Amendment 66

United Kingdom Internal Market Bill - Committee (2nd Day) – in the House of Lords at 9:30 pm on 28th October 2020.

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Baroness McIntosh of Pickering:

Moved by Baroness McIntosh of Pickering

66: Clause 14, page 9, line 13, leave out subsection (4) and insert—“(4) “Sale” has the meaning given in section 61 of the Sale of Goods Act 1979.”Member’s explanatory statementThis amendment brings Clause 14 into conformity with the existing law of sale.

Photo of Baroness McIntosh of Pickering Baroness McIntosh of Pickering Conservative

My Lords, I am grateful for this opportunity to speak also to Amendment 67. I am grateful to the Law Society for its help, as with other amendments, including Amendment 37, in preparing and drafting them.

The amendment looks at bringing Clause 14 into conformity with the existing law of sale. The reason for this is that the Sale of Goods Act 1979 defines a contract of sale of goods as,

“a contract by which the seller transfers or agrees to transfer the property in goods to the buyer for a money consideration, called the price.”

It further defines an “agreement to sell” as a contract of sale whereby,

“the transfer of the property in the goods is to take place at a future time or subject to some condition later to be fulfilled”.

The introduction of a new definition of “sale” as set out in the Bill, without reference to the Sale of Goods Act 1979, could produce confusion and lack of clarity among traders and consumers alike. I should be grateful if the Minister could explain the reasons for the Government departing from the definitions of “sale” in that Act to avoid any confusion.

Similarly, Amendment 67 would leave out Clause 14(6)(c). This has the effect that I have just set out. Clause 14(6) applies to other means of transferring possession or property unrelated to sale, including barter or exchange, leasing or hiring, and gift. I would be grateful if the Minister could explain why the Government are seeking to extend the Bill to these transactions, in particular to gifts, which transfer ownership of the item donated without payment or consideration. With those few remarks, I would be grateful to hear from my noble friend why these changes are being sought in the Bill. I beg to move.

Photo of Lord Alderdice Lord Alderdice Deputy Chairman of Committees 9:45 pm, 28th October 2020

The noble Lord, Lord Liddle, has withdrawn, so I call the noble Lord, Lord Purvis of Tweed.

Photo of Lord Purvis of Tweed Lord Purvis of Tweed Liberal Democrat Lords Spokesperson (International Trade)

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.

Photo of Lord Falconer of Thoroton Lord Falconer of Thoroton Shadow Spokesperson (Justice), Shadow Attorney General

I am obliged to the noble Baroness, Lady McIntosh of Pickering, for raising these points. There is a raft of unanswered questions here. It is late at night, so I will try to focus on only the most important. Am I right in assuming that the market access principles, recognition and discrimination, apply to the rental and gifting of goods? If they apply to the rental of goods, what is the policy purpose? What is the purpose of applying them to the gifting of goods and what does it mean in practice? For example, does it apply to statutory requirements for the provision of food by food suppliers that are subject to statutory requirements?

The second head of issues concerns the position of public bodies engaged in commerce. I understand, but only from the Explanatory Notes, that the supplying of drugs by the NHS, even though it does so in a commercial context from time to time, is not covered by the Bill. Is this right? I have particularly in mind Clause 14(2), which says:

“‘Sale’ does not include a sale which … is made in the course of a business but only for the purpose of performing a function of a public nature.”

I read in the Explanatory Notes that that means the NHS supplying drugs. If that is right, what does the completely impenetrable Clause 14(3)(b) mean when it says:

“Subsection (2)(b) does not exclude a sale which is … not made for the purpose of performing a function of a public nature (other than a function relating to the carrying on of commercial activities)”?

Can the Minister explain this to the House? It matters quite considerably because I suspect it will cover a great deal of commercial activity performed by public bodies.

Thirdly, and separately, what is the position in relation to the goods that are made partly in one part of the United Kingdom and partly in another—for example, cars on an assembly line that crosses borders, or planes or high-tech equipment where parts from elsewhere come into it? As a result of Clause 15(3) and (4), is there a separate application to each of the individual components or does one look only at the completed goods?

Lastly, and this is perhaps the most significant, how do the Government envisage that this will operate? My understanding of Clause 6, on the non-discrimination principle, is that where a statutory or regulatory requirement in one part of the country discriminates indirectly, making the sale of those goods disadvantageous in another part of the United Kingdom, that disadvantageous provision can be supported only if it has one of the legitimate aims identified in Clause 8(6).

Let us take minimum alcohol pricing in Scotland. This is a relevant requirement which indiscriminately discriminates against incoming goods on the basis that alcohol brought into Scotland from England by a supplier is the subject of a disadvantage as defined in Clause 8(2); namely, minimum pricing makes it less attractive because the goods are more expensive to buy. As I understand it, this can be justified only if that minimum pricing statutory requirement has one of the following aims:

“the protection of the life or health of humans, animals or plants” or

“the protection of public safety or security”.

Am I right in understanding that if, for example, a large supplier of alcohol from England into Scotland wished to challenge minimum alcohol pricing, he could do so by taking his buyer to court? There would then be a private law action in the courts of either Scotland or England—could the Minister tell me which it would be, assuming that the minimum alcohol pricing was in Scotland and the supplier was in England?—and the courts would have to decide whether or not minimum alcohol pricing was a regulation that had a legitimate aim.

The consequence of this Act—which is quite tricky to understand and is perhaps unthought-out—is that we in Parliament are handing over to the courts the determination of policies such as minimum alcohol pricing. That seems at the moment to be the consequence of the way that the Bill is drafted. I cannot believe that that is what any sensible Government would wish. Could the Minister please explain how Clause 8 works? I hope she can explain why my conclusions on the basis of Clause 8 are wrong—I really hope they are.

Photo of Baroness Bloomfield of Hinton Waldrist Baroness Bloomfield of Hinton Waldrist Baroness in Waiting (HM Household) (Whip)

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.

Photo of Lord Alderdice Lord Alderdice Deputy Chairman of Committees

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

Photo of Lord Purvis of Tweed Lord Purvis of Tweed Liberal Democrat Lords Spokesperson (International Trade)

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.

This is now, I think, the third time that we have tried to press the Government on whether the sale of alcohol would be treated differently from the policy of minimum unit pricing. On the previous group, the noble Lord, Lord Callanan, gave a very comprehensive response on how the policy of minimum unit pricing will be affected. We are fully aware that it will be covered under non-discrimination only if there are substantial changes to it, because it is an existing measure. The question that the noble and learned Lord, Lord Falconer, asked, which was similar to questions that I had asked before, was about provisions on the sale of alcohol. So clarity on that would be useful.

My third question is absolutely not meant to be a “gotcha”. I did not give notice to the Minister and it has not been raised, so perhaps she will be able to write to me. It comes from information provided by Universities Scotland, which is interested in whether “sale” would effectively cover tuition fees as the purchase of a good. Under this legislation, higher education is not considered to be a public authority. Public authorities are excluded under this part of the Bill, but higher education, as a provider—like, for example, the NHS—is potentially not excluded. If the Minister could write to me on that, it would be very helpful, and I think that Universities Scotland will benefit from having clarity on how it will be treated under the sale and purchase of either goods or services.

Photo of Baroness Bloomfield of Hinton Waldrist Baroness Bloomfield of Hinton Waldrist Baroness in Waiting (HM Household) (Whip) 10:00 pm, 28th October 2020

I remember the noble Lord asking that question earlier in the debate. I am more than happy to write to him on that and on the other issues that I have not been able to cover in my response.

Photo of Lord Falconer of Thoroton Lord Falconer of Thoroton Shadow Spokesperson (Justice), Shadow Attorney General

I am not complaining, but the Minister did not try to answer any of my questions, so I would like a comprehensive response.

I am really interested in whether the Government envisage that in private law actions the courts will be resolving whether regulations that are discriminatory on the face of it for public purposes, as defined in the Bill, are valid—that is, whether they are for a legitimate aim. If they are, then the consequence is that Parliament is subcontracting decisions on these policy issues to the courts. I am not asking the Minister to deal with the other issues, but if she could deal with that one now, I would be grateful. If she cannot, because the answer is not yet known or has not been worked out, I would be grateful if she could indicate that. This issue seems to be absolutely key to the question of certainty for business. If where we come out at the end of the Bill is the courts system deciding on the legitimacy of a whole range of regulations, I am sure that that would not be what the Government would have wished. That is why the common frameworks process looks so much more attractive.

Photo of Baroness Bloomfield of Hinton Waldrist Baroness Bloomfield of Hinton Waldrist Baroness in Waiting (HM Household) (Whip)

Having looked at that question, I would rather write to the noble and learned Lord giving a full answer—but I will do so very speedily, before we come to the next stage.

Photo of Baroness McIntosh of Pickering Baroness McIntosh of Pickering Conservative

My Lords, I am grateful to have had this little debate. I am particularly grateful to the noble Lord, Lord Purvis, and the noble and learned Lord, Lord Falconer, for identifying even more issues than I and the Law Society of Scotland had done.

I thank my noble friend Lady Bloomfield for her answers, as far as they went, but, bearing in mind in particular the way that procedure operates in this place as opposed to the other place, it is extremely important that we have a very full letter. Perhaps she could write to the three of us who have contributed, as well as putting a copy of her letter in the Library, before we get anywhere close to the next stage.

I would like to, and still do not, understand why we are bringing in a new definition of “sale” that has a different meaning from that in the Sale of Goods Act 1979. I do not know whether my noble friend is saying that we are widening the definition to include what is generally understood in EU law, but I do not recognise any of this from what is before us in the Bill, so I would be grateful if my noble friend could write to me and say what, precisely, is the legal basis for widening and changing the definition in the way that the Government have in that regard.

I am grateful to the noble Lord, Lord Purvis, for the definitions that he gave and the illustrations that he posted as being a particular problem north of the border. I am also grateful to the noble and learned Lord, Lord Falconer of Thoroton, because I think this is absolutely vital: none of us here this evening wants to put up barriers to trade between the four nations of the United Kingdom. However, it is absolutely essential that we have clarity on the face of the Bill for the reasons that the noble and learned Lord, Lord Falconer of Thoroton, has given: we do not wish to have to resort to private-law actions before the courts—that, surely, is not acceptable. I quite understand that the Government have had to bring this Bill forward in something of a hurry, but I am here this evening to help them identify these issues.

Certainly, I am now even more confused as to why Clause 14(6)(c) has been introduced, particularly as regards the noble and learned Lord, Lord Falconer of Thoroton, referring to Clause 8(6) in this regard. However, rather than delay proceedings this evening, I will say that it would be extremely helpful to have a written understanding from my noble friend Lady Bloomfield as to why we are in this position this evening. With those remarks, I beg leave to withdraw Amendment 66 at this stage.

Amendment 66 withdrawn.

Amendment 67 not moved.

Clause 14 agreed.

Clause 15 agreed.

Photo of Lord Russell of Liverpool Lord Russell of Liverpool Deputy Chairman of Committees

We now come to the group beginning with Amendment 68. 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.