Amendment 134

United Kingdom Internal Market Bill - Committee (3rd Day) – in the House of Lords at 9:45 pm on 2nd November 2020.

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Baroness McIntosh of Pickering:

Moved by Baroness McIntosh of Pickering

134: Clause 31, page 23, line 18, leave out “from time to time”Member’s explanatory statementThis amendment deletes the phrase “from time to time” from Clause 31(1).

Photo of Baroness McIntosh of Pickering Baroness McIntosh of Pickering Conservative

My Lords, it gives me great pleasure to move this amendment and speak to the others in my name. I thank the noble Baroness, Lady Bowles, for her support; I think she is going to speak at some stage on the clause stand part debate. I take this opportunity to thank once again the Law Society of Scotland for its briefing and its assistance in drafting these amendments.

Amendment 134 would delete the phrase “from time to time” from Clause 31(1). The reason for this is simply to state that reviews should take place on a more structured and regular basis than simply from time to time. I would like to press the Minister on what the intended timeframe for a review is within the terms of Clause 31.

Amendment 135 is on a similar theme. It looks to set out the significance of a matter that the CMA would review under the terms of Clause 31, and to press the Minister to say that surely it must be intended that the CMA conducts reviews into important and significant matters only. Is that the Government’s intention? Currently Clause 31(1) provides the CMA with an extensive power to conduct reviews. In my view that should be used only in accordance with clear rules that will ensure that only important issues are reviewed. The purpose of the amendment is to press my noble friend and the Government on what would instigate such a review and be deemed a sufficiently important and significant matter for this purpose.

Amendment 137 looks at the purpose of a proposal that should be made only, as I state here, by the Secretary of State or others that I have set out. The purpose is to ensure that only the Government and the devolved Administrations can make a proposal to the CMA to conduct a review. The reason for that is that the Bill currently provides that the CMA can receive and consider any proposals for undertaking a review, so in fact anyone can refer a matter to the CMA. Surely it must be intended that there is some qualification relating to this to exclude vexatious or frivolous referrals that might be deemed to be wasting the time of the CMA or others involved. The purpose of this probing amendment is to restrict the capacity to make referrals to the Government and the devolved Administrations, and to ask my noble friend if that is indeed the Government’s intention.

Amendment 144 looks at Clause 32, taking out “part” and replacing it with “or the entirety of”, thereby ensuring that the Secretary of State can request advice on a report for the whole UK, not simply a part of the UK. That is simply to note that the Secretary of State may request the CMA to provide a report for any part of the UK under Clause 32(11)(d), but not apparently for the whole of the UK. It is my intention to resolve that anomaly and clarify whether my understanding is correct.

Amendment 146 would delete Clause 35(4), which states:

“A duty of the Secretary of State to make a statement to Parliament is to be discharged by laying a copy of the statement before each House of Parliament.”

Is it not the case that such duties should be discharged in person directly to Parliament by making an Oral Statement rather than by laying a copy of the Statement before each House? Or do the Government intend to use that procedure and this is just the phrase that they have used? My amendment seeks to probe this.

Amendment 147 would insert, at the end of said clause:

“Before preparing advice and information under subsection (1) the CMA must consult such persons as it considers appropriate.”

This would ensure that the CMA consults those interested parties before preparing advice and information under this clause. The provision of advice and guidance about how the CMA will exercise its functions under Clauses 31 to 34 will be of considerable interest to those parties affected by that exercise. The consultation would allow an opportunity for those potentially affected to express views on the prospective content of the advice and guidance. Will the Government look favourably at this proposal?

Lastly, Amendment 148 would insert:

“Before revising or withdrawing any advice or guidance under subsection (1) the CMA must consult such persons as it considers appropriate”.

This a consequential amendment that flows from the above.

I am grateful for the opportunity to speak to these probing amendments, particularly in the context of the relevant clauses, especially Clause 31, relating to monitoring and reporting on the operation of the UK internal market, to make sure that it can function as smoothly as can be anticipated.

Photo of Baroness Bowles of Berkhamsted Baroness Bowles of Berkhamsted Liberal Democrat 10:00 pm, 2nd November 2020

My Lords, I am pleased to speak in this group on my own amendments. I recognise that the noble Baroness, Lady McIntosh, has picked out some relevant points, including probing what I call the business aspect in Clause 31.

I have already rehearsed many of the arguments relating to my stand part notices, so I shall only speak briefly. The question of whether the OIM is set up to provide independent technical advice regarding business disputes with one another or with national authorities, becoming a first-round settlement process—or not, as it chooses—is all left too vague. Some not entirely technical criteria are intimately involved. I cite again my concern as to whether the OIM is the right body or structure and whether the powers exercisable over people and businesses in Clauses 38 to 40 are justified and proportionate to the reporting requirements in Clauses 31 to 34, which largely relate to the activities of Administrations.

My Amendment 145 would delete Clause 33(2), which states:

“A relevant national authority may not request a report from the CMA ... unless the authority has considered whether any other person or body is qualified to provide an independent report on the matter.”

What is meant by “qualified”? I could not find a definition in the Bill other than that in respect of professional qualifications in Part 3, which I do not think applies here. I understand and accept the subsection if the reference is to another statutory body, but the present wording seems to relate, for example, to advisory firms. I might have all kinds of views about that and how the Government seem to use advisory firms too much already, but I am concerned that such private reports would be less transparent.

However, perhaps there is a case for saying that it is more appropriate for an Administration to pay for that research and advice than foist the cost on to businesses, which is what this provision does. Can the Minister advise me of the intention of Clause 33(2)? Does it mean statutory bodies or private bodies?

Finally, Clause 37 requires the CMA to prepare and publish general advice and information about how it expects to approach the exercise of its functions. At present, how the CMA will use its powers is left solely to its own discretion, without guidance or safeguards in the Bill, but I think it is necessary to have guidance about when enforcement and fines are appropriate. For example, they are not appropriate when there is no reasonable suspicion of wrongdoing or contravention of market principles by the person or body from whom information is sought.

Photo of Baroness Garden of Frognal Baroness Garden of Frognal Deputy Chairman of Committees, Deputy Speaker (Lords)

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

Photo of Lord Thomas of Cwmgiedd Lord Thomas of Cwmgiedd Chair, Consolidation, &c., Bills (Joint Committee), Chair, Consolidation, &c., Bills (Joint Committee)

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.

Photo of Baroness Randerson Baroness Randerson Liberal Democrat Lords Spokesperson (Transport)

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.

Photo of Baroness Finlay of Llandaff Baroness Finlay of Llandaff Deputy Chairman of Committees, Deputy Speaker (Lords)

My Lords, these amendments are part and parcel of the approach that my noble and learned friend Lord Thomas and I, and indeed the Welsh Government, have advocated. It seems essential to ensure that the office for the internal market is genuinely independent and accountable, on a basis of equality, to institutions in all four parts of the UK.

I want to take this opportunity to seek clarification on some of the powers that the Government propose to give the office. I understand that it would be able to compel persons to provide information and impose financial penalties on those who do not. I can see why these powers are necessary for the Competition and Markets Authority when it investigates matters of anti-competitive practices which possibly violate the criminal law. However, can the Minister please explain why the powers are necessary in the very different circumstances of providing independent advice on the potential internal market implications of measures proposed by a Government?

More specifically, one point in particular needs clarification. It is my understanding that devolved Ministers could not be compelled to provide such information, as, like UK Ministers, they are covered by Crown immunity. However, I am informed that such immunity does not extend to the devolved legislatures, meaning that the Senedd Commission could be compelled to provide information and fined if it did not. This seems wholly unacceptable, and I seek clarification.

Photo of The Duke of Montrose The Duke of Montrose Conservative

My Lords, I am pleased to be able to contribute to this stage of the debate, and to offer my support to my noble friend Lady McIntosh of Pickering, and particularly to her Amendment 134. Just recently we have heard much discussion, even by the noble Baroness, Lady Bowles, about the suitability of the CMA for this role. But there is no doubt that we need a body, and what we are discussing are the functions it would need to perform. I have sight of the briefing provided by the Law Society of Scotland, which supported some of these amendments, and it has been pretty forensic in striving to ensure, in particular, that this Bill contains enough representation and consultation.

I also support Amendment 135; it seems to me very appropriate that the CMA should have powers to decide what is a matter of importance, because the general idea that anybody could ask it to produce a report is a recipe for overenthusiastic demand from all sorts of people.

Moving on to Amendment 146, Clause 35 deals with who gets to receive the reports that the CMA produces, before, during or after measures that are being introduced, and who will present that report. Subsection (4) excuses the Secretary of State from being the one who gives the report in person. Surely most of the reports will actually be initiated by the devolved Administrations, and reports on the initiative of Secretary of State will be far fewer, so why should the Secretary of State be excused from speaking to the report that he has asked for?

Photo of Baroness Garden of Frognal Baroness Garden of Frognal Deputy Chairman of Committees, Deputy Speaker (Lords)

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

Photo of Lord Razzall Lord Razzall Liberal Democrat

My Lords, I will be brief, unlike many earlier speakers in this Committee, who clearly were revelling in being freed from the tyranny of two, three and four-minute speeches. As the evening goes on, I think we come back to the discipline of being brief.

As to whether Clauses 31 to 37 should not stand part of the Bill, the arguments have been well rehearsed earlier and at Second Reading, but I shall reiterate why they seem appropriate here. Why are we rushing to legislate at this stage in this area? Why are we not working with all four Governments to arrive at agreements and to legislate when necessary? As noble Lords who followed this will be aware, the process of managing the United Kingdom internal market through common frameworks has not yet been exhausted. I do not accept the argument of the noble Lord, Lord True, at Second Reading, that the list that has been dealt with by the common frameworks is not exhaustive. Those discussions can continue to take place.

Why are we not continuing to work with the four Governments and to legislate when needed? Why do we not establish a properly independent body representing all four nations in due course, and then legislate? I support the deletion of all those clauses; they should not stand part of the Bill.

Photo of Baroness Garden of Frognal Baroness Garden of Frognal Deputy Chairman of Committees, Deputy Speaker (Lords)

The noble Lord, Lord Judd, has withdrawn, so I now call the noble Baroness, Lady Hayter of Kentish Town.

Photo of Baroness Hayter of Kentish Town Baroness Hayter of Kentish Town Shadow Spokesperson (Cabinet Office), Shadow Deputy Leader of the House of Lords, Shadow Minister (Business, Energy and Industrial Strategy) (Labour), Shadow Spokesperson (Digital, Culture, Media and Sport) (Charities), Shadow Spokesperson (Cabinet Office, Constitutional and Devolved issues) , Shadow Spokesperson (Wales)

My Lords, we have said it before, so I will repeat only briefly: these amendments would never have been needed had the legislation been drafted in consultation and agreement with the devolved authorities. Instead, the legislation, as we have heard, reads like a complete desire to run everything from the centre, as if devolution never happened, and that the UK Government would simply decide and tell the others what they are to do. For example, as we have heard, it gives the CMA a cross-UK role with regard to the internal market but leaves the CMA, which currently has no devolved accountability, with the power to set penalties above the IM without any devolved authority consent.

I keep asking the same question: do the Government just forget about the other three Governments? As I have already said to the Minister tonight, we need the Government to respond to the thrust of these amendments positively and make it clear that they respect and want a proper role for the devolved authorities. The noble Baroness, Lady Randerson, said that little things matter. These are quite little requests, but they certainly matter.

Photo of Lord Callanan Lord Callanan Parliamentary Under-Secretary (Department for Business, Energy and Industrial Strategy) 10:15 pm, 2nd November 2020

I thank noble Lords who have taken part. They have asked for a lot of information on the various clauses and whether they should stand part, and I will provide it.

I start with Clauses 31 to 37 and why they should stand part. As we have discussed previously, Part 4 of the Bill creates the office for the internal market within the CMA, charged with carrying out a set of independent advisory, monitoring and reporting functions to support the effective operation of the UK internal market. Clause 31 defines a regulatory provision for the purposes of the CMA’s UK internal market reporting, advisory and monitoring functions, as well as stating which of these provisions are within scope. The purpose is to establish that the CMA may undertake monitoring reviews on an ad hoc basis, either of its own volition or at the request of other parties, including the UK Government and the devolved Administrations and legislatures. This monitoring will focus on cross-border competition, investment and trade, as well as access to goods and services.

There are two categories of monitoring and reporting that the CMA must undertake. The first is an annual health of the market assessment that will set out trends and developments in the internal market, including levels of integration across different sectors and nations. The second is a review of the impact of the measures in Parts 1 to 3 of the Bill, dealing with the internal market system itself, to be published at least every five years. Both types of report will be published and laid before both Houses and all the devolved legislatures.

Clause 32 sets out the provision for the CMA to advise on a regulatory proposal prior to it being passed or made in law. If an Administration in one part of the UK wishes to do so, it may request non-binding advice from the CMA on an approach to regulation it or any other person proposes to make in the relevant part of the UK. This is on a voluntary basis but will help support effective policy development. The advice, or report, from the CMA will examine the potential economic impact of the proposal on areas such as competition and trade distortions, the impact on prices and the choice and quality of goods and services for consumers. To ensure transparency, all advice will be published and shared with all four Administrations.

Clause 33 details the CMA’s reporting procedure on regulatory provisions already been passed or made in law. The request may be made by one or more Administrations and must concern a regulatory provision applying to its part of the UK and within its legislative competence. Similarly, to ensure transparency, the CMA will publish the report soon after it is provided to the requesting Administration. The noble Baroness, Lady Bowles, asked about this clause. The clause sets out that it is for the national authority seeking the report from the OIM to consider and determine whether another body could provide advice. This is not a technical term and is simply intended to make it clear that the OIM is not intended to displace other bodies that might in theory provide more relevant advice on the same matter and, in doing so, make the best possible use of public funds.

Clause 34 sets out the reporting procedure that the CMA will undertake for regulatory provisions that are already enacted in any part of the United Kingdom and are considered to have actual or anticipated detrimental impacts on the internal market. The CMA may produce reports upon the request of a Minister in the UK Government or a Minister in any devolved Administration. The CMA must provide copies to all other Administrations in other parts of the United Kingdom, laying the report before each House of Parliament and all devolved legislatures, as well as making it public.

Clause 35 sets out the process that the CMA, the UK Government and the devolved Administrations must follow once a report has been produced by the CMA and laid before the legislatures under Clause 32. The process requires the Minister in the Administration responsible for implementing the regulatory provision that was the subject of the report, and the Minister in the Administration who requested the report, to make a Written Statement in their relevant legislature. This supports effective parliamentary oversight, as well as prompting legislatures to determine the most appropriate subsequent course of action.

Clause 36 allows the CMA the discretion to exclude particular categories of information from its reporting on impacts on the internal market. The discretion to exclude some categories is not novel or contentious, and is used by public and private organisations to protect commercial and private information about an organisation or a person. This discretion is necessary in specific circumstances to provide assurances for business and individuals’ interests.

Clause 37 requires the CMA to publish general advice, information and guidance about how it expects to approach the exercise of its monitoring, advisory and reporting functions under Clauses 31 to 34. This mirrors existing requirements in the Enterprise Act 2002 to publish documents, as the UK’s competition authority, on how it works to promote competition for the benefit of consumers, both within and outside the UK.

I turn to Amendment 134, which seeks to delete the phrase “from time to time” from Clause 31(1), which deals with the CMA’s ability to produce ad hoc reports on matters it considers relevant to the effective operation of the UK’s internal market. The Government agree that it is essential for the CMA to undertake reviews and report on matters it considers relevant to the effective operation of the internal market. However, the Government believe that it is also important that, as an independent body, the CMA should not be under pressure to frequently produce ad hoc reports, which is what removing this phrase “from time to time” would imply. As Clause 31(5) and (6) make clear, the office for the internal market will produce regular reports on the health of the internal market; it will therefore be well placed to make the right judgment on the need for the production of other reports.

Amendments 135 and 137 would require the CMA to conduct reviews only into what are called “important” matters, and that only the UK Government and devolved Administrations may request a review from the CMA. The Government appreciate the intention of these amendments, which is to ensure that the CMA is not overburdened by expectations in relation to reviews. However, the CMA is experienced in the matter of reviews and should not have its work impeded due to debates as to what constitutes a “matter of importance”. Furthermore, it is important that all stakeholders with an interest in the internal market should be able to request that the CMA undertake a review. This in turn will help to maintain stakeholder confidence in the independence of the OIM from the UK Government and the devolved Administrations.

Amendment 144 seeks to amend Clause 32 by inserting the word “entirety” to ensure that the Secretary of State can request advice and a report from the CMA on matters relating to the whole of the UK, not just a part of it. The current wording of Clause 32 aims to capture that reporting made possible by the clause is limited only to devolved regulatory competence. In the case of the Secretary of State, this would mean England-only legislation by the UK Government would be in scope of Clause 32. The effect of the amendment would be to extend the scope of Clause 32 to capture powers being exercised for the whole of the UK by the UK Government. To support the effective operation of the internal market, the office will need to focus its reporting and monitoring on areas of regulatory divergence across the UK. If regulatory measures apply UK-wide, the same risks to the functioning of the internal market will not feature. It is therefore vital to narrow the focus of the reporting in question to regulation that covers only a proportion of the UK and could pose an issue to the functioning of the market.

I turn to Amendment 145. The purpose of Clause 33 is to enable the CMA to produce reports on the impact of regulatory provisions which have already been passed or made into law. This procedure is voluntary and can be requested by an Administration, solely or jointly, in all parts of the United Kingdom, in relation to a regulatory provision applying to the relevant part of the UK and within its legislative competence. The Government understand the concerns around transparency, but the aim of subsection (2) is to ensure that the requesting Administration consider whether any other person or body is also qualified to provide an independent report on the matter before a request to the CMA is made. It is important to consider whether any work done by another person or organisation would put the CMA in a better position to provide advice to an Administration and for this to be taken into account and considered before a request to the CMA. This is a pragmatic and wholly sensible approach and ensures that the CMA’s resources are best directed at requests for advice, monitoring and reporting where it has the relevant expertise.

Amendment 146 advocates for the removal of subsection (4) within Clause 35. This clause requires the national authority responsible for implementing the regulatory measure that was the subject of the CMA’s report to then make a written statement in the relevant legislature. This amendment would remove the obligation of laying a copy of a written statement before each House of the UK Parliament. This would clearly result in inconsistency between the UK Government and devolved Administrations in accountability to their respective legislatures. We believe that this change would result in a democratic deficit and the loss of accountability towards both Houses of this Parliament.

Amendments 147 and 148 would require the CMA to consult stakeholders before preparing advice and information about how it expects to approach the exercise of its functions and revising or withdrawing any advice or guidance. Clause 37 mirrors existing requirements in the Enterprise Act 2002 to publish documents, as the UK’s competition authority, on how it works to promote competition for the benefit of consumers, both within and outside the UK. As a matter of good practice and maintaining effective working relationships with a range of stakeholders, the CMA already undertakes extensive consultations with stakeholders in respect of its existing statutory duties before publishing advice and information. The CMA will be maintaining this approach in respect of the advice, information and guidance it publishes under Clause 37. In light of this reassurance, and to safeguard the independence of the CMA, the Government do not think it is necessary to compel the CMA to do this, as proposed by the amendment.

Amendment 151 seeks to amend Clause 39 to explicitly require the CMA to consult the UK Government, the devolved Administrations and other relevant persons in preparing or revising its statement of policy in relation to the enforcement of its information-gathering powers. Clause 39 allows the Competition and Markets Authority to take actions in response to non-compliance with the information requests described in Clause 38. To ensure that its penalties regime is fully considered and proportionate, the CMA will be required, as it already is now under its existing statutory functions in relation to the Enterprise and Regulatory Reform Act 2013, to consult other parties as it sees fit when developing or revising its approach. I can assure noble Lords that, in practice, the UK Government and the devolved Administrations would always be consulted as a duty on the CMA as it stands in the Bill. The noble Baroness, Lady Finlay, asked about compelling devolved Administration Ministers to give information. We can give DAs information notices, but they cannot, of course, receive any penalties for non-compliance.

I turn to Amendment 152, which seeks to amend Clause 40. It would require the Secretary of State to obtain the agreement of the devolved Administrations before specifying in regulations the maximum level of financial penalty in cases of non-compliance with an information-gathering notice from the CMA. Clause 40 as it stands sets out the penalty regime for non-compliance with the aforementioned information-gathering powers. It is vital that the CMA, acting as the OIM, has access to credible, accurate and comprehensive information sources to fulfil effectively its internal market functions.

Clause 40 directly mirrors Section 174D of the Enterprise Act 2002 ensuring consistency of approach in respect of financial penalties across the CMA’s existing functions. The Secretary of State will therefore make regulations specifying the maximum amounts in practice for these penalties in consultation with the CMA and other interested parties. Again, I can give noble Lords, first, the reassurance that the Government are committed to not taking any steps to bring the financial penalties into effect by commencing the clause until there is clear evidence that there is a need to do so. Secondly, the clause requires the Secretary of State to consult with other relevant persons before making the necessary regulations. I want to confirm that the devolved Administrations would of course be fully consulted as part of that duty.

In the light of the various reasons and reassurances that I have given, along with my explanations in some detail of the purpose and reasoning behind the clauses, I hope that my noble friend will feel able to withdraw her amendment.

Photo of Baroness McIntosh of Pickering Baroness McIntosh of Pickering Conservative 10:30 pm, 2nd November 2020

My Lords, I am grateful to all those noble Lords who have contributed to the debate. I did rather enjoy my noble friend’s description of not wishing to overburden the CMA with expectations; I do not think that that is quite the case as yet. As the noble Baronesses, Lady Hayter, Lady Randerson and Lady Finlay, and the noble and learned Lord, Lord, Lord Thomas of Cwmgiedd, have said, we are seeking to ensure that the devolved Administrations are consulted, that consent is sought and that they are respected. That was the main thrust of the argument.

I am disappointed that my noble friend does not find common cause with my amendments. I am very grateful in particular to my noble friend the Duke of Montrose for highlighting the fact that, as he recognised, which is most pertinent, most of the reports will in fact emerge from the devolved Administrations. That is why it is bizarre that the Secretary of State can be excused from speaking to these reports from them so that Parliament itself, along with the devolved Administrations, would be made aware of his arguments and reasons for either accepting or rejecting the reports.

My noble friend’s response begs a question which it will be interesting to explore at subsequent stages. If the Government are not prepared to accept a de minimis rule on what the status of referrals and the reports to be made by the CMA would be, that begs a question about how we define the distortion of the market. I spent six happy months in the European Commission looking at how competition was being distorted in the context of the single market, which we have just left, and what defined a distortion of the market. I shall seek to develop that argument at a later opportunity. For the moment, I beg leave to withdraw the amendment.

Amendment 134 withdrawn.

Amendment 135 not moved.

Photo of Baroness Garden of Frognal Baroness Garden of Frognal Deputy Chairman of Committees, Deputy Speaker (Lords)

We come now to the group beginning with Amendment 136. 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 the group to a Division should make that clear in the debate.