United Kingdom Internal Market Bill

Baroness Bowles of Berkhamsted Excerpts

Consideration of Commons amendments
Monday 14th December 2020 Lords Chamber

[Baroness Finlay of Llandaff (CB) [V]]

My Lords, I shall speak to Motion G1 and move my Amendment 50E to Clause 50. At this stage I am minded to seek the opinion of the House, particularly because I wonder whether the House wants to have a conscience vote on some of these issues. I have found the Government’s response to our deliberations worrying. I remain concerned that the damage to the union that will come about as a result of their refusal to commit to a process of codesign of a future subsidy regime will come back to haunt us all.

We are of course a revising Chamber. We asked the Commons to think again, and after many hours of debate we gave clear messages through large majorities on key aspects of the Bill. We have seen some concessions and they were essential changes, but the huge problem of the current approach to the devolved Administrations remains unresolved. Given the Government’s current difficulties with the pandemic and unknowns over the end of the transition period, less than three weeks away, I fear that any stand-off with the devolved Administrations will compound and massively magnify them by fuelling the break-up of our union within only a few years. I say this because, as someone living in Wales and with family in Scotland, I see the Bill acting as a recruiting sergeant for separatist movements.

It is imperative to recognise the common frameworks, and we have signalled that clearly. As part of “taking back control”, the devolved institutions must have at least as much latitude—or call it “control”—as they felt they had within the EU to deal with the question of state aid. To establish durable intergovernmental working with the devolved Administrations, there must be clarity and certainty that the differing needs across the UK will be acknowledged and are seen as a joint responsibility that listens from the ground up and gives decision-making to the devolved Administrations.

As I understand it, neither Parliament nor the devolved Administrations had legislated on state aid in the past as these decisions were taken at EU level and regulations were directly applicable. Now that the EU mechanisms have been removed, it is still unclear where the decision-making now happens. State aid was not on the list of reserved powers and it has never been tested in the courts; indeed, such a test would do untold damage to relations between the constituent nations of the United Kingdom.

I hope I misheard the Minister, or that it was a slip of the tongue. If I heard him say “dissolved competence” instead of “devolved competence”, I am really worried.

My noble friends and I have listened to the objections that three years is too long to wait to put a framework in place, so we have reduced it to 18 months and I am currently minded to seek the opinion of the House on this. Eighteen months is scarcely longer than it would take the Government to consult on a framework and bring forward the legislation to enact it. This could be far speedier should the Government accept the offer from the Scottish and Welsh Governments to proceed rapidly on developing a clear process for them to be part of the codesign of state aid, establishing the consensus through a seat at the table from the outset of such deliberations.

Of course, I share the House’s clearly stated support, restated again today, for the common frameworks process. That is essential, and I do not wish to jeopardise that in any way, as we must move forward together. Yet I believe that the Government will try to say that state aid is already reserved—in fact, I believe that is what I have already heard—and that to include it in the common framework process might somehow jeopardise that position of constitutional principle.

I would be very happy to accept a clear assurance that the Government will make every effort to ensure that the consent of the devolved Governments to a subsidy regime will be secured and will make a statement to Parliament when introducing the necessary legislation if they should override that process. To summarise, I believe that this House will want to hear that the Government will seek to agree with the devolved Governments any new subsidy framework and will explain to Parliament whether they have succeeded or not and, if not, why not. I believe that that is the minimum we can expect. I beg to move.

[Baroness Bowles of Berkhamsted (LD) [V]]

My Lords, I will speak to my Amendment 50F and Motion G2, which I may wish to move. I also support Amendment 50E and Motion G1. Amendment 50F looks to the stage at which there may be changes to state aid provisions, whether that be changes in definitions, remedies, or the scope of exemptions, or introducing conditions or time limits on approval. I agree with the Minister that at the moment they are gone, but might not alternatives be introduced, or some aspects reintroduced? I think that would also constitute a change.

The EU state aid provisions were indeed the subject of a statutory instrument recently, and they end at the end of the transition period. But, as the Minister has informed us previously, the UK will follow WTO rules and consult and report on whether any wider scope is to be introduced. If the outcome is a recommendation for going wider—some kind of policy change—it begs the question of how it will be introduced.

My proposal is not made instead of consultations and approvals with the devolved Administrations, which we support; it is in recognition that the full range of public authorities and businesses are affected wherever they may be. Therefore, the detail of how any post-consultation policy change is implemented is of significant interest.

The withdrawal Act was used to make the changes that happen at the end of the transition period. But it would seem inappropriate for that to be used for any new policy. A new policy other than moving to the WTO default should surely have the scrutiny of primary legislation.

I know the Minister may say that how policy is to be implemented can be a point in consultation, but my submission is more constitutional than convenience. Parliament should be able to scrutinise and amend, and to spot those weaknesses and problems that this House in particular has the experience to iron out, especially at the first time around of making independent, post-Brexit state aid rules.

Therefore, my Amendment 50F seeks to put on the face of the Bill that changes to the test for harmful subsidy remedies, the scope for exemptions or the conditions or time limits on approvals may not be done by regulation. I do not seek to prevent policy change being made by the Secretary of State; I am just saying that, at least first time around, it should be made by primary legislation. It may be that the Minister can put my mind at rest, and I await his response with interest.

[Lord Thomas of Cwmgiedd (CB) [V]]

My Lords, I will speak briefly in support of the eloquent and persuasive speech of my noble friend Lady Finlay in moving the amendment in Motion G1. First, I thank the Minister for his letter of Friday, which makes clear the Government’s wish for a constructive and collaborative relationship with the devolved Governments on state aid control and that the clause does not cut across the power of the devolved Governments to provide state aid or to determine how it is provided; it seeks only to restrict the distortive effects. With those thanks comes one short observation and two questions.

My observation is this: the proposal is very modest and not to the devolved institutions’ liking because, at the end of the period put forward in this amendment, it would nevertheless reserve a matter that the devolved Governments are right in saying is devolved. Of the many strengths of the proposal, it would provide a means for agreeing the regime and ensuring that it does not go forward without any risk of unilateral attack by a devolved institution. Surely the prize of agreement and strengthening the union is worth having.

I now pose my two questions to the Minister. First, the devolution statutes are now all framed based on reserved powers. That means that, if the UK Government have not reserved something, it is devolved. The power to control state aid is not reserved. If it were, these amendments would be unnecessary. This amendment therefore plainly changes the devolved settlements by removing a power that the devolved Governments have and transferring it to the UK Government. In those circumstances, I ask why the UK Government would not work together with them, consult them before the Bill was produced and try to find a common solution to that which I have always accepted as an absolute necessity: a unified state aid control regime. I fear it is an example of Westminster saying that it knows best, rather than working with the devolved Administrations.

Secondly, if the desire was to work together but, at the same time, provide a means of subsidy control, why, when changing the scheme of devolution, was a commitment not made in the Bill to work together with the devolved Administrations to develop the new regime? These questions seek to show that much could have been done to proceed in a way that strengthens the union, for that is the point of these amendments: to ensure that the UK Government work together with the devolved Administrations.

It is therefore necessary to ask the Minister a general question: how serious are the UK Government in their claims that the devolved legislatures and Governments will be fully involved in developing the subsidy regime? There are many important questions, particularly the role of the CMA as an independent regulator and not an adviser to the UK Government. I am grateful to the Minister for his letter and the constructive conversations we have had, but I join the noble Baronesses in asking for these further assurances and hope we receive them.

--- Later in debate ---

Tabled by

[Baroness Bowles of Berkhamsted]

At end insert “but do propose Amendment 50F in lieu—

50F: After Clause 50, insert the following new Clause—


“State aid


The Secretary of State may not, by exercise of powers under this or any other enactment, make any changes to the test for a harmful subsidy, remedies, the scope of exemptions and conditions or time limits on approvals.””

[Baroness Bowles of Berkhamsted (LD)]

My Lords, I have put down my marker on this point. It is not going away, and nor am I. I thank the noble Lords who spoke in favour of the principle which I laid out but, for now, this Motion is not moved.

Motion G2 (as an amendment to Motion G) not moved.