United Kingdom Internal Market Bill

Lord Thomas of Cwmgiedd Excerpts

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

[Baroness Randerson (LD) [V]]

My Lords, I will speak to the amendments in this group to which I have added my name: Amendments 117 and 118, and Amendments 120 to 124. The noble and learned Lord, Lord Thomas of Cwmgiedd, and the noble Baroness, Lady Finlay of Llandaff, have also signed these amendments, which have been put forward with the agreement of the Welsh Government.

Clauses 28 to 40 of this Bill establish a new Office for the Internal Market, within the CMA, as other noble Lords have already noted. The OIM will have reporting, monitoring and advisory functions and information-gathering powers; it will monitor the health of the internal market and provide advice on the economic impact of proposals and regulations, including their impact on trade, investment and competition. It will publish reports available to stakeholders and devolved Administrations. The problem is that all this is to be provided within the existing structure of the CMA, which is a body established and designed to work within the UK Government structure.

These amendments relate to the status, role and membership of the CMA, which was established in 2013 as a non-ministerial government department, accountable to Parliament via its sponsor department, which at the moment is BEIS. Although the CMA works at arm’s length from the Government, BEIS gives it a strategic steer that outlines the Government’s strategic priorities. The Secretary of State appoints, or removes, the chair and board of the CMA, and it produces an annual report for the Secretary of State. It is the CMA which represents the UK Government abroad on relevant issues.

The CMA was designed to deal with purely reserved matters, whereas the Office for the Internal Market is designed to have functions in relation to the devolved Administrations as well. The OIM is therefore a mismatched limb, grafted on to the CMA. For instance, Schedule 3 includes measures to establish an OIM panel and task groups. The Secretary of State must simply consult the devolved Administrations before these appointments. That is inadequate, as it provides no guarantees of agreement from the devolved Administrations before appointments are made and no guarantees of balanced representation.

These amendments seek to address these problems and to be fully respectful of devolution, including requiring the Secretary of State to get the consent of the devolved Administrations to appointments, although with the provision that they must respond within one month so they cannot unreasonably hold up the work of the OIM. Importantly, these amendments would also adjust the structure and relationship of the CMA so that it will no longer be a purely UK Government and parliamentary vehicle. The DAs would each be able to appoint and remove a CMA board member, subject to the usual five-year term and the CMA’s annual plan and annual report would be laid before the devolved legislatures as well as Parliament. Thus the parent organisation, the CMA, is structured to ensure that its offshoot, the Office for the Internal Market, works genuinely for all parts of the UK.

I spoke in an earlier debate about the hybrid role of UK Ministers, who are expected by this Bill to operate at one moment as English Ministers, acting in the specific interests of England, then to switch hats into their UK role and act as impartial arbiters between the interests of the four nations. This Bill requires a similar constitutional contortion from the CMA in relation to its baby, the Office for the Internal Market. There is a reason why the referees in Saturday’s rugby internationals did not come from either of the nations represented on the field—and we all know that. You cannot guarantee an even-handed approach unless you have the structures in place to ensure that, and it has to be built into and throughout the appointments of the organisation, into its remit and reporting processes.

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

As the noble Baroness, Lady Randerson, has very carefully explained the purpose of these amendments, I can be much briefer than I had intended.

The amendments are directed at the CMA and the Office for the Internal Market as set out in the Bill, but the principles behind these amendments would apply to any different structure that emerged, as the noble Baroness, Lady Bowles of Berkhamsted, envisaged. It seems to me that the critical point for this House to consider is that whatever structure is established must command the confidence of all the nations of the United Kingdom. Secondly, it is obvious that there will have to be a body that exercises independent powers and makes judgments that may go against one part of the United Kingdom or another part of it.

Thus, it is important to ensure, as these amendments seek to do, that the appointments both to the Competition and Markets Authority and to the office for the internal market take into account the change in the CMA’s role and cater for the new role of the OIM—assuming that these roles will be given to them when the Bill emerges from Parliament.

It seems to me that there is one useful analogy to make. Because the CMA has certain quasi-judicial and independent functions, it must be set up in such a way that those who are affected by its decisions know that those appointed to it have their confidence. They must also have a proper knowledge of the different constituent parts of the UK. When this House enacted the Constitutional Reform Act in 2005, a statutory provision was included that there had to be judges from Scotland and Northern Ireland; Wales was dealt with as part of England, and I will say nothing about that today. But recent experience of devolution legislation has shown how important it is for a body such as the Supreme Court—and for this body—to have representatives who know and understand the position in each of the constituent nations.

I need not elaborate on the detail of how this provision will work. I stress that the body must comprise those who understand the different nations of the UK and are able to provide it with confidence in its decision-making. It must address the point to which the noble Baroness, Lady Randerson, referred—namely that, more and more, Ministers are seen not simply as UK Ministers but as Ministers of England.

[Lord Palmer of Childs Hill (LD) [V]]

My Lords, I speak in support of Amendments 116, 127 and 130, to which I have added my name. I agree with the arguments put forward by my noble friend Lady Bowles, who put it much better than I can.

The aim of the amendments is to seek to bring some clarity to the office for the internal market. Gosh, it needs some clarity. I am unsure that we even require this quango. If it stays in the Bill, then please let us flesh out how it could work. Does the Minister accept that, if the office for the internal market remains, there is still much ambiguity in this Bill? It is not even constructive ambiguity; it is ambiguity pure and simple. Can he explain it?

Amendment 116 seeks to add a clause which should be the bed-rock of the Bill. There has to be an understanding agreed between the Secretary of State, Welsh and Scottish Ministers and the Northern Ireland department in order to make the internal market work, be transparent and involve all the devolved authorities.

Amendments 127 and 130 underline the need for transparency and representation. I hope the Minister can accept that the amendments seek to clarify and flesh out what the Bill means in respect of the office of the internal market and to get rid of any ambiguity. Amendments 116, 127 and 130 seek to do that.

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[The Deputy Chairman of Committees (Baroness Garden of Frognal) (LD)]

My Lords, I apologise; I should have reminded 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 this group to a Division should make that clear in debate.

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

I am very grateful to the noble Lord, Lord Stevenson of Balmacara, for explaining the place of this in the Bill and for his proposal to try and make something of the provision. As it stands, it seems wholly separate from the other provisions of this Bill. It should not be there, and it is profoundly undemocratic. Its only connection with the rest of the Bill is that it seems part of an attack on the scheme of devolution. I therefore seek to argue that Clause 48 should not, in its current form, stand part of the Bill.

The Bill is concerned with the internal market; it is not concerned with the allocation of government powers to spend money between the devolved Governments and the United Kingdom or English Government. It authorises the UK Government, as it stands, to spend funds in devolved areas—education, roads—and, giving Clause 48 (1)(a) and (b) their ordinary meaning, almost any aspect of government spending, including hospitals.

Therefore, I have a question for the Minister: why is this in the Bill? How is it going to work? Let me put forward some ideas as to why it may be there. First, the Government might, as the noble Lord, Lord Stevenson of Balmacara, has suggested, have the noble aim of investing additional resources into the devolved nations and the other regions of England. If that were the case, they might be doing the work alongside the Governments of the devolved nations and doing it as the English Government in their capacity as the UK Government. If so, why do they need these powers? They have done city deals and dealt with expenditure of this kind without specific statutory versions. If that is the noble aim of this Bill, it seems unnecessary.

There may be a different aim, which again has been foreshadowed by the noble Lord, Lord Stevenson: that the UK Government see themselves as taking over the role of the EU Commission, steering the use of such funding. If the Commission did it, so the argument goes, why should not the UK Government? In other words, it is an example of this Government doing something the EU has done rather well, but which they will never give it credit for. If that is the Government’s aim, it is fair to point out that the European legislation provided for the European Commission to set overall very high-level objectives for funding, and then to negotiate with the devolved Governments of Wales and Scotland as to how these objectives should be reflected in the programmes the devolved Governments designed. The European Commission, at the end of the day, had the veto, but it negotiated with the elected authorities in Wales, Scotland and Northern Ireland, rather than bypassing them in the way the Bill would enable it to.

There may be a third aim, which is that the United Kingdom Government, the Government of England, know far better how to direct spending and cannot trust the Scottish, Welsh and Northern Ireland Governments to spend wisely. Nor, if that is their reason, can they trust the people of Wales, Scotland or Northern Ireland to choose the Government they want, as that entails the choice between different manifestos regarding the way in which money is to be spent on areas of devolved competence.

As it stands, the clause strikes at that democratic choice and the devolution schemes. It will enable the UK Government to spend funds in ways that the UK/English Government think best, but which the people of Wales, for example, may have rejected. That is not democracy. In effect, it would give legislative underpinning to the now discredited principle that the Government in Westminster know best and the people of Wales, Scotland and Northern Ireland, which have Governments with devolved competences, are not to be trusted to spend money wisely in areas of devolved competence.

In short, I can see no justification for these powers which is compatible with the commitment to the integrity of the devolution schemes. Last week, Ministers were asked repeatedly to confirm whether they supported the devolved institutions’ powers to tailor their policies and spending needs to the wishes of the people of the devolved nations. I understand that no such assurances were given. If Ministers wish to overturn the devolution settlements, let them say so. Let them show that the devolution schemes do not work and, in the light of recent experience, that we would all be better off in the devolved nations if only the UK Government could take spending decisions on matters that have been devolved, in place of the Governments in Cardiff, Edinburgh and Belfast.

As it stands, therefore, the clause should not be in the Bill. If there are constraints on how this is to operate, they should be set out in the Bill, or a proposal of the kind made by the noble Lord, Lord Stevenson of Balmacara, should be put in its place.

[Lord Bruce of Bennachie (LD) [V]]

The Bill appears to invite a clutch of ironic metaphors. In moving the Bill at Second Reading in the House of Commons, the Prime Minister drew inspiration from Adam Smith’s invisible hand but, by contrast, the Bill delivers a clunking great fist, and the Prime Minister’s oven-ready deal is at best not even half baked. The Government assert that substantial powers are coming to the devolved Administrations and, on the surface, that is true. However, the lack of reference to common frameworks, which we have debated, and the subordination of the proposed office of the internal market, on which previous amendments have focused, to the Competition and Markets Authority, all points to a centralising agenda. The state aid and financial powers clauses of the Bill—which, as the noble and learned Lord, Lord Thomas, said, do not appear relevant to the Bill’s stated purpose of regulating the internal market—raise serious questions, providing sweeping powers for the UK Government to intervene directly on a wide range of policy areas without even consulting the devolved Administrations, let alone securing consent and agreement.

At a time when relations between the UK Government and the devolved Administrations are at rock bottom, and with elections for the Scottish Parliament and the Welsh Senedd only six months away, this is absurdly provocative and, frankly, foolhardy. Following the shambolic communication of the emerging lockdown in England over the weekend, confusion reigns today over furlough provision in Scotland. On the one hand, the furlough extension is UK-wide, which is welcome. On the other, it appears that if Scotland goes into lockdown at a later date, comparable support to that being provided in England is not assured. Scottish Conservative leader, Douglas Ross MP, is at odds with the Government over this. It raises the question of whether the Government are trying to force Scotland into a similar lockdown at the same time as England, not because the measures currently being applied north of the border are not working—it is too early to judge that—but just to secure funding for any lockdown. That is not the way to promote trust or make rational, balanced and objective decisions.

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[The Deputy Chairman of Committees (Baroness Garden of Frognal) (LD)]

The noble Baroness, Lady Neville-Rolfe, has withdrawn, so I now call the noble and learned Lord, Lord Thomas of Cwmgiedd.

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

I can be very brief in speaking to Amendments 151 and 152, which stand in my name. They relate to matters that were discussed earlier. The first deals with the need to insert into the Bill provisions to ensure that the Competition and Markets Authority—if indeed it is to be the body that plays a central role in the Bill—consults the devolved Administrations in relation to its policy for enforcement.

The second amendment deals with penalties. The Minister has a regulating power and the amendment proposes that the penalties are made with the consent of the devolved Governments. That is obviously in line with what I hope will be the approach of the Government —that is, to work with the devolved Administrations. The reasons were set out earlier and I need not repeat them.

[Baroness Randerson (LD) [V]]

My Lords, like the noble and learned Lord, Lord Thomas, I will be very brief. I have added my name to his amendments, which simply reiterate the need for the CMA to consult the devolved Administrations, as well as the Secretary of State, and to obtain consent. They emphasise the importance of respecting devolution. I say to the Government that small things count. They guarantee good and fair government. It is important that the Government take note of the tone of the debates this evening and pay that respect to devolution in the terms in which the CMA operates in the future.