lengthy process they put in place before the principles can apply would mean a considerable delay in securing business certainty that trade can continue unhindered within the UK’s internal market. Furthermore, they would limit the areas that the market access principles could apply to. This would again unduly constrain the scope of the principles and fail to fully protect the internal market.
Amendment 57 removes the requirement that a measure meets all the conditions set out in paragraph 2 of Schedule 1 to be excluded from the mutual recognition principle. The conditions in paragraph 2 of Schedule 1 relate to the exclusion of certain food and feed measures from the mutual recognition principle, where this is required to address a serious threat to the health of humans or animals. A measure will be excluded from the mutual recognition principle if all the conditions in paragraph 2 are met. These conditions were designed to be cumulative and work as a whole, and in our view would not be effective individually. The fourth condition, for example, relates to the responsible Administration providing a risk assessment of the threat addressed by the measure in question, which is essential in situations relating to protecting human, animal and plant health, but is not a stand-alone condition for any exclusion. As this amendment weakens the ability of the Bill to ensure that we can address a serious threat to the health of humans or animals, I hope that noble Lords will agree not to move it.
Lord Fox (LD)
I sometimes wonder whether the Minister sustains himself through the long periods of Committee by imagining himself throwing off the yoke of hideous EU conformity. In fact, nothing could be further from the truth. How does the noble Lord explain all the examples of diversity across the four nations of the United Kingdom if there is this conformity? How can his comment that the market has worked very well for 20 years stand up, if this conformity was so bad? Indeed, the 2020 assessment by the Government of the frameworks says that they will maintain, as a minimum, equivalent flexibility for tailoring policies to the specific needs of each territory, as afforded by the current EU rules. The Government clearly recognise the flexibility in the current EU rules.
I commend the Minister for getting through that lengthy statement without once mentioning the words “common frameworks”. There is still no explanation of how the common frameworks inform the Government’s view today of the internal market. Will he please answer that question?
Lord Callanan (Con)
I thought my comments might provoke a reaction from the noble Lord. Of course, there are EU common standards in many areas as well as EU minimum standards in many areas, and it is possible for Administrations to go further than those minimum standards in many areas, as he will know from his knowledge of EU affairs.
I have said a number of times that we are committed to the work on frameworks and will take it forward, but we were looking for frameworks in something like 38 different areas. So far, we have managed to agree frameworks in two of them. In terms of the frameworks that have been approved by the ministerial committee, I think those numbers are correct; I will write to the noble Lord if they are not. We are committed to taking forward that work on common frameworks, but we believe that this legislation provides an underpinning to that work. We do not believe that they are mutually exclusive; indeed, we think that they complement each other.
Lord Callanan (Con)
It may be helpful to the noble Lord, Lord Purvis, who I know is interested, if I return to a question he asked on the previous group—the vexed question of coal and the English-Welsh border. Let me build on the answer given by my noble friend Lady Bloomfield. Under mutual recognition, the use of coal could be banned regardless of where it is bought. The sale cannot be stopped simply because the use is not permitted. The use would still not be permitted in England, even if the coal is bought in Wales, or if it is legal to use it there. It is the distinction between sale and use that my noble friend referred to. I thought the noble Lord would like early clarification of that.
Amendments 68, 69, 70, 71, 78, 81, 84, 89, 92, 96 and 102 seek to alter the application and scope of both the exclusions and non-discrimination rules for the internal market in services. Several of these amendments centre on the application of the services rules and the non-discrimination principle. This non-discrimination rule is a fundamental safeguard for businesses, ensuring that there is equal opportunity for companies trading in the UK, regardless of where in the UK the business is based. I will address the amendments in related groups, and I am happy to explain how the services rules work, and the list of exclusions, in greater detail.
I thank the noble Baroness, Lady Hayter, for tabling Amendments 68 and 96 on consumer protection. I hope to be able to persuade her that they are unnecessary. As I set out on Monday, the Government are committed to maintaining and protecting the highest consumer standards across the UK. This legislation will be to the benefit and protection of the country’s consumers. Without an updated, coherent market structure, UK services trade could be significantly and detrimentally affected. Future complexities could arise, and costs could then be passed on to consumers through an increase in prices or a decrease in choice.
Amendments 69, 71 and 78 would provide that Part 2 applies only to services specified in regulations. We believe that these amendments are contrary to the aims of the Bill, because this is the opposite to the current approach, which is that mutual recognition and non-discrimination applies to all services except those specified in the schedule. Further, the amendments set restrictive consultation and reporting conditions on a Secretary of State wishing to make those regulations, and a requirement for devolved Administration consent to regulations extending the list of exclusions in Schedule 2. My noble friend Lord True spoke about this issue earlier today in the group on the involvement of the devolved Administrations.
Clause 17 currently aligns with the wider aims of the Bill—to allow businesses and people to trade as they do now, without facing additional barriers based on which nation they are in. These amendments run contrary to those aims. They would make the raising of barriers to service provision the default position, by not applying mutual recognition and non-discrimination principles in the Bill to any services unless specified. The reporting and consultation requirements the amendments place on specifying regulations also mean that bringing services into scope of the rules of Part 2 of the Bill, including all those to which the principles of mutual recognition and non-discrimination apply under retained EU law, would be both difficult and time-consuming. This would, in turn, cause disruption to businesses seeking to provide their services across the whole United Kingdom.
Overall, these amendments could raise barriers to service provision across the UK where even the current system does not, and would seriously hinder any attempts to develop a co-ordinated and focused response to the evolution of services in the future. Therefore, while I recognise the spirit in which these amendments were tabled, I am unable to accept them. However, to answer the questions asked by the noble Baroness, Lady Hayter, and my noble friend Lady Neville-Rolfe, on financial and legal services, and to allay their specific concerns, I can reassure them that legal services are excluded from the mutual recognition principles, and financial services are excluded from Part 2 entirely.
As my noble friend Lady McIntosh makes clear in her explanatory statements accompanying Amendments 70, 81, 84 and 92, their primary purpose is to probe the drafting of the Bill. On Amendment 70, the intention of Clause 16(5)(c) is to restrict the application of Part 2 only to new requirements that take effect after Part 2 itself does. This is because the Bill is intended to prevent future obstacles to trade within the single market, not retrospectively review all existing requirements.
Clause 16(5)(c)(i) provides that requirements already in force are not subject to the principles in Part 2. Clause16(5)(c)(ii) recognises that there will inevitably be new iterations of rules, which will in fact simply restate the previous rules that were in place. This provision sets out a threshold, beyond which the new requirement will be brought within scope, and that is where the requirement has changed in substance.
My noble friend in particular asks the meaning of “substantive change”, which her amendment would replace with the phrase “significant amendment”. This wording is simply intended to distinguish between those rules which are genuinely new and different from those which may have been in place beforehand, and those which are in fact substantively the same rules. My noble friend’s suggested change uses the term “significant”, which is less easy to quantify and suggests to me a higher threshold before which a change would bring the provision within scope of the principles in the Bill. “Change” and “amendment” are of course covering fairly similar ground, but I suggest that “amendment” would more commonly be used when talking about changes to text. Since Part 2 is operating on requirements imposed by or under legislation rather than the text of the legislation itself, we think, in these circumstances, that “change” is the most fitting word— but there will probably be lots of work for the noble and learned Lord, Lord Falconer, and his friends in interpreting this.
I turn now to Amendments 81 and 84. In Clause 21, a legislative requirement is one imposed
“by, or by virtue of, legislation”.
This extends beyond legislation to rules produced by bodies with powers delegated to them in respect of a particular field of regulation, and it may include licences or requirements contained therein. My noble friend’s Amendments 81 and 84 would appear to have the same effect. However, in my view, the term “of no effect” is the more appropriate to apply in respect of a licence or a non-legislative rule.
Turning now to Amendment 92, the purpose of the words “less attractive” in Clause 20(3) is to encompass requirements which are not outright prohibitive but which otherwise make it harder to offer a service in a particular market. Without these words, the clause could be read as referring only to actively punitive measures, when in fact it is intended to cover a broader range of harms under the definition of direct discrimination. My noble friend will no doubt also be aware of the amendment in my name to Clause 20, which seeks to clarify the meaning of the test for indirect discrimination in that clause—although the language that she highlights remains unaltered by it.
Amendments 89 and 102 from the noble Baroness, Lady Hayter, seek to remove the reference to the legitimate aims in Clause 20. These amendments should be read alongside the other amendments in the noble Baroness’s name. The wider purpose of all these amendments is to alter the legitimate aims in Clause 20. The amendments would have the effect of making the principle of non-discrimination almost absolute, not allowing any requirement which had an indirectly discriminatory effect, no matter how valid or urgent the justification. I suspect that this was not what the noble Baroness intended with this suite of amendments.
Clause 20(2)(d) provides that a requirement will be discriminatory only if it cannot be justified by a legitimate aim. Amendment 89 suggests removing that. Clause 20(9) provides that, to determine whether a regulatory requirement can be considered as a necessary means to achieve a legitimate aim, particular consideration must be given to the effects of the requirement in all circumstances and to the availability of alternative means to achieve that aim. This subsection is key to determining whether a legitimate aim may be relied upon. It is designed to assist the reader and its removal would hinder the effective application and operation of the test. The subsections are both key to the effective operation of the non-discrimination principle provided for by Part 2 of the Bill. I therefore cannot accept these amendments.
Amendment 103 relates to Part 3 of the Bill, concerning professional qualifications. As used in the clause, “mainly” has been used in this context to ensure that the majority of the experience that a professional is relying on is obtained in the United Kingdom. This is so that relevant authorities can reliably assess the professional’s experience. The decision to use “mainly” rather than “substantially”, or other similar words, is so that professionals can rely on their experience for this part of the Bill without it being interpreted as the whole of their experience needing to have been obtained in the UK. I hope, therefore, that this explanation satisfies the House and that the noble Baroness feels able not to press her amendment.
Lord Falconer of Thoroton (Lab)
I go back to the very interesting answer that the Minister gave on the coal example. Let us assume that the coal example, which he described as being a prohibition on sale but not use, did not come in a pre-existing requirement and that it had been entered into after this Bill became law. I would be right, would I not, in assuming that such a requirement would offend against the non-discrimination principle under Clause 8? It is obviously a disadvantage to be able to sell coal to people who cannot use it. In those circumstances, it is valid only if that was a provision entered into after the Bill became law if such a provision was justified by one of the legitimate aims identified in Clause 8(6). Would I be right in assuming that? Would I be right in assuming that the question of whether the ban on the use of coal survived would depend upon a private law action between the supplier of the coal and the buyer of the coal?
Lord Callanan (Con)
I do not think the noble and learned Lord is correct in his assumption, but it is a detailed legal point, so I will take further advice and reply to him in writing.
Baroness Hayter of Kentish Town (Lab)
My Lords, I thank noble Lords who have contributed to the debate, which poses more questions than even I had realised. I have also realised that I have not got a complete handle on the services that are covered. Are financial services excluded? I think auditing is excluded. It would perhaps be helpful if a note could be passed about what services are covered. I assumed they are cultural and intellectual property, education and architecture, but there are some interesting ones where there are big differences at the moment between countries.
I am particularly thinking of residential property, where Wales now licenses landlords and is ahead of us in licensing letting agents. We are now in discussion with the Government about the licensing—shortly, we hope—or authorisation of all property agents, but then that would be different between England and Wales and Northern Ireland and Scotland. Presumably all that would be caught by this, but I am not certain.
This is a genuine question and it would be really helpful to have, without it being part of the Bill and without it committing the Government to anything, a more useful note of what is covered. Then we could look at what is already different, particularly in licensing, as is certainly the case in the area that I know about of residential agencies in Wales and elsewhere.
In a sense, the bigger issue is the one I set out at the beginning. The noble Baroness, Lady Neville-Rolfe, put it much better. I was asking about the purpose of Part 2. I think the noble Baroness went further and asked whether we even need Part 2. It actually comes back to whether we need the whole Bill or whether the common frameworks road might be the better one, or, as the noble Baroness, Lady Finlay, asked, whether it might be sufficient to fall back on the 2018 position on what things could not be agreed—it would probably save an awful lot of this. The purpose of Part 2 needs justifying, rather than defining. Why do we need it? Is the noble Baroness, Lady Neville-Rolfe, correct that we do not need this level of detail?
If the Minister could also informally explain a little more about what would be covered, that would be helpful, and we might come back at a later stage to look at whether we could define why we have this part. However, for now, I beg leave to withdraw the amendment.
Lord Callanan
Member’s explanatory statement
This amendment is consequential on the amendment adding a definition of relevant connection to Clause 20 (page 14, line 16).
Lord Callanan (Con)
My Lords, in moving Amendment 82, I shall speak also to Amendments 83 and 85 to 88 in my name.
Clause 20 provides the test for assessing whether a regulatory requirement is indirectly discriminatory in relation to service providers. The indirect discrimination test comprises several elements, including a test for difference of treatment between incoming and local service providers and a test to assess whether the difference in treatment gives rise to an adverse market effect. This group of amendments would provide greater clarity to readers, particularly in relation to differential treatment and adverse market effect. The amendments would break up concepts previously included in Clause 20(4) and deal with the unequal treatment test separately from the adverse market effect test. This revised drafting also allows for clarification of the language.
This change delivers the same policy objectives but with greater clarity. It is supported by consequential amendments throughout Clause 20, including new definitions for local and incoming service providers. The definition of “relevant connection” is also moved into Clause 20 to link it better to the provision. Limb C of that definition is deleted because it is not relevant to indirect discrimination. A consequential amendment to Clause 19 supports this.
In my detailed remarks, I will focus on Amendments 90, 91 and 93 upon which the other amendments are consequential. Amendments 90 and 91 would provide greater clarity and break up concepts that were previously packed into Clause 20(4). They deal with the unequal treatment test separately from the adverse market effect test, and this division also allows for a clarification of the language. These amendments would introduce and define the concept of “relevant disadvantage”, tying it more clearly to the concept of unequal treatment between incoming and local service providers. Importantly, the more clearly laid out test for relevant disadvantage between local and incoming providers makes plain that it does not require all incoming providers to be disadvantaged or all local providers to be advantaged. That was the intended effect of the drafting; this amendment would ensure that it is clear.
Amendment 93 does two things. First, it defines local and incoming service providers—terms used in this group of amendments. Secondly, it copies the definition of “relevant connection” over from Clause 19, linking it more clearly to this provision. Limb C of the direct discrimination provision is deleted because it is not relevant to indirect discrimination.
Amendment 94, which is unrelated to the other amendments in this group, would simply remove a provision that is now no longer necessary. I beg to move.
Baroness Neville-Rolfe (Con) [V]
My Lords, I apologise to my noble friend the Minister for speaking on a technical amendment. I support much of the Bill and have limited my contributions accordingly.
However, I want to ask for a fuller explanation of Amendments 90 and 93, which again relate to services. Why do we need to make a distinction between incoming service providers and local service providers? Will that not create uncertainties and its own form of discrimination? Is this an insurance policy, for example against unwise anti-competitive moves by a devolved Administration? Is there any evidence that such an outcome is at all likely, given their well-known attachment to the EU single market? What is the underlying purpose of this approach?
The Minister was not able to answer my question on Amendment 68 about how marketing activity would be treated, or indeed the question from the noble Lord, Lord Purvis, on local language capability. The distinction between incoming service providers and local service providers may be part of the answer. I would welcome some simple examples that make some of this service area easier to understand. If the Minister needs notice of the questions, perhaps he would be kind enough to write to me on these points, as it is late.
Lord Stevenson of Balmacara (Lab) [V]
My Lords, like other speakers, I welcome the idea that this is a clarification of the language currently used in the Bill. However, like the noble Baroness, Lady Neville-Rolfe, I wonder whether what we have got is in fact any clearer, or makes us any more clear about what we are supposed to be doing with this part of the Bill.
The language is, in places, incredibly archaic and obscure. There seems to be no recognition of the digital world. Services provided through the internet are not going to be provided locally; they are not going to be provided “in a region” and there are not going to be local service providers, and yet there seems no reference to them or how they are to be treated. Even if that were not that case—even if we were not living in the virtual world—the idea that somehow a service provider has a relevant connection to a part of the United Kingdom if it has a registered office seems to ignore hundreds of years of the use of brass plates outside solicitors’ offices which provide registered offices but no services, no people, no contribution and no economic effect. Where is all this heading?
Lord Callanan (Con)
I thank noble Lords for the brevity of their contributions, particularly given the late hour, and I shall endeavour—they shall be pleased to hear—to match that brevity.
We think that these amendments make the test significantly clearer. The relevant concepts are unpacked in distinct subsections, and the new subsections more clearly express policy intention on how the test for indirect discrimination will function. The additional clarity ensures that businesses can operate with certainty, which is what this Bill is intended to ensure.
I have noted the requests from my noble friend Lady Neville-Rolfe—the noble Lord, Lord Purvis, repeated them several times—for details of how the service provisions will operate in things like marketing, language tests, et cetera, and for the legal definition of what “adverse market effect” means in practice. I will, of course, provide those for them in writing. With that, I commend these amendments to the Committee.
Lord Callanan
Member’s explanatory statement
This amendment would make clear that Clause 20 is concerned with incoming service providers.
Lord Callanan
Member’s explanatory statement
This amendment follows from the amendment to page 13, line 34 in my name.
Lord Callanan
“(2A) A regulatory requirement puts an incoming service provider at a relevant disadvantage if—(a) it puts the incoming service provider at a disadvantage in relation to the provision of services in the part of the United Kingdom in which the requirement applies, and(b) it does not put, or would not put, each local service provider at that disadvantage in relation to the provision of those services in that part (at all or to the same extent).”Member’s explanatory statement
This amendment would define the concept of relevant disadvantage, introduced by the amendment to page 13, line 39 in my name.
Lord Callanan
“(4A) For the purposes of subsections (1) to (4)—(a) an “incoming service provider” is a service provider that—(i) provides the services in the part of the United Kingdom in which the regulatory requirement applies, but(ii) does not have a relevant connection to that part;(b) a “local service provider” is a service provider that—(i) provides the services in the part of the United Kingdom in which the regulatory requirement applies,(ii) has a relevant connection to that part, and (iii) does not have a relevant connection to another part of the United Kingdom;(c) a service provider has a “relevant connection” to a part of the United Kingdom if the service provider—(i) has a registered office, place of business or residence in that part, or(ii) provides the services from that part.”Member’s explanatory statement
This amendment would define concepts used in the other amendments to Clause 20 in my name.
Covid-19: Financial Support for High Street Retailers
Lord Callanan Excerpts(3 years, 6 months ago)
Lords ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Lord Rose of Monewden
To ask Her Majesty’s Government what additional financial support they plan to provide to high street retailers affected by the restrictions in place to address the COVID-19 pandemic.
The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Callanan) (Con)
My Lords, we have abolished business rates for high street retailers for 12 months as part of the Government’s support during the pandemic and have extended the moratorium on commercial landlords’ right to forfeiture for non-payment of rent. The Chancellor has announced the next phase in the Government’s plan to protect jobs and support businesses, including a new job support scheme and greater flexibility to help pay back loans.
Lord Rose of Monewden (Con) [V]
I thank the Minister for his reply and, of course, I welcome the additional support the Chancellor announced last week and the business rates holiday, which has been a lifeline for so many businesses. However, that holiday is due to come to an end in April and without it, I fear more retailers will go under, resulting in yet more store closures and job losses. We have already lost 14,000 stores this year and 125,000 retail staff have lost their jobs. Will the Government extend the business rates holiday for a further year and think again about their recent decision to end the VAT retail export scheme, which CEBR estimates will result in at least another 27,000 people losing their jobs in the retail sector?
Lord Callanan (Con)
I know that my noble friend has great expertise in this sector. As set out in the call for evidence for the fundamental review of business rates, of which he will be aware, the Government anticipate setting out our preliminary conclusions from the review in the most pressing areas, including reliefs, in the autumn.
Lord Dubs (Lab) [V]
My Lords, does the Minister agree that Covid has exacerbated a problem that existed some time before the pandemic, that high street retailers face higher costs and taxes than internet suppliers and that this will continue long after the Government’s short-term measures cease? Does the Minister agree that we need a permanent solution unless we want to see our high streets permanently damaged?
Lord Callanan (Con)
I did not quite catch all of that question, but I understand what the noble Lord was saying about the difficulty the retail sector is experiencing. Of course, the pandemic has exacerbated what has been a long-term problem, so I agree with the noble Lord to that extent.
Viscount Ridley (Con)
My Lords, given the remarkable achievements of the high street retail sector in adapting to very difficult circumstances this year, can my noble friend say what steps the Government and the retail sector are taking to ensure that shops are safe for customers to visit in the run-up to Christmas?
Lord Callanan (Con)
The Government have worked closely with retailers throughout the pandemic and we continue to do so. Retailers were instrumental in the development of the Covid-secure guidance and we have invested a great deal to ensure that their premises are Covid secure. I welcome the British Retail Consortium’s campaign to encourage consumers to “Shop early, start wrapping, enjoy Christmas”.
Lord Shipley (LD) [V]
My Lords, I remind the House of my registered interests. Footfall in high streets is down by well over a third compared to a year ago and despite business rates retail reliefs, the collection of business rates overall this financial year is still forecast to be down by more than £1.5 billion. Do the Government have a plan to meet this deficit without penalising the high street?
Lord Callanan (Con)
As I set out earlier, we will be announcing a review of the business rates system shortly but we have a number of other elements in place, which I outlined in answering the first questioner, to support the high street during this difficult time.
The Earl of Shrewsbury (Con)
My Lords, does my noble friend agree that the serious demise of the high street was evident long before Covid hit, through a combination of the success of out-of-town shopping centres and the trend for shopping online? We really should have been thinking about things of this nature many years ago. Does he also agree that it is vital that we rethink the role the high street must play post-Covid, especially in rural towns, where it has always been a major part of the social structure of those communities?
Lord Callanan (Con)
I agree with my noble friend that the retail sector has been undergoing a period of transition that well predates the pandemic. High streets play a crucial part in our rural communities, and through the £3.6 billion Towns Fund and the High Street Task Force we are providing support to local businesses and high streets.
The Earl of Clancarty (CB)
My Lords, does the Minister agree that it is difficult to separate the original Question from questions about the longer term at a time, for example, when the current vulnerability coincides with changes to planning regulations? How much importance will be attached to the recent LSE report, Saving the high street: the community takeover, and does its message that close local authority involvement with community-driven projects is central to the future of our town centres have the Government’s support?
Lord Callanan (Con)
The noble Lord is quite right. We welcome the report prepared for Power to Change, which provides some valuable insights that will inform future policy interventions to support the recovery of the high street and town centres. This is a difficult, ongoing problem and we will want to work closely with both local authorities and retailers to solve it.
Baroness Fox of Buckley (Non-Afl)
My Lords, will the Minister ask colleagues in the Welsh Assembly if the distinction between buying essential and inessential retail goods is a scientific one or an arbitrary political one? For retail in general, beyond financial support, a dangerous dose of puritan moralism will not help shops if it means that a care worker who has worked long shifts and might want to treat themselves to a dress is now treated as a criminal. The Minister said to shop early for Christmas—not in Wales, where I am from, because you are not allowed to shop at all, apparently.
Lord Callanan (Con)
The noble Baroness makes a powerful point, and I point out that we do not have these restrictions in England. I almost felt sorry for the Welsh Government yesterday in trying to navigate a way through this self-imposed error.
Lord Stevenson of Balmacara (Lab) [V]
My Lords, with visits to the high street falling and the prospect of Christmas and new year being digital at best, why are the Government asking local authorities to pay back support originally designated for the high street fightback fund? Should not the focus be on reopening the fund to help businesses struggling under the new restrictions?
Lord Callanan (Con)
As the noble Lord will be aware, the retail, hospitality and leisure sectors have been helped considerably. We allocated £12.3 billion to local authorities in England to pay grants to businesses under the small business grants fund. This support will continue and we need to do all we can to help our high streets.
Lord Addington (LD)
My Lords, will the Minister have a look at the fate of charity shops on the high street, which fill up a great deal of it? They provide a large part of the income of many charities and are having their services called on very heavily at the moment. Can we do something to help them particularly? They have lost a lot of money and we need their services.
Lord Callanan (Con)
The noble Lord makes a powerful point. We are providing an unprecedented package of support worth £750 million to allow charities and social enterprises to continue their vital work but, of course, we accept that we are not able to replace every pound that they have lost.
Baroness Altmann (Con)
My Lords, I congratulate my noble friend on the business rates holiday and look forward to the forthcoming reform proposals. Following up the question from the noble Baroness, Lady Fox, are there discussions between his department, the DHSC and the Government in Wales regarding the sale of non-essential items and the risk to high street jobs that it poses when those who might otherwise have purchased such items on the high street are then driven to buy them online?
Lord Callanan (Con)
My noble friend makes a powerful point. As I said earlier, I thought the Welsh Government were placed in a really difficult situation yesterday. It shows the difficulty of trying to define what is an essential item and what is non-essential. As I said, I almost felt sorry for them.
Lord Flight (Con)
My Lords, can the Government consider placing out-of-town retailers on a comparable basis to high-street retailers with regard to business rates? There has long been a perceived position of overtaxing high streets and undertaxing out-of-town businesses.
Lord Callanan (Con)
My noble friend makes an important point. Business rates are based on the rateable value of non-residential properties, and rateable value is a measure of the property’s annual open-market rental value, as assessed by the Valuation Office Agency. Clearly, with the move towards out-of-town shopping centres and online retailers, this is an area ripe for urgent review, and we are doing that.
The Lord Speaker (Lord Fowler)
My Lords, all supplementary questions have been asked, so we now move on to the next Question.
Corporate Insolvency and Governance Act 2020 (Coronavirus) (Extension of the Relevant Period) Regulations 2020
Lord Callanan Excerpts(3 years, 6 months ago)
Grand CommitteeRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Lord Callanan
That the Grand Committee do consider the Corporate Insolvency and Governance Act 2020 (Coronavirus) (Extension of the Relevant Period) Regulations 2020.
Relevant document: 29th Report from the Secondary Legislation Scrutiny Committee
The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Callanan) (Con)
My Lords, this statutory instrument was laid before the House on 24 September 2020.
Since the emergence of Covid-19, businesses have received billions of pounds in loans, tax deferrals, business rate reliefs and grants to support them and help save jobs. The Government’s recently launched winter economy plan has a further package of targeted measures to provide ongoing essential support as social restrictions are reintroduced in many regions of our country. However, the Government recognise that while most businesses have been able to reopen and many have received significant financial support, some continue to face uncertainty and financial difficulties.
This statutory instrument will help companies by extending most of the temporary measures introduced by the Corporate Insolvency and Governance Act 2020 which were due to expire on 30 September. The extensions to various parts of insolvency and company law will protect companies from aggressive creditor action, promote company rescue and give greater flexibility to businesses by allowing them to hold their annual general meetings in a way which is consistent with social distancing measures.
The Government recognise that these measures have a significant impact on the normal working of insolvency legislation and the rights of creditors. Therefore, it is right that they are not extended for longer than they are needed. We think it is right, therefore, that any consideration of an extension, and for how long, should be done on an individual basis, rather than in the round, taking into account all the circumstances and potential impacts. We will continue to monitor the situation closely and will act swiftly if evidence demonstrates the need to act further.
The temporary insolvency measures being extended are: first, the suspension of serving statutory demands and the restrictions on filing petitions to wind up companies until 31 December 2020; secondly, certain modifications to the moratorium provisions and the temporary moratorium rules, which are extended until 30 March 2021; and, thirdly, the small supplier exemption from termination clause provisions, which is also extended until 30 March 2021.
During these difficult trading times the temporary suspensions on serving statutory demands and restrictions on winding-up petitions have helped many essentially viable companies by removing the threat of aggressive creditor action at a time when many businesses are unable to operate at full capacity due to continuing social distancing restrictions.
Since the introduction of these measures there has been a decrease in the number of compulsory liquidations by 67%, compared with the same period last year. Not extending these measures may lead to essentially viable companies that would be able to pay their debts but for the virus being put into a value-destructive compulsory liquidation. Such an outcome would put jobs and investment at risk and would not be a satisfactory outcome for creditors or the economy. Extending these measures further will instead give confidence and support to companies that are doing their best to stay open in these unprecedented times.
Noble Lords will know that the Government have already extended the temporary suspension on the right of commercial landlords to forfeit the tenancies of businesses until 31 December 2020. This will give further protection to tenants who have only recently been able to restart trading after the restrictions introduced because of the pandemic.
Most landlords and tenants have been working together to reach agreements on debt obligations. However, there remains a risk that some landlords might use aggressive debt recovery tactics against companies struggling to meet rent commitments in these difficult trading conditions. These measures taken together will support such businesses.
While we believe that the extension of the statutory demand and winding-up provisions will be particularly welcomed by commercial tenants, it applies to all business sectors of the economy. A range of other legal options is available to creditors seeking to recover debts that are unaffected by the changes being made here—for example, it is possible to bring a civil claim to recover a debt—but it is important to note that these measures aim to encourage forbearance and do not extinguish any existing creditor rights or interests.
I turn to the other measures related to the moratorium. While support from government measures has meant that there has been suppressed demand to date for the new moratorium procedure, I am pleased that companies, particularly smaller ones, are beginning to make use of them. During normal economic conditions, moratoriums are intended to include important criteria that must be met before a company can enter into one. These criteria protect the integrity of the moratorium, which should be used only for companies with a realistic prospect of rescue.
Noble Lords will know that it was recognised during the debates on the Corporate Insolvency and Governance Bill that a temporary relaxation of these criteria would help fundamentally viable companies impacted by the pandemic to make use of the moratorium. These regulations extend some of those temporary relaxations to 30 March 2021. They, first, allow a company subject to a winding-up petition to access a moratorium by simply filing the relevant documents at court, rather than having to make an application to the court; and secondly, disapply the rule that prevents a company from entering a moratorium if it has been subject to certain insolvency measures within the last 12 months—for example, a company voluntary arrangement, an administration, or a previous moratorium.
The temporary modifications to moratoriums that are being extended relax the eligibility criteria for obtaining one, enabling a greater number of companies in financial distress access to rescue or restructure options free from creditor pressure. This extension recognises the extraordinary and temporary difficulties being caused by coronavirus and will make the moratorium as widely available as possible. The regulations also extend the temporary administrative rules for the moratorium that enable it to operate, as contained in Schedule 4 to the Corporate Insolvency and Governance Act.
The final measure to be extended in the insolvency framework is the small company supplier exemption from the prohibition of termination clauses, which this instrument extends to 30 March 2021. Termination clauses are often found in supply contracts between businesses. They are triggered when a company commences a formal insolvency or a rescue procedure, allowing the supplier to terminate supply immediately. They can also be used by suppliers to demand ransom-type payments to maintain the supply of essential goods or services that may be vital to continue trading and the withdrawal of which could jeopardise any potential rescue. Their prohibition means that contracted suppliers cannot terminate contracts or take other steps, such as demanding additional payments, simply on the basis that the company has entered an insolvency procedure or a moratorium. The measures give an important protection to distressed companies while they attempt a rescue.
However, in the current circumstances such a provision could hit small suppliers hard, potentially endangering their own solvency. While small businesses represent 99% of the business community, 64% of turnover is through businesses that do not fall within the definition of a small business. It therefore continues to be right to temporarily exempt small suppliers from the prohibition, thus allowing them to terminate supplies should they need to protect their own business.
Turning to annual general meetings, the Corporate Insolvency and Governance Act 2020 introduced temporary flexibilities around the way companies and other qualifying bodies could hold general meetings. This allows companies to balance the requirements of legislation and their constitutional arrangements with the prevailing coronavirus restrictions. In doing so, companies can safeguard the well-being of their employees, shareholders and members. This is crucial in the operation of the UK’s strong corporate governance regime, which makes sure that company boards are fully held to account by their members. Without an extension, this scrutiny would be made increasingly difficult.
Despite the fact that, in large part, the season for annual general meetings is behind us, we know that there remain over 100 large companies still to hold an AGM between now and the end of the year. To that we must add the multitude of smaller companies, charitable incorporated organisations and mutual societies that have similar obligations. The extension in these regulations will give companies comfort that they can continue to convene these and other general meetings safely and consistent with their legal obligations.
Overall, the package of temporary measures introduced by the Corporate Insolvency and Governance Act in June this year has been widely welcomed by businesses at this crucial time. We have been told by business that these measures have been essential in supporting them, with many companies now able to trade without the threat of aggressive creditor action being taken against them, and with the availability of new tools to help them to restructure and rescue themselves. I commend these regulations to the House.
Lord Callanan (Con)
I thank all noble Lords who contributed to this short debate. I know that many also contributed to the legislation when we originally introduced it. There is a great deal of expertise in the House on this subject, and I am grateful to those who have thought to opine further on the extensions that we have introduced.
I thought that the debate started off well with an excellent contribution from the noble Lord, Lord Blunkett, who, rightly, highlighted the difficulties of businesses in areas such as his own dear Sheffield which are subject to tier 3 restrictions. The Government very much recognise the ever-changing context in which we operate, but I hope he is assured that the Government are keeping all these measures under review in light of the ongoing development with the pandemic, in order to act in a proportionate way should it prove necessary to do so. I can further offer assurances to the noble Lords, Lord Blunkett and Lord Vaux, and to my noble friend Lady McIntosh that the measures included in the order are being kept under review as part of this. We would not hesitate to move swiftly to extend them further if that is necessary to support business in a proportionate and viable manner.
My noble friend Lord Bourne raised questions on the differing dates of the extensions within the regulations. The reason for that is that they were assumed to be the best and most viable dates at the time, following consultations with various organisations and other government departments. However, as I said earlier, we will keep those measures under review. The temporary measures all have significant impacts on the normal working of various parts of insolvency legislation and the business community. The term of extension for one measure may not be desirable or needed for another. We think it right, therefore, that any consideration of an extension and for how long should be done on an individual basis, rather than in the round, taking into account all the circumstances and potential impacts.
My noble friend Lord Bourne and the noble Lord, Lord Stevenson, asked further about why restrictions on wrongful trading were not being extended. Careful consideration was given to whether to prolong each of the separate temporary measures introduced by the Corporate Insolvency and Governance Act; a package of targeted measures remains in place to assist companies in financial difficulties. We reached the view that a further extension of the prohibition restrictions on wrongful trading was not required at this time.
The end of the suspension represents the return of an important protection for creditors. As always, it is a question of getting the right balance. At the beginning of the pandemic, company directors faced a very uncertain future with regard to trading conditions. Now that the suspension has been in place for seven months, they will have had time to make a better assessment of the impact of the pandemic on their companies’ viability. We therefore considered it right to restore that provision.
The points made in the debate have highlighted the importance of the measures being extended by these regulations and the necessity of extending them so that businesses continue to benefit from them. The Government have considered the ongoing impact of Covid-19 and the potential impact of each measure to determine how for long each measure should be extended, if at all. Government officials have been in close dialogue with business and professional groups about these measures and the impact that they are having. Given that the Covid-19 crisis is still with us and businesses are still dealing with its impact, the consensus is that the measures being extended are still necessary.
The number of corporate bodies benefiting from the company law measures—my noble friend Lord Bourne referred to 100 companies—are public companies with obligations to hold AGMs with a variety that is testament to our varied business sectors. Countless other companies will benefit from having flexible general meetings in the coming months. The flexibilities are intended to be temporary and only for the purposes of assisting bodies in coping with Covid-19 restrictions. Once the measures and powers expire, meetings will continue to be held as normal and in line with the body’s normal constitution.
The Companies Act 2006 already gives companies the ability to hold general meetings in a virtual form but, generally, they would need to secure shareholder consent to appropriate changes in their articles of association. Ultimately, it is for companies and shareholders to agree what flexibilities they want over the longer term. We do not think it appropriate to mandate that meetings be held in a particular way. These measures give bodies the flexibility to hold meetings in a safe way, including through the use of electronic means. This will allow companies to respond appropriately to changing circumstances where required. I am happy to confirm for the noble Lord, Lord Stevenson, and my noble friend Lord Bourne that the Financial Reporting Council has published guidance on AGMs on its website.
The noble Lord, Lord Vaux, asked how to protect businesses in recovery after the end of the measures for which it is clear that the restrictions have changed. Government support has evolved; its goal remains to protect people’s jobs and livelihoods. As the path of the virus and the threat to the economy become clearer, government action needs to support jobs and businesses while at the same time allowing the economy to adapt to the new normal.
The noble Baroness, Lady McIntosh, asked me about the uptake of the measures, and I can confirm to her that two companies have obtained a moratorium under the Insolvency Act 1986, as amended by the Corporate Insolvency and Governance Act 2020. One company had a restructuring plan under the Companies Act 2006 amended by this Corporate Insolvency and Governance Act 2020 sanctioned by the court. The restructuring plan, which was backed by creditors and sanctioned by the court in September, has allowed the airline Virgin Atlantic to restructure its debts, and to attract in excess of £1 billion of investment and international press attention. I think we can see that the legislation has worked in this respect: it has saved a company that was in difficulties because of the pandemic. We all know what has happened to airlines and the aerospace industry so, in this particular regard, the legislation that we slaved over has proved to be valuable.
Other noble Lords raised questions on the regional uptake of the measures and the impact of different-sized businesses; we are constantly keeping all these measures under review, and they will be reviewed on an individual basis. The low number of cases of each of these new legislative tools since the Act came into force is very likely to be as a result of the range of Government support which is still available and still being provided to companies—as noble Lords will be aware, and as I mentioned above—including the range of temporary measures that have recently been extended for a further period.
These temporary rules on the moratorium need to remain in place to allow time for the permanent moratorium rules, which require further secondary legislation, to be drafted. The law requires that the England and Wales rules require consultation with the Insolvency Rules Committee, which of course will take some time. It would also be undesirable to require businesses to adjust to new procedural rules at a time of great economic uncertainty, such as having to adapt to changes in government fiscal support and other regulatory support as a result of coronavirus.
The noble Lord, Lord Stevenson, asked on the point of viability for insolvency. I accept his point that this is not a term normally used by accountants of his persuasion, but it is being generally used as a term to indicate which companies would be profitable otherwise than for the impact of Covid-19. Over the past few months, businesses have continued to face an exceptionally challenging time, with many unable to trade or their ability to trade at full capacity restricted due to social distancing measures.
These regulations will provide the much-needed continued support for businesses to concentrate their best efforts on continuing to trade and to build upon the foundations for economic recovery in the United Kingdom. Careful consideration, as I said earlier, has been given to extending these temporary measures, and the Government will monitor the situation very closely before making any decisions about any further extensions, including, of course, consulting further with businesses, their representatives and shareholder bodies. With that, I commend these regulations to the House.
United Kingdom Internal Market Bill
Lord Callanan ExcerptsMonday 26th October 2020
(3 years, 6 months ago)
Lords ChamberRead 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-II Revised second marshalled list for Committee - (26 Oct 2020)
Lord Fox (LD)
My Lords, if the Ministers shepherding this Bill expected an easy ride, this gives a taste of things to come. It serves a purpose in setting the scene, and a lot of arguments and debates will come in other groups as we go through this process. I shall not labour those points. An overriding sense I got from my noble friend Lord Purvis is that the question everybody wants to know the answer to is: why have Her Majesty’s Government decided to turn away from a process of managing markets that has been extremely successful? It was successful before we joined the European Union and successful afterwards. This is the overriding question that hangs over this whole debate.
On Amendments 1 and 112, if ever we needed convincing that things such as the environment need to be written into the Bill, the speech by the noble Lord, Lord Naseby, convinced me that they do. This is because we cannot take things for granted. Governments come and Governments go, but the law stays, and we need to be sure that our public policy is being directed properly. I uncharacteristically find myself somewhat agreeing with the noble Baroness, Lady Noakes: we have to be careful not to constrain the nature of this Bill. We need to find a way to write in issues such as those of the consumer and the environment. I would add some of the points made by my noble friend Lady Bowles and food safety to that. We need to ensure that there is an assessment of the success of this internal market in some of those areas, including the environment, the effect on consumers, the effect on jobs, et cetera. I share the view of my noble friend Lady Bowles that perhaps more work is needed, but the issue is live and very important. I thank the proposers of the amendment.
Turning to Amendment 2, I do not think proportionality pops up anywhere in other amendments. We had a brief discussion of this extremely important subject from various speakers. I take my lead on this from the noble and learned Lord, Lord Hope, who understands the law, and my noble friend Lady Bowles, who knows a thing or two about regulation. If they are concerned about proportionality, so are we on these Benches. The Government need to find a way of writing that issue into the Bill.
On public procurement, we need to understand what the Government mean by what they seek to do in this legislation. The issue highlighted by my noble friend Lord Purvis is live and real: how will this legislation affect those issues? It is a probing amendment, but for it to work we need answers.
We have started. There are issues we shall return to, but proportionality and public procurement are two on which I hope the Minister will respond at length.
The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Callanan) (Con)
My Lords, let me open by thanking noble Lords for their contributions at Second Reading last week. Again, the contributions have demonstrated the tremendous breadth of expertise in this House. This is indeed a crucial piece of legislation. In this respect, I agree with the noble Lord, Lord Fox, and I look forward to providing the scrutiny it deserves and that I am sure it will receive from noble Lords, beginning today and in the days and weeks ahead.
Let me reassure, and to some extent disagree with, my noble friend Lord Cormack, which will not come as a surprise to him. We are not riding roughshod over the devolution settlements. The devolved Administrations will acquire dozens of new powers that they have not exercised before once we leave the EU transition period. The Bill is about ensuring that those powers are exercised in a non-discriminatory manner, but they will acquire new powers and new responsibilities. Before I address the specifics of Amendments 1, 2, 59 and 112, which we are discussing in this first group, I want to remind to noble Lords of why we need this Bill and the context of Part 1.
By opening with the purpose of the Bill, I hope to explain why these four amendments, which seek to alter the Bill’s core principles, are not necessary. The Bill aims to allow the continuing smooth functioning of our UK internal market at the end of the transition period. As we set out in the White Paper, and as I explained at Second Reading, the Bill will establish a market access commitment by enshrining mutual recognition and non-discrimination in law. Part 1 concerns itself with delivering this market access commitment for goods. The principle of mutual recognition is that goods and services from one part of the UK will continue to be recognised across the country. This will ensure the devolved Administrations will benefit from their additional powers and freedoms outside the EU. As the transition period ends, they will gain increased powers, as I said to my noble friend Lord Cormack, to set their own rules and standards across a wide range of policy areas within their competence. At the same time, it provides firm assurance to our businesses that their goods can continue to flow freely throughout the United Kingdom. Non-discrimination ensures that there is continued equal opportunity for companies to trade in the UK, regardless of where in the UK the business is based.
I say to the noble Lord, Lord Empey, that the measures in the Bill will also ensure that Northern Ireland qualifying goods benefit from the market access commitment and receive mutual recognition in the rest of the UK. The Bill will also affirm the principle that those goods are not subject to checks, controls or administrative processes as they move from Northern Ireland to Great Britain. I hope that I can reassure the noble Lord on that point. This means we will fulfil our commitment to legislate for unfettered access, as we promised to the people and businesses of Northern Ireland. This will ensure that businesses and citizens in the United Kingdom can continue to trade freely across the four nations.
With this context in mind, I turn to Amendments 1 and 112 together. These seek respectively to limit the purpose of Part 1 and the Office for the Internal Market’s statutory objective to the protection of the environment and consumer interests. Now, it goes without saying that the protection of the environment and consumers is hugely important, and something that we as a Government are already committed to. The UK, as I never tire of repeating, has some of the highest standards in the world, and we will continue to improve these ahead of others. We remain committed to being at the forefront of environmental protection and a leader in setting ambitious targets to prevent damage to our natural world, building on our already strong environmental record. For example, we have set out a range of new policies in the Environment Bill that are designed to drive up environmental standards in line with the UK’s priorities.
The statutory objective of the Competition and Markets Authority—acting as the Office for the Internal Market—ensures that the office is able to effectively operate as the monitoring body for the internal market, and that there is no confusion between the pre-existing powers of the CMA and those newly conferred on it as the OIM. Distinct objectives will prevent any operationally problematic blurring of functions.
As my noble friend Lady Noakes observed, the office will operate for the benefit of all those with an interest in a smooth-functioning internal market, whether that be regulators, businesses, professionals, the four legislatures or indeed consumers. Explicitly narrowing its focus to consumers would be to the detriment of all the others that I have listed.
Moreover, the functions set out in Part 4 of the Bill clearly establish that the office will consider the economic impacts of regulatory measures on the internal market. Although some of these will of course be environmental protection measures, it will not be authorised to opine on the extent to which these measures safeguard the environment, because this would risk duplicating the role of existing public bodies with a purely environmental focus. As such, given how much the Government are already doing in the area of consumer and environmental protection, I consider that these amendments, which seek to change the purpose of the Bill, are unnecessary, and I hope that I have been able to persuade my noble friend Lady McIntosh and the noble Baroness, Lady Hayter, to withdraw Amendment 1 and not move Amendment 112.
Amendment 2 aims to introduce the principles of proportionality and subsidiarity into the Bill as additional market access principles. These are European law principles. We have now left the EU and are free to organise our internal market in a way that is better suited to the UK’s unique constitutional arrangements and common-law systems. I agree with my noble friend Lady Noakes that the market access principles will protect seamless trade and jobs across all four corners of the United Kingdom following the end of the transition period in December 2020. They have been designed for the UK’s specific devolution arrangements and legal approach, and they already take account of the need for reasonableness and respect for devolution. In contrast, the proposed amendment would muddy the waters with EU concepts that in our view are ill-fitting in the UK. For these reasons, the Government cannot accept this amendment and I hope that noble Lords will not move it.
Amendment 59, on which there was considerable discussion, seeks to disapply the market access principles from the public procurement rules. I assure the noble Baroness, Lady Hayter, and the noble Lords, Lord Purvis and Lord Fox, that the principles proposed in the Bill will not typically operate in the area of public procurement, and indeed that we intend to legislate separately in this area via a wider package of procurement reform, on which we will shortly consult. The market access principles are not relevant to procurement as they are about how business is regulated. The procurement rules cover how public authorities carry out their procurement function. We believe that the risk of divergence can be effectively managed through a combination of close devolved Administration engagement and use of the common frameworks, and we are working to develop a concordat on expected public procurement practices and policies between the four UK nations.
Lord Purvis of Tweed (LD)
My Lords, while I am grateful that the Minister has confirmed to me that a piece of legislation that has been made fully compliant with our single market—the deposit return scheme—will now come into scope under this legislation, because it is not yet in force in Scotland, that will be of very significant concern to Members of the Scottish Parliament, who legislated in good faith in a perfectly legal way. This Government have now said that that will come into scope, contrary to the market access principles, because it will not be able to be afforded protection if it is challenged in court because of the lack of environmental objections. I take the Minister’s point that he believes that it will be brought under the scope of market access principles, so I would be grateful if he could write to me to explain how indeed that will happen. If it is under a framework, we are back to exactly where we started, which is that the best approach on all these aspects is a framework.
That leads me to the question that I wish to ask him, because he did reply to the question that I asked about the status of the agreement made between the UK Government and the devolved Administrations on the framework agreement. In the document of September 2020 on the framework analysis, the Government repeated what that agreement was. I will quote from it again for the Minister: it was to
“maintain, as a minimum, equivalent flexibility for tailoring policies to the specific needs of each territory, as is afforded by current EU rules”.
The document goes on to say:
“These principles continue to guide all discussions between the UK Government and the devolved administrations on common frameworks.”
What is the basis of that document and that commitment, given what the Minister has just said in responding on this group: namely, that that is an ill-fitted set of agreements because we are now out of the EU? What is the status of the agreement that was made over the frameworks?
Lord Callanan (Con)
Well, as I have said before to the noble Lord, we remain completely committed to the framework process and we remain committed to frameworks that have already been agreed—but we see this legislation as complementary to that, as it underpins the entire framework process. As I said to him with regard to the deposit return scheme, if it comes into force when it is predicted to do so, then indeed it will be covered by the market access principles, but we are confident that the deposit return scheme can be brought into effect in full compliance with the market access principles.
Baroness Hayter of Kentish Town (Lab)
I am slightly lost on that, but we will come back to it. I thank the Minister for his response and I am grateful for the very interesting debate that has happened. I will say a few words about what was said by the noble Baronesses, Lady Noakes and Lady Bowles, about the point of competition and why it should be here. I agree with the noble Lord, Lord Naseby, that competition is extremely good for consumers. We want to see a successful economy, and I see no difference whatever in what he was spelling out and what we want to achieve.
The problem, of course, is where, for whatever reason, there is not a perfect market. Although here we are talking about goods rather than financial services, I was involved in the Financial Services Consumer Panel, and even though we had and still have—although Covid is throwing everything out—a thriving financial services market that has been good for the economy, for consumers and for the taxpayer, it has sometimes been, as we know from all the compensation that had to be paid, at the expense of consumers. So we cannot assume, simply because we have a good, thriving economy and lots of competition, that there are not sometimes disadvantages for consumers. That is why it is important, while we want a competitive, thriving market, to make sure that those protections are there. So as we look forward to the internal market being all the things that have been described, it cannot be at the price of consumers.
As I have said, I really support competition—we all used to wear NHS glasses until someone freed up the market, so we are all able to get nice red ones now. I doubt there is anything much between us on that. It is important, though, as we look forward to a market that is going to work for the whole UK, that it is not at the expense of consumers or the environment. I have been buying plants recently, hoping that one day we will have some good weather, but they should not be in peat pots. That is not good for the environment. Something may be good for consumers and at a good price, but you also need to consider the environmental aspect.
Consumers are not just interested in price; they are interested in safety and the longevity of products. However, that is not always something they can see at the point of purchase. Price is very easy for consumers: they can look at it and compare. Other things behind the price are also important. It is important as we look to a new market mechanism that we take that into account. I am sorry to have gone on a bit about this issue but as we will come back to it on Report, it is probably helpful for the Minister to understand. We may not have got the wording quite right: I am not trying to trump the Government but to point out why those elements need to be included.
On the devolution issue, the noble Lord, Lord Empey, is right that there is a clash between the settlements and what we are now trying to do with the internal market; I think he called it a collision between London and the regions. I hear very much what the noble Lord, Lord Cormack, said: that if we get this wrong, we are threatening something much bigger than any of us thought. No Brexiteer wanted to challenge the union; that was not what divided some of us who had divisions on that issue.
We need to look at how we deal with devolution. I was really taken by the example that the noble Lord, Lord Inglewood, gave of the IGC process that led to the single market and other things. I will come on to that way of working when we consider a different group of amendments. The confidence to do things in a shared and consensual way is important. The noble and learned Lord, Lord Hope, said that it would probably be important to put in the Bill retention of the subsidiarity and proportionality principles. They have guided us well and there is no reason why we should lose them, just because we are leaving. I think we will return to that issue.
On procurement, I think the arguments were fairly common between us. I am afraid I was slightly thrown by what the Minister said and will have to read later exactly what he said about separate legislation. Maybe we can exchange correspondence on that issue, and on the timing. Clearly, we will need to come back to procurement to ensure that we have something that will work for all four nations. For the moment—and I am sorry about the length of my response—I beg leave to withdraw the amendment.
Lord Stevenson of Balmacara (Lab) [V]
My Lords, as the noble Lord, Lord Dunlop, said, this debate is a sort of appetiser for the main course to come in later groups, when we will dig much deeper into the right approach to ensuring that our current well-functioning internal market continues after the transition period ends and that we can manage the necessary and inevitable policy divergences that we need across the United Kingdom and should welcome.
The noble Lord, Lord Bruce, said that the key questions are why we need the Bill at all, let alone now, why the Government are ignoring the evident successes of the co-operation and constructive progress which have been hallmarks of the common framework programme, why threaten the devolution settlement so directly, and what it is about the top-down approach that the Government wish to introduce that is so attractive, given the huge risks to devolution. Those are very important questions and I look forward to hearing what the Minister says when he comes to respond.
The noble Baroness, Lady Neville-Rolfe, said that she recognised the value of proposed new subsections (1) and (2) in the amendment but was worried that proposed new subsections (3) and (4) made it a wrecking amendment. I do not think that it is. Indeed, I make the same points about the need for a pause before we implement in my Amendment 178, which is in a later group.
I hope that the Government will think very hard about the clear message that seems to come from this debate. We need to carry on down the road well travelled in recent years, encouraging the devolved Administrations to continue to collaborate, to work together with mutual understanding until agreement is reached, and then to go further so that there is agreement on all the issues that need to be agreed and a way of resolving any issues that are left over. This is the way in which we make progress—not by imposing a top-down solution. Indeed, anything else risks destroying the complex but pretty successful devolution settlement that we currently enjoy.
Lord Callanan (Con)
My Lords, Amendment 4, tabled by the noble Lords, Lord Fox and Lord Purvis, would prevent the market access principles applying by the end of the transition period. As my noble friend Lady Neville-Rolfe pointed out, that would produce a considerable delay in providing certainty to businesses that free trade can continue within the UK’s internal market.
I heard the noble Lord, Lord Bruce, query my assertion at Second Reading about business support for these measures, but over 270 businesses and organisations responded to the public consultation on our proposals and, overwhelmingly, businesses supported our approach. Particularly as they look to recover from the impacts of Covid-19, businesses need certainty, and that is what this Bill, as drafted, seeks to provide.
I repeat that the aim of the Bill is to ensure that there are no internal barriers to trade within the UK, while respecting the devolution policies. All devolved policy areas will stay devolved. The proposals ensure only that no new barriers to UK internal trade are created. The Bill aims only to procure frictionless trade, movement and investment between all nations of the UK. The policies that different parts of the UK choose to pursue in the future is a matter for those Administrations. The Bill ensures that these local policies can be pursued while, at the same time, maintaining seamless trade in the UK internal market.
The noble Lord, Lord Bruce, asked me specifically about barley, and indeed the noble Lord, Lord Purvis, has written to me on the same subject. We believe that this provides a good example of the risks that businesses could be exposed to. Food produce placed on the market must comply with rules on pesticide maximum residue levels. These are currently set at EU level, and so are consistent across the United Kingdom, meaning that food can be traded across the devolved Administrations. This is an example of a policy area which will be devolved after 1 January. At the moment, all Administrations are supported by the same regulator—the Health and Safety Executive. That will, to a certain extent, aid consistency, and we are of course committed to working closely with the devolved Administrations to jointly agree consistent maximum residue levels across Great Britain.
However, without the Bill’s mutual recognition provisions, there would be the possibility of divergent decisions being taken, which would then introduce new trade barriers on food between different parts of our country. Depending on any particular decision, this could affect any agricultural or horticultural produce that has been previously treated with pesticides. For example, different residue rules might mean that it is not lawful to sell in Scotland barley grown in England.
More broadly, without the principles set out in the Bill, harmful divergence would be possible, in spite of the important protection provided by industry standards. That is because industry standards are voluntarily agreed between private economic actors and so cannot provide the same certainty for businesses and investors as the legislative principles set out in the Bill.
The consent process proposed in the amendment would remove that certainty and make operating conditions for businesses across the UK dependent on a number of fairly onerous conditions. These conditions include matters that would cut across ongoing collaborative work with the devolved Administrations. I say to the noble Lord, Lord Bruce, that these include the common frameworks programme and the intergovernmental relations review, both of which the Government are fully committed to pursuing. Indeed, in the next group, we will examine the common frameworks principles in more detail, and my noble friend Lord True will explain our position in more detail.
However, I assure noble Lords that the Government have already committed to appropriate consultation with the devolved Administrations on these matters. Furthermore, we are engaging them in all suggestions for how practically to improve intergovernmental relations, including both the machinery, such as dispute resolution, and the way in which these joint forums are run.
The noble Lords, Lord Fox and Lord Purvis, asked a question about dispute resolution. I can tell them both that the office for the internal market will support existing arrangements for dispute resolution. Its non-binding reporting will ensure that evidence-based dispute resolution takes place in line with the current memorandum of understanding on devolution. The OIM’s reporting will be available to all four Administrations and legislatures on an equal and purely advisory basis. It will provide information and support separate political processes to resolve any disagreements and enable intergovernmental engagement. The amendment would cut across all ongoing collaborative work with the DAs and remove our ability to give businesses the certainty they need at this time.
The noble Baroness, Lady Randerson, said that the Government would override the rest of the UK when legislating for England. That is certainly not our intention. The nature of our constitution is that the UK Parliament will be able to legislate over existing legislation, but the Bill aims to treat all domestic legislation in the same way. Her Majesty’s Government will be cognisant of the importance of market access principles in supporting any extra legislation.
Lord Wigley (PC) [V]
My Lords, the Minister cited the example of pesticides, a subject on which there will almost certainly be unanimity. But on matters such as subsidy control, where there may be a justifiable difference in approach, does the Minister not accept that unless the Government are willing to accept a mechanism such as this to secure consent from the devolved Administrations, he is in effect imposing his solution on them, and cannot in any way claim that this Bill is agreed by the devolved nations—with all the consequences that flow from that unfortunate situation?
Lord Callanan (Con)
The Bill would legislate for subsidy control becoming a reserved matter. We are committed to consulting further with the devolved Administrations before proceeding, if we do, to any further legislation.
Baroness Neville-Rolfe (Con) [V]
I have two questions. First, I called for clarity, trying to explain its importance to organisational success, which, frankly, is very relevant. I noticed almost no support for this from the Benches opposite, yet businesses, citizens and professionals will have to manage in the new market, and if the rules are at risk of changing in different ways regularly, that could be a problem. Obviously, sensible consultation and collaboration are needed, but we must be wary of a political veto. Does the Minister agree that this is a problem, or is the noble Lord, Lord Purvis, right?
My second question is whether the noble Baroness, Lady Randerson, is right or I am. At Second Reading, I mentioned with approval the ability of the devolved territories to do their own thing and gave two examples: minimum pricing of alcohol and carrier-bag charges, both of which I supported at the time. The noble Baroness, Lady Randerson, suggested that the powers to do such things will be undermined, and quoted exactly the same examples. Am I right or is she right?
Lord Callanan (Con)
My noble friend is putting me in the very difficult position of choosing which noble Baroness is correct. If I might venture to say, on the measures she has quoted my noble friend is correct. The Bill has no effect on minimum pricing of alcohol; that is excluded as a policy area, as are all pre-existing measures. This would also apply to carrier-bag prices. The Bill provides clarity and certainty for businesses, which is what we seek.
Lord Purvis of Tweed (LD)
My Lords, I take it as a little chink of victory that the Minister found it difficult to say whether he agreed with his noble friend or me. I will secure that as an achievement of the day, if he does not mind. I will return in a future group to minimum unit pricing and single-use carrier bags, because I am not convinced about that position.
I suspected that the Minister would refer to pesticides, so I took the liberty of reading the Health and Safety Executive’s board report on the framework, which has now been agreed, on pesticides and maximum residue levels. That agreement has been reached, so the concern the Minister is putting forward, of a threat to the operation of the single market, does not exist. That will be a UK-wide provision, and the regulations for Scotland are about policing it. The approach of the HSE has been well established for many years, and the regulation required to police this in Scotland is quite different from what the Government are asserting, which is the exercise of a power that would effectively prohibit goods from entering a Scottish market. That is notwithstanding the fact that if it concerns what is ultimately used for produce such as whisky, it is an industry standard, based on the minimum base that would be taken. The chemicals and pesticides framework from Defra and HSE has been resolved, so perhaps the Minister should stop using this an example. It is not convincing.
Regarding the office for the internal market, the Minister has now said something new: that the CMA, the parent body of the OIM, is involved in existing disputes under the Joint Ministerial Committee’s memorandum of understanding that was agreed after devolution. This will be news to the CMA. Can the Minister repeat that the CMA has a role in the Joint Ministerial Committee’s disputes, under the memorandum? That is what he said in response to the question, but it is not the case. As outlined in the Bill, the OIM has no role in disputes. If the Minister is saying that the dispute resolution mechanism for the internal market is the JMC memorandum of 20 years ago that was agreed for devolution, it simply will not work, because it does not provide for the operation of the single market.
Lord Callanan (Con)
The noble Lord asked a number of questions, and I am sure he will be quick to write to me if I do not answer all of them. On the famous subject of barley and pesticides, he is correct, but the whole point about frameworks is that they are voluntary agreements. Any one of the Administrations can walk away at any time. We are committed to agreeing voluntary frameworks and will continue to take part in those discussions and advocate them, but the point of this legislation is to provide a legislative underpinning for all of the work taking place on frameworks.
Could the noble Lord remind me what the other questions were?
Lord Purvis of Tweed (LD)
I am grateful to the Minister and may well be writing to him on that basis, as he predicted. Can he clarify what the intended role of the office for the internal market will be under the CMA? In a previous answer, he indicated that it has a role in the dispute resolution mechanism in the devolution memorandum of understanding. My understanding is that it does not. Which is the case? If the intention is that the OIM has a role in the dispute resolution mechanism, there is no reference to that in the legislation.
Lord Callanan (Con)
The purpose of the office for the internal market is to provide advice, reports and monitoring to all four Governments and legislatures. It will have no direct role in dispute resolution, which will be a matter for the Joint Ministerial Committee to discuss.
Lord Fox (LD)
My Lords, I apologise to the Deputy Chairman of Committees for having jumped in so soon. I thank all noble Lords for their contributions; the subsequent questions were worth waiting for, so I am glad that I did not plough on.
This has been an interesting debate; however many more hours we will have in Committee, it has uncovered above all else how half-baked—how completely undercooked—this Bill is. It is not worked through. The point of this amendment was to highlight, and give the Government, an opportunity to step back and admit that there are so many open questions and so many issues. I feel sorry for the Minister—I rarely do, but on this occasion I do—because he is having to respond to things that have not been properly locked down in this legislation. So I will look at Hansard, but it is quite clear that, one way or another, we will have to come back on Report to these absolutely central issues. Having said that, I beg leave to withdraw Amendment 4.
World Energy Outlook 2020
Lord Callanan Excerpts(3 years, 6 months ago)
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Lord Ravensdale (CB)
My Lords, in asking this Question I declare my interests as recorded in the register.
The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Callanan) (Con)
The World Energy Outlook 2020 report examines how the global energy system could develop under different scenarios in the coming decades. We welcome its focus on the impact of the pandemic and the choices needed to enable a sustainable recovery. We also welcome the focus on the path to reaching global net-zero emissions. We will continue to draw on the analysis as we work to accelerate the global energy transition, including through COP 26.
Lord Ravensdale (CB)
My Lords, I thank the Minister for that response. The report recommends faster structural changes and the need for Governments to take decisive actions to accelerate clean-energy transitions, particularly over the next decade. First, can the Minister give any indication of when we can expect the transport decarbonisation plan and the buildings and heat strategy? Secondly, we have been promised an energy White Paper this autumn. I noted the thickening autumn leaves as I walked to Parliament today, so can he reassure the House that the energy White Paper will be with us before the end of November?
Lord Callanan (Con)
My Lords, I am sorry to disappoint the noble Lord. I cannot give him a specific answer to that, but we expect the White Paper to come shortly.
Baroness Blackstone (Ind Lab)
My Lords, do the Government accept that, while they must lead, changes in everyone’s behaviour will be needed? So how do they plan to engage with citizens on what net zero looks like, and the changes in behaviour that will be needed to get there?
Lord Callanan (Con)
The noble Baroness makes a very good point. It is important that everybody’s behaviour is changed. There will be a number of campaigns, both by government and by various NGOs and interested parties in the run-up to COP 26, which we see as a major global lever that we can use to change fundamental behaviours.
Lord Taylor of Goss Moor (LD) [V]
My Lords, I draw attention to my interest in sustainable development and low-carbon heat, as listed in the register of interests. Can the Minister accept that it makes no sense to build literally a million or more homes over the next few years with carbon heating technologies when low-carbon technologies could be cheaply put in place today, leading to zero carbon by 2050, rather than facing householders and government with the enormous costs of retrofitting even more homes than those already built today?
Lord Callanan (Con)
The noble Lord makes a good point; heating decarbonisation will be a crucial part of the race to net zero, and we will be bringing forward a detailed heating decarbonisation strategy shortly.
Baroness Neville-Rolfe (Con)
My Lords, I was disappointed that this report neglects nuclear energy. Its reliable, emission-free 24-hour baseload provides an essential complement to solar and wind, which sadly can be absent for weeks at a time. At a time of unparalleled low interest rates, will the Government’s forthcoming energy White Paper grasp the nettle and propose government support for nuclear via direct government involvement?
Lord Callanan (Con)
I thank my noble friend for her question, but the WEO 2020 report suggests a 10% increase in nuclear between 2019 and 2030. Beyond 2030, the Paris compliance scenarios envisage small modular nuclear reactors taking a stronger role, alongside CCUS and hydrogen. Of course, we will address all these upcoming matters in the energy White Paper.
Lord Broers (CB) [V]
My Lords, the IEA outlook report points out that to achieve net zero in 2050 we need by 2030 to have 50% electric cars and 75% low- carbon electricity. These aggressive goals will be met only with international collaboration. It takes 50 times longer to charge an electric car than to fill a petrol car, requiring an immense number of charging points; at present too much carbon is released in making car batteries; and, to meet the 75% target, more nuclear power will be needed than is planned. Does the Minister think that there is a leadership role for the UK in achieving all of this?
Lord Callanan (Con)
Indeed there is—and we have taken a leadership role by setting our 2050 net-zero targets, by setting a phase-out date for petrol and diesel vehicles, and by introducing policies to incentivise the electric vehicle market. Accelerating the clean energy transition globally is the focus of our work going up to COP 26.
Lord Grantchester (Lab)
My Lords, the 2020 report shows above all that renewables will be integral to the future energy mix that will power modern economies. Yet, under this Government, clean energy investment plummeted by 56% in 2017 as a result of cuts to various renewables schemes, and it has fallen each year since. Can the Minister confirm what urgent steps the Government will take to promote clean energy investment? In particular, will the continually delayed national infrastructure strategy contain strong policies in this regard?
Lord Callanan (Con)
Well, the Government’s policies towards clean energy investment have been a resounding success. We are seeing record levels of deployment and the costs of clean energy are falling dramatically—we will see that during the next contracts for difference round next year—but, of course, we keep all these things under review.
Lord Teverson (LD) [V]
My Lords, a strong theme in this report in relation to Covid and energy is that, to quote from the report:
“The worst effects … are felt among the most vulnerable.”
In the UK context, how will the Government protect our vulnerable people as we transition to a clean energy economy?
Lord Callanan (Con)
The noble Lord makes a good point. We are investing record sums in helping vulnerable consumers. He will be aware of the new green homes grant that will provide grants of £5,000, and indeed £10,000 for those on low incomes, to help them insulate their home and make it more energy efficient and, more importantly, get their bills down.
The Lord Bishop of Salisbury [V]
My Lords, the report from the IEA focuses on the impact of the pandemic on macro energy generation and distribution, and it emphasises the vulnerability of the national grid. The pandemic has emphasised the importance of the local, so how does the Minister see the Government’s role in encouraging the rapid development of local micro energy generation?
Lord Callanan (Con)
The right reverend Prelate makes a very good point. Local micro energy schemes will play a key role in our decarbonisation efforts but, of course, fundamental changes are required in the grid to enable us to move to a much more diversified model, away from key energy nodes, and considerable investment is taking place to allow that to happen.
Baroness Hayman (CB) [V]
My Lords, I declare my interests as set out in the register. Does the Minister agree that there are considerable opportunities for the creation of many sustainable jobs for the future in the infrastructure and technology projects needed to achieve net zero? If so, can he assure me that plans are in place for reskilling workers currently facing redundancy or the loss of their job to take up those sustainable jobs for the future?
Lord Callanan (Con)
Indeed, I agree with the noble Baroness. In a previous answer I referenced the green homes grant: £2 billion worth of green stimulus investment that is going to generate hundreds of thousands of jobs. I have been in discussions with lots of contractors that are already expanding their workforce. We have provided training grants to enable them to upskill both existing and new employees. I agree with the point that the noble Baroness is making.
Lord West of Spithead (Lab)
My Lords, nothing in the IEA’s World Energy Outlook 2020 changes the need for the UK to have a viable nuclear power sector producing about 30% of the future daytime electricity demand of 80 gigawatts by 2050, when, of course, we are planning to have net zero emissions. The provision of nuclear power needs planning and a clear programme of build and provision. That cannot be done at the last minute—often it takes decades—yet it appears that the plan for nuclear power is in disarray. When will the Government produce a clear statement of what is planned for the nuclear power provision required by 2050? Is it “shortly”?
Lord Callanan (Con)
It is indeed shortly. We will provide more detail on nuclear power in the energy White Paper, but, as I said to my noble friend Lady Neville- Rolfe, we see much of the future being in small modular nuclear reactors.
Viscount Waverley (CB) [V]
My Lords, how is it believed the pandemic and its aftermath will reshape the energy sector? In that regard, does the Minister have his magic wand as to the long-term outlook for the development of LNG, given the current downturn in energy demand in China and the Far East, as that could directly impact the Government’s sustainable development strategy?
Lord Callanan (Con)
The noble Viscount makes a good point. The short-term impact of Covid-19 on the global energy industry is a reduction in energy demand of something like 5% year on year, which has accelerated the movement away from coal towards renewables. The report highlights the fact that solar PV is now one of the cheapest forms of energy below carbon fuel. The other points that he makes are indeed very valid.
The Lord Speaker (Lord Fowler)
My Lords, all supplementary questions have been asked. That brings Question Time to an end.
United Kingdom Internal Market Bill
Lord Callanan ExcerptsTuesday 20th October 2020
(3 years, 6 months ago)
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United Kingdom Internal Market Bill
Lord Callanan ExcerptsMonday 19th October 2020
(3 years, 6 months ago)
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The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Callanan) (Con)
My Lords, I beg to move that the Bill be now read a second time. The United Kingdom’s internal market has been the bedrock of our shared prosperity for centuries. Since the Acts of Union, the UK internal market has been the source of unhindered and open trade across the entire United Kingdom. It has enabled businesses and individuals to thrive and has been the source of unhindered and open trade across our country. It has helped to demonstrate that, as a union, our country is greater than the sum of all our parts.
Around 60% of Scottish and Welsh exports are to the rest of the UK, which is around three times as much as exports to the whole of the rest of the European Union. About 50% of Northern Ireland’s sales are to Great Britain. When we leave the transition period at the end of this year, an unprecedented number of powers will flow from the EU to the devolved nations and the UK Government. As this happens, and as we recover from Covid, we must ensure that our economy is stronger than ever. The Bill will guarantee the continued functioning of our internal market to ensure that trade remains unhindered in the UK and businesses can continue to operate with certainty. Without the Bill a Welsh lamb producer, for whom almost 60% of the market is the rest of the UK, could end up unable to sell their lamb as easily as before. Scotch whisky producers could lose access to supply from English barley farmers, unnecessarily putting at risk Scotland’s own whisky industry.
This package guarantees a continuation of our centuries-old position that there should be no economic barriers to trading within the United Kingdom. To achieve this, the Bill will do the following. First, it will introduce a market access commitment for goods, services and professional qualifications respectively. This will ensure that the UK can continue to operate as a coherent internal market and maintain the deep integration and strong economic ties that bind the UK together. Secondly, it provides a statutory underpinning for a new office for the internal market, within the Competition and Markets Authority. This office will independently monitor the health of the UK internal market and provide technical advice on issues that may impact it, reporting to the devolved legislatures and to this Parliament itself.
Thirdly, it introduces provisions to ensure that there is a safety net in domestic law to prevent new checks and controls on goods going from Northern Ireland to Great Britain, in line with the Government’s commitment to unfettered access for qualifying Northern Ireland goods. Fourthly, it enables strategic investment in all four corners of the United Kingdom, giving the UK Government a power to provide financial assistance for the purposes of economic development, culture, sporting activities and infrastructure, as well as both international and domestic educational and training activities and exchanges.
Finally, it reserves to the UK Parliament the exclusive ability to legislate for a UK subsidy control regime once this country ceases to follow EU state aid rules at the end of the transition period. This is to ensure that subsidies do not unduly distort competition within the UK’s internal market. Let there be no doubt: this Bill is crucial in providing certainty to businesses, and we must give them that certainty.
My department and I, along with colleagues across government, spoke to hundreds of businesses and business representative organisations from across the UK to gather views and feedback on our original White Paper proposals. Over 270 businesses and organisations responded to a public consultation on the proposals, and businesses overwhelmingly supported our approach. I record my thanks for the engagement we have had from all aspects of business on this.
The Bill will put in law a market access commitment by enshrining mutual recognition and non-discrimination: mutual recognition to ensure that goods and services from one part of the UK will be recognised across the country, and non-discrimination to guarantee that there is equal opportunity for companies trading in the UK regardless of where in the country that business is based. The same principles of mutual recognition and non-discrimination will also be applied to services and will introduce a process for the recognition of professional qualifications across the whole UK internal market. This will allow professionals such as doctors and nurses, qualified in one of the UK nations, to work in any other part, as I am sure Members would expect. Furthermore, the Government are inviting views on the regulatory framework for professional qualifications, to ensure that our approach remains world leading. We have, of course, listened to those in the devolved Administrations and business, and have made some exemptions, for example to respect the divergence that exists between the legal professions in England, Wales and Scotland.
The Bill will also ensure that Northern Ireland qualifying goods benefit from the market access commitment and receive mutual recognition in the rest of the UK, guaranteeing a continuation of our centuries-old position that there should be no economic barriers to trading within the United Kingdom.
We consulted on how to ensure an independent monitoring and advice function to uphold the UK internal market. In response, and to oversee the functioning of the internal market, the Bill will set up an office for the internal market within the CMA. This office will monitor and report on the internal market to the UK Government, devolved Administrations, the legislatures, and external stakeholders, ensuring the continued smooth operation of that market that businesses so desperately desire.
Subsidy control has never been devolved. It is crucial to continue to have a UK-wide approach, to protect our internal market and prevent harmful and distortive practices arising. The purpose of the Bill is to ensure that we continue to have fair and open competition across the UK, and so it is right that we have a UK-wide approach to subsidy control. As we take back control of this policy from the EU, the UK will have its own domestic subsidy control regime. From 1 January, the Government will follow the World Trade Organization rules for subsidy control, and any related commitments the Government have agreed in free trade agreements.
We will consult on whether to go further than those existing commitments, including whether legislation is necessary to achieve a system that promotes a competitive and dynamic economy throughout the United Kingdom. We appreciate that our longer-term approach will have implications for business and all public authorities that grant subsidies with taxpayers’ money, including the devolved Administrations. So we will take the time to listen closely to those voices and design a system that promotes a competitive and dynamic economy throughout the whole of the United Kingdom. However, we will not return to the 1970s approach of bailing out unsustainable companies, be they in Scotland, England, Wales or Northern Ireland.
As we leave the EU and take back control of our money, we will require new powers to continue to invest across the United Kingdom. Therefore, this Bill will confer a power to make sure that the UK Government can invest UK taxpayers’ money nationwide, including on the UK Government’s priorities, supporting people and businesses across the UK and delivering on our commitment to level up all parts of our country. Currently, unelected EU bodies spend billions of pounds that we provided as a net contributor, on our behalf. They spend our money, with very little say from elected politicians in the UK. This will, rightly, change as we leave the transition period.
The UK Government intend to take a much more collaborative approach in delivering programmes that replace EU funds. This includes engaging heavily with local authorities as well as wider public and private sector organisations. And, of course, it means working closely with the devolved Administrations to make sure that investments complement their existing—and continuing—powers used to support citizens in Scotland, Wales and Northern Ireland. This power to provide financial assistance will cover infrastructure, economic development, culture and sport. It will also support educational and training activities and exchanges both within the UK and internationally, much of which of course was previously done at EU level.
These powers are not designed to take powers from the devolved Administrations, but to add powers to direct investment in a similar fashion to the EU Commission, while reforming programmes and empowering MPs from Wales, Scotland, Northern Ireland and England to design and scrutinise funds in a way that was never possible within the EU. This will also allow the UK Government to meet their commitments to replicating and matching EU structural funds within the shared prosperity fund. This is in line with the Government’s manifesto commitments to strengthen the union and level up the country. This power to provide financial assistance is one of the mechanisms by which the Government hope to achieve these ambitions.
We will also be introducing limited and reasonable steps to provide a safety net to ensure that peace can always be preserved in Northern Ireland. In the event that we do not reach an agreement with the EU on how to implement the Northern Ireland protocol, we must be able to deliver on promises in our manifesto and in the Command Paper. This is a legal safety net which clarifies our position on the Northern Ireland protocol, protecting our union and ensuring that businesses based in Northern Ireland have true “unfettered access” to the rest of the United Kingdom, without paperwork. The Bill will also provide certainty on state aid, ensuring that there is no legal confusion and that, while Northern Ireland will remain subject to the EU’s state aid regime for the duration of the protocol, Great Britain will not be subject to EU rules in this area.
This Bill, and our wider approach to protecting our internal market, is designed for co-operation between the four parts of the United Kingdom. It will protect our common causes, such as the setting of high standards in our economy, and will work in concert with the common frameworks programme and the IGR, which is due to conclude shortly. After all, the UK has some of the highest standards in the world. It is worth reminding noble Lords that we go beyond EU rules in many areas, including health and safety in the workplace, workers’ rights, food, health and animal welfare, consumer protections, household goods, net zero and the environment. We will maintain that commitment to high standards, including as we negotiate trade agreements that will provide jobs and growth in the UK. We have been driving this forward through our common frameworks programme, to drive collaboration and a coherent approach to policy across the UK now that we have left the European Union. I therefore want to reiterate the Government’s invitation to all devolved Administrations to work together on this Bill, with the common frameworks process and with the internal market as a whole.
This Bill is crucial to ensuring that we continue to work together as one United Kingdom to support jobs and livelihoods across our entire country. As we rebuild and recover from Covid-19 and look ahead to opportunities following the end of the transition period, this Bill will provide the certainty that businesses need to invest and create jobs. It will accompany one of the biggest transfers of powers in the history of devolution, with hundreds of powers flowing from the EU to the devolved Administrations at the end of the transition period. This Bill will do all this and preserve the internal market, which has been an engine of growth and prosperity since the Acts of Union. That is why we need this Bill. I beg to move.
Amendment to the Motion