United Kingdom Internal Market Bill

Lord Alderdice Excerpts

2nd reading & 2nd reading (Hansard): House of Lords
Monday 19th October 2020 Lords Chamber

[Lord Alderdice (LD) [V]]

My Lords, my perspectives are shaped by my Northern Ireland roots and the implications that I draw from Part 5 of this dangerous Bill.

The inevitable consequence of Brexit was a series of difficulties with the Belfast Good Friday agreement, which had brought to an end not only 30 years of terrorism but a disturbed historical relationship with Ireland that went back many centuries. Those of us who spent many years of our lives negotiating and implementing that agreement had assumed that if we could find a new future for the people of our islands, we could find a way of maintaining our relationships with the rest of the European Union. However, when it became apparent that Brexit was the will of a majority of people in England and Wales, the challenge was to negotiate arrangements that would maintain the Good Friday agreement while taking the UK out of the European Union and at the same time hold together the constitutional union of England, Scotland, Wales and Northern Ireland.

Since Northern Ireland’s relationship with the rest of the UK and Ireland was already a singular one, it was clear that there would be significant challenges, especially if the British Government chose to leave the customs union and the single market. This was widely discussed in Northern Ireland during the referendum campaign and was probably the chief reason why the Ulster Unionist Party became pro-remain.

When Mr Johnson became Prime Minister, he and his party, including the members of the European Research Group, abandoned their Democratic Unionist allies and, last October, signed up for the revised protocol for Northern Ireland that Mr Johnson had negotiated. The DUP was betrayed, but Mr Johnson went on to fight the election on what he called

“a good arrangement, reconciling the special circumstances in Northern Ireland with the minimum possible bureaucratic consequences at a few points of arrival in Northern Ireland.”

The Conservative Party won the December 2019 general election, its manifesto based on the “great new deal” that the Prime Minister said he had done. Now, in presenting this Bill for the approval of your Lordships’ House, he has abandoned the commitment to the British people on which he was elected and seeks to break not only his manifesto commitment but international law. We should not be surprised; the Prime Minister has been entirely consistent—he has never felt the need to be bound by any commitments that he makes to people, nor by any rules or law. He was even prepared to mislead Her Majesty the Queen into approving a prorogation of Parliament, advice ruled to be unlawful.

Now he wants the rest of us in Parliament to collude with him in a flagrant breach of international law. That creates a constitutional crisis. While this House should generally restrict itself to giving advice to the Government of the day, I believe it has a responsibility of constitutional guardianship that is now being called into play by the Government’s premeditated breach of international law. Even the tabling of the Bill is a breach.

It is possible in the short term to toss facts, truth and the law to the side, but as this Government are beginning to discover, truth, facts, the law and broken relationships have a way of coming back to bite. Bluster, hyperbole and waving one’s arms around do not impress the Covid-19 virus; nor, increasingly, do they convince ordinary people in this country.

When one manifestly does the wrong thing—not making a mistake, but doing what is morally wrong and unjustifiable—history will find you out. Members of your Lordships’ House who support this Government’s disregard for the law should reflect on how past leaders have been hauled before the bar of history and their reputations irreparably shredded. Today’s remarkable debate in your Lordships’ House may even be the beginning of the end of this Government, for this is not a mistake or a misjudgment but a consistent pattern of behaviour that must be stopped before it destroys our United Kingdom.

United Kingdom Internal Market Bill

Lord Alderdice Excerpts

Committee stage & Committee: 1st sitting (Hansard) & Committee: 1st sitting (Hansard): House of Lords
Monday 26th October 2020 Lords Chamber

Lastly, on the question asked by the noble Lord, Lord Purvis, about the Scottish deposit return scheme, if that legislation comes into force after 30 January 2021, it will indeed be covered by the market access principles. However, we are confident that the deposit return scheme can be brought into effect in full compliance with the market access principles that we have set out in this legislation.

[The Deputy Chairman of Committees (Lord Alderdice) (LD)]

My Lords, I have received a request to speak after the Minister from the noble Lord, Lord Purvis of Tweed.

--- Later in debate ---

Amendment 2 not moved.

[The Deputy Chairman of Committees (Lord Alderdice) (LD)]

We now come to the group beginning with Amendment 3. I remind noble Lords that anyone wishing to speak after the Minister should email the clerk during the debate. Anyone wishing to press this amendment or anything else in this group to a Division should make that clear in the debate.

Amendment 3

Moved by

--- Later in debate ---

[Baroness Randerson (LD) [V]]

My Lords, I regret that I was unable to take part at Second Reading, but that does not mean that I am not deeply concerned—[Inaudible.]

[The Deputy Chairman of Committees (Lord Alderdice) (LD)]

We seem to have a technical problem.

[Baroness Randerson (LD) [V]]

[Inaudible]—needed at all, certainly at this stage. The earlier parts of the Bill, which deal with the establishment of new rules to maintain the internal market now that we have left the EU, have received much less publicity than Part 5. However, these parts are just as constitutionally significant because, under the cover of Brexit, the Government are attempting to slip through the unravelling of devolution. They have claimed that this Bill will increase the powers of the devolved Administrations, which is akin to President Trump claiming that the virus is waning in the USA: the facts demonstrate its falsity, as the clauses in this Bill demonstrate multiple ways in which it undermines current devolved powers.

The UK’s internal market appears to function perfectly well at the moment. The barriers cited by the Government as the reason for this Bill are hypothetical and unlikely to materialise because they are clearly against the interests of the devolved Administrations. There is no clamour to diverge from existing standards set by the EU because they are both high and universally recognised. Therefore, taking the Bill at face value, it seeks to solve a problem that does not exist, but that judgment is rather too kind because the details betray the Government’s real purpose.

Until now, devolution in the UK has functioned under the umbrella of EU legislation. Most of the fundamental devolved powers have operated in that way, and EU regulation has been accepted with noticeably little argument because it operates on such a large scale that there is little perception of party-political bias. The new arrangements set out in this Bill will be very different. Obviously, England will dominate, come what may, but the Government are not content with relying on size alone. This Bill steals all the remaining cards from the devolved nations.

We have a ragged devolution settlement—lopsided, confused, and already under huge strain. Leaving the EU has destabilised it further. Because there is no proper devolution in England, UK Government Ministers are effectively hybrid Ministers. One minute they are acting as Ministers for England and the next they are UK Ministers. Indeed, in some cases, such as agriculture, the Secretary of State is largely just the Minister for England, so it is essential that there is a strong dispute resolution mechanism: there will be problems if that fell back on the Secretary of State alone. This Bill itself will become a protected enactment, which devolved Administrations cannot repeal or modify. However, the UK Parliament will, in practice, be able to override the market access principles when legislating for England. Hence it will have an inherently asymmetrical effect.

Looking at how the market access principles will be enforced, we see a much tighter definition than allowed under EU law. It narrows the territorial scope of devolved legislation, which will no longer be able to apply to all activity within that nation. The Senedd could still vote to ban a wide range of single-use plastic items, for example, but that ban could no longer be applied to products entering Wales from the rest of the UK, nor could it ban sales of those goods. Such a ban would therefore be pretty meaningless. Amendment 4 applies the Government’s own market access principles, but with a framework of respect for the decisions and views of the devolved nations. With all due respect to the noble Baroness, Lady Neville-Rolfe, the UK is not a supermarket. The nations of the UK have individual and proud heritages and identities.

The Government’s regulatory impact assessment recognises that the broad application of the market access principles will limit the ability of the devolved Administrations to introduce distinct approaches to environmental and social policy, which will of course undermine the fundamental purpose of devolution. In the interests of centralisation of power, the Government are attacking innovation. The freedom provided by devolution has encouraged new approaches, such as plastic bag pricing, in Wales and minimum alcohol unit pricing in Scotland and Wales. There is an insidious pattern in many of the controls in the Bill. It allows the status quo to stand in some instances, but removes the right of devolved Administrations to change regulations in the future. This looks like the path to a stagnating economy.

Amendment 4 seeks to strengthen the hand of the devolved Administrations so that their voice can be heard. It replaces the very weak duty to consult with a much stronger principle of consent. That would force the Government to return to a normal approach of partnership and respect. The Bill scythes its way through devolved powers, and the amendment attempts to tackle some of that. The Government have lately reminded me of a drunk in a bar, who swaggers around aggressively challenging the other customers over imagined insults and picking unnecessary fights. This really is an unnecessary fight with the devolved Administrations. Devolution was always incomplete and uneven, and UK identity has been stretched pretty thin recently. Throughout the Bill there is a thread seeking to reverse devolution and recentralise the state, and this Government simply must not be allowed to get away with it.

United Kingdom Internal Market Bill

Lord Alderdice Excerpts

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

Amendment 174 would place a duty on Ministers and others involved in making legislation to have regard to the need to establish and maintain a high level of protection in respect of regulatory aims. The UK Government are of course committed to maintaining high standards across the UK. However, the proposed clause as constituted would create difficulties of defining and therefore assessing what is meant by levels of protections and standards. The proposed clause also implies that there may be a compulsion on Ministers to lower standards. This would contradict the explicit commitments made in our Conservative manifesto to raise standards on workers’ rights, agriculture, animal welfare and the environment. The Government expect to use the pragmatic and productive collaboration with the devolved Administrations to continue to enable us to maintain high standards across the UK. In the light of that information, I hope that the noble Baroness will feel able to withdraw her 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 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?

--- Later in debate ---

Clause 13 agreed.

[The Deputy Chairman of Committees (Lord Alderdice) (LD)]

We now come to the group beginning with Amendment 66. I remind noble Lords that anyone wishing to speak after the Minister should email the clerk during the debate. Anyone wishing to press this amendment or anything else in the group to a Division should make that clear in the debate.

Clause 14: Interpretation of references to “sale” in Part 1

Amendment 66

Moved by

--- Later in debate ---

[The Deputy Chairman of Committees (Lord Alderdice) (LD)]

The noble Lord, Lord Liddle, has withdrawn, so I call the noble Lord, Lord Purvis of Tweed.

[Lord Purvis of Tweed (LD)]

My Lords, I am grateful to the noble Baroness, Lady McIntosh of Pickering, for putting down this question. The Law Society of Scotland makes a valid point about why there would be a new, and potentially competing, definition of sales between this legislation and the Sale of Goods Act. I will just ask two supplementary questions. The first is a genuine probing question about the Government’s view. Given that many sales are conducted online now—and probably the vast majority in the coming years—what is the Government’s view, with regard to this legislation, on the location where an online sale takes place and how that is covered by the definition?

The example given by my noble friend Lord Fox was about phasing in the banning of coal in England, but not yet in Wales or Scotland. It was a genuine question, and it was a shame that the noble Lord, Lord Callanan, did not have a chance to answer. On a reading of this legislation, someone in England who is banned from purchasing coal for use in their household in England would, under the definition of “sale” in Clause 13, be able to buy household coal from a Welsh or Scottish coal merchant, at a local or online sale, who would then be able to deliver. It would be good if that could be clarified, even if the Minister needs to write to us about it. It is a genuine issue to highlight.

My second question links to this amendment more directly. The noble Baroness, Lady McIntosh of Pickering, and other noble Lords who have Scottish legal qualifications will be familiar with this. I see the noble and learned Lord, Lord Falconer, on the Opposition Front Bench. Sales in Scotland often have a cut-and-paste element, stating that the law of contract of England applies. Of course, it does not in Scotland. That tends to be viewed as not having effect, and that the cut and paste is not accurate, as contract law is different north of the border. When it comes to the definition of sales through a contract, if the sale of an imported good is conducted within Scotland, is it considered local or not? If that is the case, does the contract law of Scotland apply under this legislation or is the default the law of contract for England? If the latter, that is problematic for transactions carried out north of the border.

[Baroness Bloomfield of Hinton Waldrist (Con)]

My Lords, I thank noble Lords for their contributions to this short debate. There were a lot of questions in there, some of which I will just have to write to noble Lords about because my briefing does not cover the whole gamut of what was asked and I would rather give a full answer.

Amendments 66 and 67 are relatively technical amendments relating to the definitions of “sale” in the Bill. I am willing to provide further details on this issue and discuss any concerns that my noble friend has. Amendment 66 would narrow the definition of “sale” in the Bill. It would narrow the types of supply-related activities that a trader could carry out and benefit from the market access principles. It would therefore reduce the effectiveness of the market access principles in reducing barriers to trade across the UK.

The United Kingdom Internal Market Bill is intended to provide a structural underpinning and additional protections to the status quo of intra-UK trade, ensuring certainty for businesses and investors in the form of a safety net of regulatory coherence. We should not cut holes in the safety net. The definition of “sale” that we have will ensure that businesses can continue to trade in a frictionless way, no matter how they are supplying their goods. It also seeks to align broadly with the scope of the “placing on the market” concept that is central to our existing goods regulation.

I say to my noble friend Lady McIntosh that the Sale of Goods Act 1979 was a very UK-specific way of defining a sale. The EU style of definition that has been brought into our legislation is much broader, and there is a need to ensure that the same principles align across the whole legislative piece. “Placing on the market” is therefore included in this as a concept but not in the Sale of Goods Act. In short, the Government cannot support this amendment, and I ask my noble friend to withdraw it.

Amendment 67 would exclude the supply of goods free of charge from the market access principles. It would include the rental of goods, as the noble Lord, Lord Purvis, pointed out. That would lead to the strange outcome that a good could be lawfully sold under the mutual recognition principle in a part of the UK for only a penny but could not be supplied there under that principle free of charge. This would affect a range of items such as commercial samples, marketing merchandise or introductory offers, and would reduce the effectiveness of the market access principles in reducing barriers to trade across the UK.

I was asked a question by the noble Lord, Lord Purvis, when we were talking about coal. I think the distinction my noble friend was trying to make was between a ban on the sale of coal and a ban on its use. As in his example, you could legally buy it in Wales, but you could not then legally use it in England just because you bought it over the border due to the difference in rules. For these reasons, I ask my noble friend not to move Amendment 67.

[The Deputy Chairman of Committees (Lord Alderdice) (LD)]

I have received a request to speak after the Minister from the noble Lord, Lord Purvis of Tweed.

[Lord Purvis of Tweed (LD)]

I am grateful for how the Minister responded. I think that the last point she made was really important. The Government have been talking about restrictions on the ability of the devolved Administrations to sell, yet on the point that my noble friend Lord Fox made—that the Government for England have banned not the use but the sale of household coal—the Minister said that it would be possible to continue to provide household coal in England through a Welsh or online retailer. It is quite extraordinary that the undermining of public policy along those lines could be operated, but the Government seem to be perfectly content about that. However, the transparency on that, at least, has been helpful.

--- Later in debate ---

[Baroness Scott of Bybrook (Con)]

My Lords, these amendments seek to exclude teaching services and the teaching profession from the scope of the mutual recognition principle in Parts 2 and 3 of the Bill. Starting with Amendment 79, the current list of entries in Schedule 2 is largely drawn from the exclusions under the existing framework in the retained EU law. Schedule 2 aims to list those services for which it would be inappropriate to apply either or both of the provisions in Part 2. For example, legal services are excluded in recognition of the long-standing differences between the legal systems in each part of the UK.

I should allay the noble Baroness’s concerns if I explain that public services, including the public education services, are already excluded from the scope of Part 2 of the Bill under Schedule 2. That exclusion will ensure that public education services are not subject to the principles of mutual recognition or non-discrimination in Part 2. For this reason, it is my view that Amendment 79 is unnecessary.

Clause 17 requires the Secretary of State to keep Schedule 2 under review and contains the power to amend it by regulation to add services or requirements to those matters excluded from the principles of mutual recognition and non-discrimination. I can assure noble Lords that the Government will continue to keep the list of exclusions under review to ensure that it includes the appropriate services and requirements, to which either or both market access principles should not apply.

I turn to Amendment 106, which deals with recognition of professional qualifications. I assure noble Lords that teaching standards across the UK are very important to this Government. The provisions in Clause 24 allow relevant authorities to replace the automatic recognition principle with an alternative recognition process if they think that automatic recognition of different UK teaching qualifications would not be appropriate.

We are therefore answering the General Teaching Council for Scotland and the issues brought up about Wales and Northern Ireland; they will still be able to set standards in those devolved authorities, as now, and control who can teach in them. If the General Teaching Council for Scotland or a council in any other devolved authority decides that recognising teaching qualifications from other parts of the UK automatically is not appropriate, it can put in place an alternative recognition process to check qualifications and experience, as set out in the Bill. That should allay a number of the fears brought up in this short debate.

The system will enable relevant authorities to assess an individual’s qualifications before allowing professionals to practise. Relevant authorities will continue to have the ability to refuse access to those who are unable to demonstrate that they meet the standard requirements, such as the Welsh language. This makes an exception for the teaching profession unnecessary. On those grounds, I cannot accept the amendment and hope that the noble Baroness will withdraw it.

[The Deputy Chairman of Committees (Lord Alderdice) (LD)]

I have received a request to speak after the Minister. I call the noble Lord, Lord Purvis of Tweed.

[Lord Purvis of Tweed (LD)]

My Lords, I wish to obtain absolute clarity from the Minister on the exemption in Schedule 2 with regard to:

“Services provided by a person exercising functions of a public nature”—


that is, a public body. That may apply to Wales but the General Teaching Council for Scotland is a charity as well as a regulatory body. The Minister outlined what it would be able to do to change, if challenged, those seeking to be registered in Scotland under the English criteria but who do not meet the Scottish criteria. The fear is that because the council is a charity—it is the oldest regulatory body for teachers in the world—it would be forced to accept teachers of a different standard than the English standard, which I automatically assumed would be a lesser standard. Will the Minister clarify that charities, such as regulatory bodies like the GTCS, are included in Schedule 2? She said it applied just to public bodies.

--- Later in debate ---

Amendment 81 not moved.

[The Deputy Chairman of Committees (Lord Alderdice) (LD)]

We now come to the group beginning with Amendment 82. I remind noble Lords that anyone wishing to speak after the Minister should email the clerk during the debate. Anyone wishing to press this or anything else in this group to a Division should make that clear in the debate.

Amendment 82

Moved by

--- Later in debate ---

Clause 21 agreed.

[The Deputy Chairman of Committees (Lord Alderdice) (LD)]

We now come to the group beginning with Amendment 102A. I remind noble Lords that anyone wishing to speak after the Minister should email the clerk during the debate, and anyone wishing to press this or anything else in the group to a Division should make that clear in debate.

Amendment 102A

Moved by

United Kingdom Internal Market Bill

Lord Alderdice Excerpts

Committee stage & Committee: 3rd sitting (Hansard) & Committee: 3rd sitting (Hansard): House of Lords
Monday 2nd November 2020 Lords Chamber

[The Deputy Chairman of Committees (Lord Alderdice) (LD)]

I have received requests to speak after the Minister from the noble and learned Lord, Lord Falconer of Thoroton, and the noble Lord, Lord Fox.

[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?

--- Later in debate ---

[The Deputy Chairman of Committees (Lord Alderdice) (LD)]

I have also received a request from the noble Lord, Lord Purvis of Tweed, but I first call the noble Lord, Lord Fox.

[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.

--- Later in debate ---

Amendment 109 not moved.

[The Deputy Chairman of Committees (Lord Alderdice) (LD)]

We now come to the group beginning with Amendment 110. I remind noble Lords that anyone wishing to speak after the Minister should email the clerk during the debate. Anyone wishing to press this or anything else in this group to a Division should make that clear in the debate.

Clause 28: Functions of the CMA under Part 4: general provisions

Amendment 110

Moved by

--- Later in debate ---

[The Deputy Chairman of Committees (Lord Alderdice) (LD)]

The noble Lord, Lord Liddle, has withdrawn, so I call the noble Lord, Lord Naseby.

[Lord Naseby (Con)]

My Lords, when I first read through the Bill, I had some reservations about the CMA, not least because of the number of its investigations that have not exactly gone smoothly, as my noble friend Lady Noakes referred to. As all noble Lords are aware, it arose from its antecedent, the old Monopolies and Mergers Commission. I voiced some of those reservations at Second Reading. I then had another look at the OIM and could not for the life of me understand why it did not have its own status. How could it be right for it to be almost subservient to the CMA? I could immediately see a clash of interests. As has just been said, its role is to monitor, advise and report. That may well clash with the basic element of the CMA. While this amendment may not be exactly right, there is a strong case for it.

I will give an example. I have recently been approached by some outside people because they know that I take an interest in the credit lending market, principally credit unions. It is a difficult market because there is the FCA, which does a good job on the whole, but there is also the ombudsman. People who are in difficulty with credit are prone to appeal to the ombudsman for better treatment, as it goes beyond the normal provisions under which the FCA works. That created a real problem for the genuine lenders—not the fly-by-night operators—because of a clash of interests.

I would not expect my noble friend on the Front Bench to respond in any detail today, but the OIM has to have its own status. It should not be in a position where it is embarrassed by the CMA going against what the OIM thinks is appropriate in any situation.

--- Later in debate ---

[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 Fox (LD)]

My Lords, I am grateful for the Minister’s response. In her speech, the noble Baroness, Lady Bowles, asked some very specific questions, particularly in the stand part bit of her speech. I listened hard but I could not hear any answers to them, so perhaps the Minister could review her speech and write a letter, promptly, making sure that I and the noble Baroness, Lady Hayter, get a copy.

--- Later in debate ---

Clause 29 agreed.

[The Deputy Chairman of Committees (Lord Alderdice) (LD)]

We now come to the group beginning with Amendment 114. I remind noble Lords that anyone wishing to speak after the Minister should email the clerk during the debate. Anyone wishing to press this or anything else in this group to a Division should make that clear in debate.

Clause 30: Office for the Internal Market panel and task groups

Amendment 114

Moved by

United Kingdom Internal Market Bill

Lord Alderdice Excerpts

Committee stage & Committee: 5th sitting (Hansard) & Committee: 5th sitting (Hansard): House of Lords
Monday 9th November 2020 Lords Chamber

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

I speak to oppose the inclusion of Clause 50 in the Bill. It is important to distinguish between what I spoke about on the last occasion the Bill was before the House: under Clause 48, what regime is to govern EU structural funds in future. This clause deals with state aid.

Both clauses have one thing in common: they seek to alter the devolution schemes as they stand, for economic development powers are devolved. For example, in respect of Scotland, paragraph 4(1) of Part 3 of Schedule 5 to the Scotland Act makes that clear. The position at present, therefore, is that it is for Scottish Ministers, Welsh Ministers and Ministers in Northern Ireland to determine what financial assistance is provided, in the same way as they determine how the structural funds are dealt with.

State aid is of obvious, considerable importance. It can help to address market failures and provide incentives for research and development, of which the noble Baroness, whom it is a privilege to follow, has spoken. They also deal with areas where the Government want to deal with strategic objectives, such as promoting the use of green technologies or promoting more sustainable agriculture.

Of course, state aid can be harmful if it is not directed in the same way; that is why there must be some form of regime in respect of state aid. The present position on state aid is, as we remain part of the European Union regime, that the devolved Governments make the decisions within the EU regime. In consequence—and it has been during the whole period of devolution—state aid is not a reserved matter. It is devolved.

The British Government’s stated position had been to retain the EU regime and put in place an independent body to police it in place of the Commission, as has happened in respect of other parts of the regime that still governs us but will not do so for much longer. That obviously would not have required any change to the devolution scheme. However, the present Government have decided to change this. They intend to use their Henry VIII powers to do so by statutory instrument. However, they have not consulted on what they want to put in its place, and seek agreement and the views of industry and others, in particular the devolved Governments. As in the other parts of this Bill, the UK Government want to do so without reference to working with the devolved Governments within the devolution schemes. However, in this case, they have hit the snag to which I have referred: they lack the power to do so. State aid and schemes are not reserved.

Clause 50, therefore, seeks to make state aid a reserved matter by what I regret to call a “device” of extending the competition reservation so that it can be used, in effect, to direct policy on state aid. This is not the way to proceed. A regime for state aid subsidies is needed unless, within the current negotiations, we agree to some arrangement that mirrors those of the EU. As is clear from the recently published IfG paper, Beyond State Aid, there are many reasons why a state aid regime is essential, but we need a properly thought-through regime before we legislate, including thinking through the role of the regulator. Such proposals should have been set out before we considered such a clause as this. They should have been consulted on and agreed with all the relevant interests—businesses, universities and others.

Furthermore, the regime to be put in place would have to command the confidence of the devolved Governments, who are responsible, under the devolution schemes, for economic development. Bodies within England also have economic development responsibility. After all that consultation, it should have been determined how this would best be implemented. One way of proceeding would be a common framework with an independent regulator such as the CMA, but a decision would have to be made on the kind of regulator wanted. Would it be the kind of light-touch regulator that some have suggested, with an advisory role, or one with policing powers? If it was a light-touch regulator, to whom would it report—to the UK Government only or to the devolved Governments as well?

Tackling all of this without a policy and through the back door is wrong, as I see it. That course of action also has long-term implications. Proceeding in this way will set policy on the legal basis that it is designed to avoid anti-competitive practices. It will not be based on a forward and positive way of setting out a policy based on looking for economic development.

Therefore, in opposing the inclusion of this clause in the Bill, in short, it is wrong to change the devolution arrangements in this way and without any consultation about the future regime, let alone agreement on it having been reached. I have no doubt that we need a competition regime and that it will need some kind of advisory or other independent policing body. However, we should do this in the proper way and not rush to do it by putting a clause such as this in the Bill. It should not stand part of the Bill.

[The Deputy Chairman of Committees (Lord Alderdice) (LD)]

The noble Lord, Lord Purvis of Tweed, has withdrawn, so I call the noble Baroness, Lady Finlay of Llandaff.

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

My Lords, like other noble Lords, I pay my respects to the memory of Lord Sacks. His loss is immeasurable, and I am sure he would have contributed enormously this evening.

I have put my name to the proposal of my noble and learned friend Lord Thomas of Cwmgiedd that Clause 50 should not stand part of the Bill for a number of reasons. First, the clause is in direct contradiction to Ministers’ assertions that the Bill does nothing to remove powers from the Senedd. If that is the case, why is a new reservation necessary?

Secondly, and related to this, is the conundrum that the Government insist that state aid is already reserved. This position has long been strongly contested by the devolved Governments, who have always operated the state aid system, as the UK Government do in England. If there is doubt about the current legal disposition, would it not be better to ask the courts to interpret the meaning of the current reservation and whether it does or does not include state aid?

Thirdly, although I am no expert, I understand that the Government have been resisting pressure from the European Union during the still-ongoing negotiations to keep in place a state aid framework broadly similar to the one we have inherited through our membership of the EU. Indeed, the statutory instrument to revoke all state aid law is before this House. Why are a Government that seem so reluctant to commit to a rules-based system also so eager to take to themselves absolute power on this vital area of economic development policy?

The devolved Governments in Cardiff and Edinburgh are both in favour of retaining this framework in retained EU law. It is a clear system that provides a bulwark against the arbitrary use of public subsidies to support businesses in favour with the Government or to attract investment, something that is a real risk. Having the protection that this current situation affords for the Governments of the smaller nations of these islands is important because, at the end of the day, the UK Government in their “Government of England” mode can always trump any financial incentives that the devolved Administrations could offer in some kind of dog-eat-dog contest. This clause simply feeds the suspicion that, rather than maintaining a level playing field across the UK, this element of the Bill is about giving the Government the maximum freedom to do what they like with the system and channel investment to marginal Conservative seats.

Fourthly, it is probable that, despite their effort, the Government do indeed sign up to an agreement with the EU that requires the enhancement of a new system of state aid. I hope that the term “subsidy control” evaporates in the way the “implementation period” seems to. If that is the case, then the devolved institutions will have to conform to those new rules because they flow from an international treaty obligation, so this new reservation will be unnecessary.

Finally, I turn to what this clause, like so much else about this Bill, says about the Government’s approach to devolution. Quite simply, it would seem that they do not like it, would prefer it not to exist and want simply to pay lip-service to it. This is a Government that do not seem to tolerate any source of law and public policy that they cannot control and, having removed the rival source of authority of the EU, seem to be gunning for other bodies that have the power to make primary legislation. This is not just distasteful; it is profoundly dangerous for those of us who care deeply about the union. I appeal to the Government to rethink their approach urgently because, otherwise, they will see the country gradually disintegrate in front of their eyes.

[Viscount Trenchard (Con) [V]]

My Lords, when I read the three amendments of my noble friend Lady Rawlings, I was not sure exactly what had driven her to propose them. Of course, I am aware that my noble friend is a distinguished former chairman of King's College London and, therefore, well aware of the importance of research and development grants. I recognise the importance of regulating the provision by public authorities of subsidies that may be distorting or harmful.

I had thought that Clause 49 makes it clear that financial assistance for economic development may be provided in a number of forms, including grants. However, I sympathise with my noble friend’s view, which she clearly explained in her impressive speech, that R&D grants should be incorporated to safeguard against unfair state aid masquerading as legitimate subsidies. I would like to hear the opinion of my noble friend the Minister on this question.

Regarding the proposal of the noble and learned Lord, Lord Thomas of Cwmgiedd, that Clause 50 should not stand part of the Bill, although I have the greatest respect for his opinions and was impressed by his characteristically clear explanation of his reasons, I believe it is still necessary for this clause to protect against the undesirable possibility that the devolved authorities might otherwise adopt significantly different regulations on this. I look forward to hearing what my noble friend the Minister has to say about this amendment and the need for a single nationwide state aid regime.

[The Deputy Chairman of Committee (Lord Alderdice) (LD)]

The noble Baronesses, Lady Bowles of Berkhamsted and Lady Neville-Rolfe, have withdrawn, so I call the noble Lord, Lord Fox.

--- Later in debate ---

[The Deputy Chairman of Committees (Lord Alderdice) (LD)]

The noble Baroness, Lady Bennett of Manor Castle, has also withdrawn, so I call Lord Stevenson of Balmacara.

[Lord Stevenson of Balmacara (Lab) [V]]

My Lords, I thank the noble Baroness, Lady Rawlings, for introducing her amendment. She made her case extremely well: R&D is important, and the Government could easily, with advantage, accept all three of the amendments as they stand. However, her introductory speech raised all the issues that have subsequently been picked up by other speakers, because we are facing what appears to be another black hole in this Bill. The noble and learned Lord, Lord Thomas, the noble Baroness, Lady Finlay, the noble Lord, Lord Fox and I have signed up to an amendment more in frustration than any genuine feeling that the existing clause is wrong, although the noble and learned Lord, Lord Thomas, does make a very good case for how the procedures adopted there are not the ones that should be seen in the final version of this Bill.

The question really seems to be about what our state aid regime is going to be. Is it going to be central or devolved in terms of both its process and delivery? Is there going to be a central body that will be charged with making sure that all those participants who benefit from state aid do so on a fair and open basis, and are they going to be able to review and make recommendations for how it is taken forward?

It seems to me this is another area where common frameworks have an opportunity to provide the solution to a problem the Government are facing. I hope that whichever way we go on this, time will be taken to make sure we get it right, do it properly and come forward with something that will justify the effort that has been placed in it, because it will be worth it.

[The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Callanan) (Con)]

My Lords, I thank noble Lords who have taken part in this debate. I recognise that the hour is late, so I will attempt to be as brief as possible. I begin by setting out why Clause 50 should stand part of the Bill, before moving on to discuss Amendments 169A, 169B and 169C.

Clause 50 reserves for the UK Parliament the exclusive ability to legislate for a UK subsidy control regime in future. The Government have always been clear in their view that the regulation of state aid, which is the EU approach to subsidy control, is a reserved matter. Let me say in reply to the noble Lord, Lord Fox, that the devolved Administrations have never previously been able to set their own subsidy control reviews, as this was covered by the EU state aid framework. Now we have left the EU, we have an opportunity to design our own subsidy control regime that works for the UK economy.

It is important, in our view, that there continues to be a uniform position across the United Kingdom. Reserving will ensure we take a coherent and consistent approach to the way public authorities within the UK subsidise businesses, supporting the smooth functioning of the UK’s internal market. A unified approach will reduce uncertainty for UK businesses and prevent additional costs in supply chains and to consumers.

Also in reply to the noble Lord, Lord Fox, I say this reservation does not impact the devolved Administrations’ existing spending powers. The devolved Administrations will continue to make decisions about devolved spending on subsidies—how much, to whom and for what—within any future UK-wide subsidy control regime.

The Government announced in September that the UK will follow World Trade Organization rules for subsidy control from 1 January. These are internationally recognised common standards for subsidies. Before the end of the year, the Government will publish guidance for UK public authorities to explain these rules and any related commitments the Government have agreed in fair trade agreements. We will also publish a consultation in the coming months on whether we should go further than those existing commitments, including whether or not legislation is necessary, because we want a modern system for supporting British business in a way that fulfils our interests. We do not want a return to the 1970s approach of Government trying to run the economy or bailing out unsustainable companies. We will take the necessary time to listen closely to all those with an interest in this subject.

UK government officials have been meeting, and will continue to meet, their devolved Administration counterparts on a regular basis. We are keen to ensure that the devolved Administrations are involved in the upcoming consultation process. I hope that noble Lords will agree that this approach is the best, and indeed the only, way to ensure that the whole of the UK can benefit from having a consistent and coherent system of subsidy control, which is necessary to support the smooth running of the UK internal market. I therefore commend that Clause 50 stands part of the Bill. I hope that I have answered at least some of the questions from the noble Lord, Lord Fox. If not, I will write to him to confirm the other points.

I turn to Amendments 169A, 169B and 169C, in the name of my noble friend Lady Rawlings. They seek to amend the definition of a subsidy for the purpose of their reservation. They would add to this definition that a subsidy will also include “research and development grants”. The interpretation provisions contained in Clause 50 set out what is classed as a subsidy for the purpose of this reservation. We define a subsidy as including assistance provided to a person, directly or indirectly, financially or otherwise. The definition includes examples of this assistance as income or price support, grants, loans and guarantees.

For the purpose of the reservation of subsidy control, the definition of a subsidy is deliberately broad to ensure that we have sufficient scope to design a future domestic regime that meets the needs of the United Kingdom. To ensure that we cover a broad range of financial interventions, the definition is not currently limited by reference to any specific policy purpose or sector. Subsidies may be given for a variety of purposes, and it would be anomalous to single out just one of them here. The current wording in the clause already encompasses assistance provided to a person directly or indirectly by way of grants and is therefore sufficient to cover research and development grants as my noble friend intends. Therefore, the Government do not think that the amendments are legally necessary. I hope that, in the light of that information, my noble friend will be able to withdraw her 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 Fox (LD)]

With every answer, there come more questions, I am afraid. The Minister sought to explain that the devolved authorities will still be able to spend the money—I think those were the words that he used—but I am interested to know to which money he is referring. How in future will they get their hands on the money? Will there be a competitive bidding process? Is it part of the formula? Is that the money that he is talking about? Perhaps he could outline what he means by “the money”, because it is not entirely clear to me. He is looking at me as though I am being slightly stupid and I shall be very happy to be educated by him in writing rather than verbally.