United Kingdom Internal Market Bill - Committee (5th Day)

Part of the debate – in the House of Lords at 10:00 pm on 9th November 2020.

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Photo of Lord True Lord True Chair, Intergenerational Fairness and Provision Committee, Minister of State (Cabinet Office), Chair, Intergenerational Fairness and Provision Committee 10:00 pm, 9th November 2020

My Lords, I too begin by humbly paying my own tribute to Lord Sacks. His reflective witness to faith was, and will remain, an inspiration to very many people he never knew.

As your Lordships are unusually, as I understand it, intending to terminate all discussion on these clauses in Committee; and as some, including the noble and learned Lord, Lord Falconer, opposite have somewhat brazenly—some people in the other place may consider—stated that this House may not be prepared to consider them again if invited to do so; and as, unusually for your Lordships’ House, some of these clauses have not been considered in detail, your Lordships must forgive me if I take some time to explain the rationale. I would, of course, like to thank all those who have contributed to the debate; although I agreed with the minority rather than the majority, I have listened carefully to them all and respected them all.

Lest there be doubt, let me put it beyond peradventure. The United Kingdom has stood, does stand and will stand behind the Belfast/Good Friday agreement. Nothing in this Bill is conceived to undermine that agreement. The United Kingdom Government intend no change to the status of Northern Ireland. The United Kingdom Government will never seek or support a hard border on the island of Ireland.

Equally, the United Kingdom Government will never accept that a foreign power, in the form of the EU, could unduly disrupt the free movement of goods within the United Kingdom’s customs territory. It is solely and specifically against such an unwanted, disproportionate and unnecessary potential intervention that the parts of this Bill, to which so many of your Lordships object, are designed. They are designed, as the minority of speakers in this debate—who were listed by the noble and learned Lord, Lord Falconer—have noticed, to protect east-west links, with full respect for the interests of the EU to maintain its single market, and designed to protect the basis of the Belfast agreement.

There has been significant and robust debate about Part 5, both in this House and the other place, ended with an extremely robust statement by the noble and learned Lord, Lord Falconer. The debate has focused predominately on the safety net or backstop provisions in Clauses 44, 45 and 47. However, Part 5 of the Bill contains crucial provisions which are not safety net provisions but protections that we want to apply in all eventualities. These provisions safeguard Northern Ireland’s place in the United Kingdom’s customs territory and legislate for unfettered access for Northern Ireland goods to the rest of the UK market, which is clearly provided for under the protocol. They also codify in legislation the existing practice where state aid is notified to the European Commission by the Foreign Secretary via the UK mission in Brussels.

I understand that some noble Lords intend to divide the House to remove the whole of Part 5, and the noble and learned Lord, Lord Judge, made that clear today. However, if we go to a Division, there will be at least two groups with different issues. As your Lordships consider your votes, I urge each of your Lordships to consider each clause on its merits, and consider the signal that striking each out might send to the people of Northern Ireland. I listened carefully to what the noble and learned Lord, Lord Judge, said, and I could not hear a case made for a link between Clauses 42 and 46 with what he sees as the offending clauses. I therefore do not see how they are dependent on one another.

As for Clause 43, I must disagree with the noble and learned Lord. I am clear that it stands entirely on its own as a means of safeguarding unfettered access to the UK market. This Government have repeatedly committed, and remain committed, to precluding checks or controls on qualifying Northern Ireland goods to the rest of the UK market. This is what the Northern Ireland Executive have asked for, what Northern Ireland businesses right across the spectrum from agri-food to manufacturing have asked for, and what the withdrawal agreement preserves and protects. Helping to give that effect is the sole purpose of Clause 43. It was not drafted to be interlocking or interdependent with any other clause in the Bill. If no other clause in this Bill were passed, the Bill would be able to function and stand alone as a means of protecting access for Northern Ireland businesses to—as we have heard—their most important market. To that end, while it does refer to Clause 47 in Clause 43(3)(b), that is only as part of spelling out that the clause in fact allows checks where applicable international obligations require them.

Given the broad support in Northern Ireland for unfettered access to their businesses’ most important market—and I hope that noble Lords have been listening to the speeches made by some of those who are here from Northern Ireland—it would be hugely disappointing for them and for businesses in Northern Ireland if noble Lords were to remove them unduly.

Before coming to the main argument, let me address briefly amendments in this group which would fall if the clauses in Part 5 are removed by your Lordships. First to fall will be Amendment 161, tabled by the noble and right reverend Lord, Lord Eames. I am grateful for having been able to discuss these issues with both the noble and right reverend Lord and the right reverend Primate. Their amendment would require the Secretary of State to publish a statement on the impact on peace and reconciliation in Northern Ireland before regulations on export declarations and other exit procedures under Clause 44 can be made. As I have just underlined, central to any exercise of those powers would be our aim to ensure that the political and economic integrity of our whole United Kingdom is maintained, and that the Belfast agreement and successor agreements and the gains of the peace process are protected in all potential circumstances.

Above all, I so agree with the most reverend Primate and the right reverend Prelate that we must ensure that the delicate balance between all communities in Northern Ireland is maintained and the UK Government pursue policies for sustained economic growth and stability in Northern Ireland—the best route to sustaining peace, as the noble Lord, Lord Morrow, just reminded us. The statement that these have always been, and will remain, the Government’s priorities applies to all clauses of this Bill, not just Clause 44. Therefore, the Government do not consider it is necessary for this further step to be introduced, but we fully appreciate and endorse the motives and concerns of the opposers so powerfully spoken to by the noble and right reverend Lord, Lord Eames.

Amendments 158 and 159, introduced by my noble friend Lord Callanan, would ensure that the UK Government and the devolved Administrations can continue, as they do now, to respond to serious threats to the health of people or animals, a principle already reflected in Schedule 1. I trust that the House will accept the principle of these important amendments to protect people and accept that they are necessary for the health and safety of us all. They will fall today if your Lordships remove Clause 43.

I turn to Amendments 162 and 163 in the name of the noble Lord, Lord Hain. The Government agree with the noble Lord’s aims, and I hope that I can provide reassurance that the Bill already provides the protection he seeks. We are unequivocally committed to delivering unfettered access for Northern Ireland goods to the UK market. The Bill, unless that protection is struck out by your Lordships today, prevents any new checks or controls on those goods, thus ensuring that Northern Ireland goods have unfettered access—and, of course, those goods will not be subject to tariffs.

We are also working with the Northern Ireland Executive and businesses to ensure the next phase of the regime, which will come into force during 2021, focuses benefits specifically on Northern Ireland business, again as the noble Lord, Lord Hain, and his supporters are asking. The amendment aims at much the same outcome as the Government does, but I submit that the benefit of our approach is that we can ensure unfettered access without burdensome requirements on business and do so as part of the regime that applies right across the United Kingdom.

On Amendment 163, again I recognise the noble Lord’s aims, but this amendment would risk tying the Government’s hands on how best to support businesses trading between Great Britain and Northern Ireland in future. The trader support service is, as the noble Lord’s amendment asks, free at the point of use and is part of the extensive programme to support businesses impacted by these new processes. While we have set out that it will be reviewed after two years, I assure the noble Lord, Lord Hain, and the noble Baroness, Lady Suttee, that this is by no means a guillotine on its operation. Legislating prior to review would not be best practice; circumstances will evolve, impacting the nature and best focus of any support that may be required. I hope that the points I have made provide assurance that these amendments are unnecessary. While we are ready for further engagement, I hope the noble Lord feels able not to press his amendment.

I turn to Amendments 179 and 180 in the name of my noble friend Lady McIntosh of Pickering, which seek to amend Clause 56 in Part 7 to ensure your Lordships’ House, as well as the other place, would be required to approve a Motion before Clauses 44, 45 and 47 can commence. The process provided for in Clause 56 operates in line with precedent that has been set in recent years for significant votes, such as the meaningful votes on the previous Prime Minister’s withdrawal agreement and votes on military action, such as the Syria vote in 2013. It ensures—and I hope my noble and learned friend Lord Clarke of Nottingham has read the Bill—that a mandate from the democratically elected House should be the basis for proceeding or not while respecting the important voice this place should have in a take-note Motion. That is the right balance, and I ask my noble friend not to press her amendments.

I return to the core of the debate: the view of many of your Lordships that Part 5, considered, amended, approved and sent to us by the elected House, has no place in this Bill. The Northern Ireland protocol is clear that Northern Ireland is part of the UK customs territory, and our manifesto was clear that we would

“maintain and strengthen the integrity and smooth operation of our internal market”.

Clause 42, which the noble and learned Lord, Lord Judge, declared “contaminated”, delivers on that commitment. The Bill requires that, when exercising functions relating to implementation of the protocol or movement of goods within the United Kingdom, all authorities must have special regard to three fundamental matters:

“the need to maintain Northern Ireland’s integral place in the United Kingdom’s internal market … the need to respect Northern Ireland’s place as part of the customs territory of the United Kingdom; and … the need to facilitate the free flow of goods between Great Britain and Northern Ireland”.

Article 6 of the Northern Ireland protocol states:

“Nothing in this Protocol shall prevent the United Kingdom from ensuring unfettered market access for goods moving from Northern Ireland to other parts of the United Kingdom's internal market.”

This clause delivers on those provisions in the protocol, in our Command Paper in May and in the Government’s manifesto. I see no contamination; I see clarity. In my judgment, it would be a serious matter for your Lordships to remove it.

On Clause 43, the Government have repeatedly committed to legislate for unfettered access for Northern Ireland’s businesses, as the noble Lord, Lord Dodds, reminded us, in the New Decade, New Approach agreement to restore the Northern Ireland Executive, in our Command Paper in May and in the manifesto on which this Government won the last election. Your Lordships will no doubt be mindful of the need to respect that. It is also in accordance, as with other clauses in Part 5, with the fundamental principles of the Act of Union. Clause 43 gives effect to this commitment by prohibiting the introduction of new checks and controls on Northern Ireland goods. There will be very limited exceptions to its application—for example, to protect endangered species, as now.

Unfettered access is something that the Government have constantly promised. It is critically important to the businesses and people of Northern Ireland, protecting access to their most important market. As the noble Lord, Lord Dodds, reminded us, it is worth £8.1 billion in sales each year. I am mildly surprised that anyone in this House should disagree that unfettered access for Northern Ireland goods to the rest of the UK market should be provided for. Clause 43 provides for it.

I share the astonishment of some who have spoken that this House—the unelected House—should require Her Majesty’s Government to repudiate the commitment in this Bill to unfettered access, on which they have pledged to legislate. Again, it would be a serious matter for your Lordships to remove it. In my submission, and as have heard in the debate today, it would send a disquieting signal to many in Northern Ireland. I hope that the noble and learned Lord, Lord Judge, has listened to the noble Baroness, Lady Hoey, the noble Lords, Lord Dodds and Lord McCrea, and many others, and will reflect on this before inviting the Committee to remove Clauses 42 and 43 from the Bill.

Some have argued today that the Government are ignoring the protocol or wilfully dishonouring an agreement. That is not the case. We are committed to implementing the withdrawal agreement and the Northern Ireland protocol, and indeed have already taken many practical steps to do so. I give the assurance to my noble friend Lady Neville-Rolfe that we are working with the EU in the joint committee to resolve outstanding issues arising from the protocol. As the Prime Minister has set out, our approach will be one of reasonableness, common sense and balance—that word again—and we will persevere in that spirit. However, as a responsible Government, we cannot allow the gains of the peace process or the economic integrity of the UK’s internal market to inadvertently be compromised.

Clause 44, together with Clause 47, is necessary to ensure that we can give effect to the Government’s undertaking to provide full, unfettered access for Northern Ireland goods to the whole of the UK internal market. The Bill allows for this. There is no secret: it is there on the face of the Bill by providing a safety net power to disapply or modify any requirement for export declarations or other export procedures when goods move from Northern Ireland to Great Britain.

We hope never to have to make such regulations, and recognise the significance of such a step and the issues raised today by many noble Lords—although I submit that to compare the conduct of Her Majesty’s Government to that of communist China is unacceptable. That is why, before this clause is commenced, the other place will be asked specifically to approve a Motion to that effect and this House will hold a debate. Any regulations made under this clause would be subject to the affirmative or “made affirmative” procedure, meaning that they will be subject to debates requiring a vote in both Houses, including your Lordships’.

However, we must ensure that, in any scenario, we are upholding the economic integrity of the United Kingdom, including the Belfast agreement and the gains of the peace process, and protecting the delicate balance between communities in Northern Ireland. The Government believe that this clause is a limited and reasonable step which, along with Clause 47, creates a safety net to enable those aims to be met. It ensures that the UK Government can act as necessary, if a negotiated outcome in the joint committee should not be possible.

Clause 44 is in keeping with what the Government, including the Prime Minister, have repeatedly pledged, with our manifesto and with our commitments to the people of Northern Ireland. We have heard today from many noble Lords about how important these commitments are to the people of Northern Ireland, and it is for these reasons that I ask your Lordships not to strike them from the Bill.

Clause 45 has been designed to give the Secretary of State the ability, should it be required, to ensure that there is no confusion or ambiguity in UK law about the interpretation of Article 10 of the Northern Ireland protocol on state aid. The Government consider it necessary to be able to provide a domestic interpretation of this article and help public authorities navigate these complex rules.

There is no question—and of course I recognise the disappointment of the noble Lord, Lord Dodds—but that state aid rules will apply in Northern Ireland, as agreed. However, there are risks that a broad and, in our judgment, unreasonable interpretation by the EU of Article 10 could give the European Commission extensive jurisdiction over subsidies granted in the rest of the UK—the concept of “reach back”.

We intend to reach an agreement with the EU, in good faith, about the operation of Article 10. It will be our overriding priority but, given the risk that a sensible approach is not agreed, we must have the ability, as my noble friend Lord Moylan and other noble Lords argued, to create a safety net in the form of regulations to provide legal certainty that avoids any risk of an extreme or irrational interpretation of the protocol. Without the regulations provided for in Clause 45, clarity on the scope of Article 10 would arise only over time, once the Commission’s approach had become apparent and been tested in the European courts. That is not acceptable to the United Kingdom Government and would not respect the clear decision of the British people that the UK should be an independent nation controlling its own laws.

Furthermore, a period of uncertainty would be in no one’s interest. We must be able to set clear parameters for Article 10 to ensure consistency and certainty for investment decisions across the UK from 1 January 2021. The proposals are necessary and proportionate, given the unique circumstances of Article 10. I urge your Lordships not to turn a blind eye to the potential threat to UK business and not to strike down this clause.

I turn to Clause 46. Under state aid rules, notification is the process through which EU member states inform the Commission about state aid or potential state aid. Exactly the same process will continue to apply from 1 January, but in relation only to the limited circumstances where Article 10 of the protocol applies. Clause 46 simply establishes in law that no one but the Secretary of State may notify the European Commission of state aid or potential state aid. It merely codifies in legislation the existing long-standing practice. It is non-contentious and will ensure that a uniform approach to state aid elements in the Northern Ireland protocol is taken across the United Kingdom. Again, I trust that the noble and learned Lord, Lord Judge, will not press his objection to this clause standing part of the Bill.

I turn to Clause 47, and of course acknowledge the concern of many noble Lords who have spoken. I have explained in detail that Clauses 44 and 45 set out potential powers for Ministers to make regulations as a safety net if we cannot reach agreement in the joint committee with the EU. That safety net can operate with full effectiveness only if those regulations can have effect notwithstanding any relevant international or domestic law with which they may otherwise be incompatible or inconsistent.

That is why Clause 47 is necessary. It provides that all-purpose safety net so there can be no confusion about the position in domestic law for our courts, businesses and public bodies. For the avoidance of doubt, I repeat that we are fully committed to implementing the withdrawal agreement and the Northern Ireland protocol, and have already taken many practical steps to do this. However, as a responsible Government, we cannot allow the gains of the peace process or the economic integrity of the UK’s internal market to be inadvertently compromised by harmful legal defaults in the protocol.

As the Government have made clear, they will ask Parliament to support the use of these provisions in the Bill and any similar subsequent provisions only in the case of, in the Government’s view, the EU being engaged in a material breach of its duties of good faith or other obligations and thereby undermining the fundamental purpose of the protocol. The Government’s statement of 17 September confirms that, in parallel with the use of these provisions, they would always activate appropriate formal dispute settlement mechanisms with the aim of finding a solution through that route.

The rule of law is a fundamental element in our constitution, but so, as many have argued today, is the principle of parliamentary sovereignty. It is entirely proper and constitutional, and in line with the principle of parliamentary sovereignty, that Parliament may legislate in a manner inconsistent with international law. That is an age-old principle underpinning our constitution. I say to the noble Baroness, Lady Fox of Buckley, that being laughed at by the Liberal Democrats in only her third speech in your Lordships’ House does not mean that she is wrong; I have tried it about 300 times.

Returning to this fundamental point, our constitution allows for the possibility of inconsistency between domestic and international law. Tensions may arise. It is important not to conflate the two. We are very clear that we are acting in full accordance with UK law and the UK’s constitutional norms. International law is separate and operates on a different plane. Under domestic law, any inconsistency is resolved, entirely properly, as my noble friend Lord Naseby argued, by parliamentary sovereignty.

It is permitted for any Government in pursuit of the national interest—and there is a national interest engaged, as I argued at Second Reading, in relation to the tying of the Government’s hands in negotiation and the importance of the union and the Belfast agreement—to ask Parliament to legislate to authorise their acting in a manner that would then be lawful in domestic law, even if unlawful in international law. As my noble friend Lord Lilley powerfully stated, this is the dilemma addressed by many nations. I will be interested in the response of the noble and learned Lord, Lord Judge, to the challenge my noble friend threw down.

There is one further amendment in this group: a challenge by Her Majesty’s Opposition—we have not even discussed it today, and it will go undiscussed if rejected—as to whether Clause 52 in Part 7 of the Bill should stand part. The Northern Ireland protocol, as the noble Baroness, Lady Hoey, the noble Lord, Lord McCrea, and many others reminded us, has the democratic principle of consent at its heart. Many of the special arrangements in it remain in place only as long as the representatives of the people of Northern Ireland vote to continue them. Democratically elected local politicians will decide its future in consent votes that can take place every four years. The Bill ensures that, so long as the special arrangements for Northern Ireland set out in the protocol apply, these will be reflected in the legislative framework for the UK internal market. However, the protocol itself is not codified as a permanent solution and the domestic legislation which implements it should surely reflect that.

Clause 52 is a necessary practical step to account for and respect the democratic principles enshrined in the protocol. It disapplies certain provisions of this legislation in the event that Northern Ireland’s elected representatives resolve, under the protocol consent mechanism, that Articles 5-10 should no longer apply. I had understood that this principle was accepted by the Labour Party, so I ask the noble and learned Lord, Lord Falconer, not to press his consequential amendment in this group.

I apologise for the length of this response but I felt it appropriate, given the importance of these clauses. I call to your Lordships’ minds the importance of degree and proportion. To strike out these clauses, in Committee, with little discussion of the detail, would be an unusual step, relating as they do to the fundamental principles of the Belfast agreement, east-west trade across the sea and how your Lordships’ action might be received by a large part of the Northern Ireland population. They also relate to national sovereignty, to the right of any nation to resist the unreasonable pretensions of others to impede internal trade, and to the delicate position of Her Majesty’s Government in seeking to defend our common national interest in ongoing negotiations of vital and lasting importance. Striking them out in toto at the first opportunity would, I submit, not be proportionate to the potential risk perceived by some noble Lords.

I have heard many noble Lords focusing today through what seemed to be one end of the telescope about the potential contingent powers we are proposing to take to react to potential coercive interference in our kingdom. Too many have failed to look through the other end of the telescope. As the noble Lord, Lord Morrow, and the noble Baroness, Lady Hoey, reminded us, east-west and north-south relations are interlocking and independent facets of the Belfast agreement.

These clauses were sent to us, having been considered, amended and approved by the elected House. Your Lordships have a right and a duty to revise, but a responsibility not to wreck. Each and every one of us must consider where on this spectrum tearing out this whole part of the Bill would lie, as the amendments in this group propose. Bluntly, to many, including many in Northern Ireland, this action would look more like wrecking than revision. Faced with such action, I have no doubt that the other place would seek to return the provisions to your Lordships’ House as they had approved them. For these reasons, I hope that the noble and learned Lord, Lord Judge, will not divide the Committee, and that other noble Lords will not press their amendments.