Motion K1 (as an amendment to Motion K)

United Kingdom Internal Market Bill - Commons Reasons and Amendments – in the House of Lords at 4:00 pm on 9th December 2020.

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Lord Thomas of Cwmgiedd:

Moved by Lord Thomas of Cwmgiedd

At end insert “and do propose Amendments 48B, and 48C to the words restored to the Bill by the Commons disagreement to Amendment 48—

48B: Clause 48, after subsection (1) insert—“(1A) The powers in subsection (1) may only be exercised—(a) after consultation with the relevant authority on the principles under which financial assistance may be provided by a Minister of the Crown;(b) after publication of such principles; and(c) with the consent of the relevant authority where the financial assistance is assistance that could be given by a relevant authority.”

48C: Clause 48, in subsection (2), after the definition of “providing” insert—““relevant authority” means the Welsh Ministers in respect of Wales, the Scottish Ministers in respect of Scotland, and the Northern Ireland Executive in respect of Northern Ireland.””

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

I thank the Minister for the opportunity to discuss this matter with her. In light of what she said about wishing to set up a governance structure, I am sure that progress could be made. However, there are five short reasons why I hope the House will accept the compromise I have offered in Motion K1, which I now seek to move. First, the Commons reasons were, as has been stated by the Minister, to do with financial primacy. With the utmost respect, they are not correct. Powers to spend in devolved matters are powers of the devolved Governments, not the UK Government. Most of what is covered in this clause are matters that are devolved. Secondly, the clause therefore seeks to change the devolution settlements to enable the UK Government to override the devolution settlements. The clause is therefore a constitutional and not a financial issue.

My second reason is that, at present, funds provided by the EU for regional aid for matters within devolved powers are provided to the devolved Governments, who have to agree how the funds are to be spent. The amended clause would continue this architecture for the shared prosperity fund, the successor fund to that. Under the amendment, the UK Government would agree with the devolved Governments the way in which the funds would be spent where the funds were for matters within the devolved competences—roads, health, education and the like. This would combine the benefit of an overall strategy for the UK with the benefit of devolved Governments agreeing how funds were to be expended in the areas for which they and they alone were responsible.

Thirdly, it would put expending the fund on a principled basis. Principles are not set out in the only description so far—that set out in box 3.1 in the Blue Book published at the time of the Autumn Statement on expenditure. The amendment would ensure a principled basis for spending on devolved areas that the UK Government and the devolved Governments could agree would be democratic and effective.

Fourthly, the effect of the clause without the amendment can be summarised as follows. It would take us back to the days of “Westminster knows best”. It would effectively be saying, “We do not trust the people of Northern Ireland, Scotland and Wales to elect Governments to spend wisely in the devolved fields”. It would take powers back to London in these areas. Secondly, it would be undemocratic, because the democratic mandate to spend in devolved fields is that of the devolved Governments and Parliaments. Thirdly, it would be inefficient, as there would be no co-ordination of spending and the real risk of inconsistent spending. In short, the clause without my amendments would enable the UK Government to spend in devolved fields and bypass the devolved Governments and Parliaments in Scotland, Wales and Northern Ireland who have been elected to be responsible for those fields. It would, in effect, hollow out the devolution settlements.

In contrast, the amendment would, above all, strengthen the union. Not only would it stop the hollowing out of the devolution settlement, it would show that the UK Government and the devolved Governments were acting together in a union that was working for each of the four nations and for the four nations together—the UK as a whole. For those reasons, I beg to move.

Photo of Lord Russell of Liverpool Lord Russell of Liverpool Deputy Chairman of Committees 4:15 pm, 9th December 2020

One Member in the Chamber has indicated he wishes to speak. I call the noble Lord, Lord Adonis.

Photo of Lord Adonis Lord Adonis Labour

My Lords, I do not wish to cover the ground that the noble and learned Lord, Lord Thomas, has just covered so compellingly. He has made absolutely compelling arguments for why we should send this matter back to the Commons again. As he says, it goes to the heart of the devolution settlement: you just need to read the wording of his amendment to Clause 48 to see why it is so compelling.

What the Government are proposing is a provision that says they should make financial arrangements in respect of spending in the devolved territories of the United Kingdom without consultation with the relevant authorities, whereas the noble and learned Lord’s amendment says that it should take place only with consultation with the relevant authorities. So the noble Baroness would need to explain to us why it is appropriate that these arrangements should be entered into with no consultation with the devolved authorities to which they apply. That is an absolutely fundamental point about whether devolution is for real.

The point I want to add, which is so important and why it is a vital that we send this back to the other House, is that what is essentially going on here is an attempt by the Prime Minister to undermine and make as weak as possible the existing devolution settlement. He said, and we should take him at his word, that devolution was the worst mistake of the Blair Government; he does not agree with the setting up of the Scottish Parliament; he does not agree with the Welsh Assembly; he has played very fast and loose with the role of the Northern Ireland Assembly in the way he has conducted policy in respect of Ireland over the last year.

We have a constitutional duty to see that that the devolution settlement, as constructed by Parliament in successive Acts, all of which have represented consensus settlements between the territories concerned and the United Kingdom Parliament, is safeguarded. This Bill is deliberately intended to cut across and undermine the devolution settlements because the Prime Minister does not agree with them, and it is therefore vital that we send this matter back to the House of Commons again.

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

Does any Member in the Chamber wish to speak? No? Then I call the noble Lord, Lord Fox.

Photo of Lord Fox Lord Fox Liberal Democrat Lords Spokesperson (Business, Energy and Industrial Strategy)

My Lords, this has been, again, a short but important debate. I thank the previous speakers and I thank the noble and learned Lord, Lord Thomas of Cwmgiedd, for his detailed proposal.

First, I will address the comprehensive and well-laid out response by the Minister on why your Lordships’ amendment has been knocked back. I will not come between the noble and learned Lord and the Minister when it comes to deciding whether it is a financial issue; I shall leave those two to have that argument. However, I will pick up on the second issue. The Minister painted a genuinely exciting picture of all this wonderful investment that will happen across the country—I am not being ironic—and I agree that there needs to be a response to what we have seen this year, and it needs to be comprehensive, co-ordinated and well organised. This cuts to the point made by the noble and learned Lord, Lord Thomas, and the noble Lord, Lord Adonis: without working with the devolved authorities, the efficiency and the effectiveness of any investment are massively undermined. Leaving aside the devolution issue for now, the efficiency issue raised by the noble and learned Lord, Lord Thomas, is absolutely called into question here. The measures from the noble and learned Lord in Motion K1 bring the devolved authorities back into this process. It recognises the importance of the devolved settlement, as set out by the noble Lord, Lord Adonis, and makes sure that this investment, which will be so important to the future prosperity of this country—if indeed there is enough of it and it is delivered properly—can be made efficiently and in keeping with the needs of the people of that particular country.

As someone who comes from Herefordshire, which is a far-flung part of England, I wish that we had similar regional structures in England, whereby the same level of consultation that should be coming through this amendment could also be offered to the regions of England. While some parts of England have unitary mayors and some parts have negotiations directly with Government, places such as Herefordshire that are in as much need as some of the worst-affected places across the United Kingdom, do not have the benefit of that access. This is not the place, but going forward, I ask that when these proposals are brought, an approach towards the English regions that the Government have towards the devolved authorities would be appreciated.

With that, we look forward to supporting the noble and learned Lord, Lord Thomas, when he presses this.

Photo of Lord Stevenson of Balmacara Lord Stevenson of Balmacara Opposition Whip (Lords), Shadow Spokesperson (Digital, Culture, Media and Sport), Shadow Spokesperson (Business, Energy and Industrial Strategy and International Trade)

My Lords, I thank the Minister for her clear and concise introduction to this topic. Although she said she was relying primarily on the Commons argument that this issue engages financial privilege, she recognised there were other issues going on, and it was good of her to take the argument a bit further. We are, as the noble Lord, Lord Fox, has also said, completely cognisant of the restrictions placed on the House due to financial privilege being engaged. The noble and learned Lord, Lord Thomas, made a compelling case about the wider issues, and it is important to have those on the record. I will add to the list of points he made.

The Government clearly assert—and we believe them —that these will be additional to existing powers, and we should not be concerned, as we have been, that the devolved Administrations will have their responsibilities and authority challenged in this way. The Minister said that the driving force behind the shared prosperity fund is to add and complement existing arrangements. If she wishes to repeat it when she winds up, that would be helpful. In that sense, there should be no need for the concern that is currently in the devolved Administrations about that particular aspect of it. We do not have the detail, and I think she said the likely outcome for their consultation would not be before spring 2021, which seems a long way away in terms of what we are doing. We accept that existing programmes are currently running out—but they are running out; they are not being continued at the same level and, therefore, there will be a shortfall unless the Government are prepared to move a bit faster than the current timescale suggests.

The Minister also confirmed—and this is good news —that there will be engagement with the devolved Administrations. When she responds, perhaps she could explain a bit more about what that means. We have already heard from the Government today about programmes of engagement that have involved substantial change in previous views; it would be good to hear that language repeated when she talks about how the devolved Administrations might be engaged with this process.

The Minister has confirmed there will be some form of shared prosperity fund board, which is interesting. She may recall that at the previous stage of this Bill, we proposed a shared prosperity commissioner. I said at the time, and I still think, that that was code for a board, because we were trying not to engage financial privilege. We have clearly failed in that. Can she confirm the board will be independent and say more about the powers that might be invested in that board? Can she also talk a bit more about whether the programme itself, when it is brought forward, will be subject to guidelines? Will those be published and discussed before they are invented? Will there be themes to it, as there have been in previous rounds of the regional structural funds? Will the funds be competitive and open to all countries to bid for? Can she confirm, most importantly, that the plan will be for the funds under the shared prosperity fund to be separate from any Barnett formula calculations? That is not in the sense of making people not eligible for funding—that is not what we are about here—but a needs-based or different set of indicators to set out the ideas under which the shared prosperity fund will operate. I look forward to hearing her response.

Photo of Baroness Penn Baroness Penn Baroness in Waiting (HM Household) (Whip)

My Lords, I thank noble Lords for this short but very useful debate. I think it might be useful to take the points of the noble and learned Lord, Lord Thomas, in turn. On the first point on financial privilege, I think the noble Lord, Lord Fox, was wise to stay out of that one. All I can say to this House is that the decision on financial privilege is made by the Speaker on advice from the clerks. It is the only reason, when invoked, that can be given. Though I have spoken to others, that is the process in the other place.

On the second point on the consultation of, and consent from, the devolved Administrations on spending on these matters, I have said before, and will again, since the noble Lord, Lord Stevenson, asked me to reiterate, that this is about an additional programme of spending to support the work of the devolved Administrations but also about taking a strategic look across the whole of the UK. It is important to remember that the main fund we are talking about, when it comes to the use of this power and the shared prosperity fund, replaces EU structural funds that were determined at an EU level for the needs of many different nation states. They were determined at an EU level and, while they may have been managed and delivered at a local level, the structure, framework and principles that people had to deliver were decided at an EU level.

The third point was about a principled basis for the funding. The Government set out, at the spending review, the heads of terms for the shared prosperity fund. Those have begun to outline how the shared prosperity fund will work. A portion of the SPF will target the places most in need across the country, such as ex-industrial areas, deprived towns and rural and coastal communities.

The fund will develop a UK-wide framework for investment in places receiving funding. It will prioritise investment in people and skills tailored to local needs, such as work-based training and supplementing and tailoring national programmes; and investment in communities and place, including cultural and sporting facilities, civic, green and rural infrastructure, community-owned assets, neighbourhood and housing improvements, town centre and transport improvements and digital connectivity. There will also be investment in local business, including support for innovation and green and tech adoption, tailored to local needs once again. In terms of how this will work, places receiving funding will be asked to agree specific outcomes to determine within the UK-wide framework. We have also said that investments should be aligned with the Government’s clean growth and net-zero objectives.

That is the start of the principles on which this funding will be allocated but, as I have said, further details will be set out in an investment framework to be published in the spring. I have also said that we will continue to engage with the devolved Administrations on the development of that framework in advance of its publication. I reassure the noble Lord, Lord Stevenson, who asked about the timings of that framework and the multiyear shared prosperity fund that will come in from 2022 onwards, that the existing EU structural funds are still in place; they begin to tail off, but in 2021-22 at least the same amount of money will remain available to those areas under the existing funds. That gives us time to consult properly all those who may be involved on the framework, and for people to see how it will operate when it comes into place. In addition, next year £220 million will be made available to areas to pilot different approaches and begin to test out how this principle should work.

I hope some of those points also address the noble and learned Lord’s fourth point, on “Westminster knows best”, meaning that we do not trust Governments to spend in this area. I reiterate that this is a different approach to the devolved nations; we are talking about replacing EU funds with a UK-wide strategic fund. It is not about replacing the responsibilities of devolved Administrations but supplementing them with a strategic approach at the UK level. These powers do not amend any of the devolution Acts. On the final point about strengthening the union, that is one of the purposes of putting in this UK-wide power. It is to complement and strengthen it on areas where action may need to be taken across nations and regions.

The noble Lord, Lord Fox, asked about consultation with areas that are not devolved Administrations or mayoral combined authorities. I reassure him that we will do our best to consult local authorities and all parts of England, as well as the devolved nations. I believe the Government are bringing forward further plans on devolution that will give areas those strengthened local voices at some future point.

I have addressed the point of the noble Lord, Lord Stevenson, about the potential shortfall in the funds. I have reassured him on that, and that this power is intended to be additional to those powers of the devolved Administrations. I also reassure him that the powers and the shared prosperity fund will be different from Barnett; they will be based on a different understanding of needs and therefore separate from that formula. I can also reassure him that the fund will be open to the whole country, which was a theme of his. On the governance of the fund, I am not sure whether we have been so specific as to say that there will be a board; as I have said, there will be governance structures and the devolved Administrations will have a place within them. That is part of the further work we need to do, in consultation with the devolved Administrations and others, as we work to set out the framework that we will publish in the spring.

Photo of Lord Russell of Liverpool Lord Russell of Liverpool Deputy Chairman of Committees 4:30 pm, 9th December 2020

I have received a request to ask a short question of elucidation from the noble Lord, Lord Fox.

Photo of Lord Fox Lord Fox Liberal Democrat Lords Spokesperson (Business, Energy and Industrial Strategy)

The Minister will be aware that the current structural fund does not reach many regions across the United Kingdom, compared, I think, to the planned extent of the new shared prosperity fund. Can the Minister confirm whether that is true? If it is, and the money put into the shared prosperity fund is only—I use the word advisedly—as much as that put into the structural fund, it will be spread more widely. There will be losers among those who have been able to take advantage of the structural fund, because the money they would bid for will be spread to other regions and countries. Will the Minister acknowledge that? Is that perhaps one reason that the Government are rather reluctant to allow the devolved authorities any more involvement in this, because they know there will be issues around losing out on money that would have come through the structural fund but is now to be spread more widely across the United Kingdom?

Photo of Baroness Penn Baroness Penn Baroness in Waiting (HM Household) (Whip)

My Lords, the Government made a number of commitments on the shared prosperity fund in the manifesto, both about the overall quantum of the fund and the funding that different parts of the UK can expect to receive. We set out in the spending review that that would ramp up to £1.5 billion per year as the structural funds tail off. Our approach will be guided by that but, as I say, more detail will be set out in advance of the operation of the fund in spring next year, with the multiyear settlement coming in the following year.

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

I thank all noble Lords who have spoken in this short but interesting debate. I will deal with the Minister’s points in turn.

First, it seems clear that these powers—the Minister actually said this in Committee—were being taken to give the UK Government power to spend across the United Kingdom. These powers would plainly not be needed unless they were encroaching on devolved powers. City deals can be done without them; the Government can spend without them. I say respectfully to the Minister and to those who say this is a financial matter that it is not. When powers are devolved, the spending power goes with them. The reason of financial privilege is not correct.

Secondly, on how the funding works, I find it difficult to understand why, in light of what the Minister has said, she cannot agree to the very short amendment I have put forward. It spells out the principles, deals with consultation and ensures that, within the areas of devolved spending only—the amendment is clear on this—there should be agreement so that funds are spent together. With respect, the importance of this amendment is to show that, as we go forward, we do so as a United Kingdom with the central UK Government and the devolved Governments working closely together. Putting this provision in the Bill, particularly the structure under which this is to be done in this area, would be an enormous reassurance. It would strengthen the union, not imperil it, by enabling inconsistent spending to occur in devolved areas. Having listened to the debate and heard what all noble Lords have said, I seek to take the opinion of the House on this issue.

Ayes 305, Noes 236.

Division number 3 United Kingdom Internal Market Bill - Commons Reasons and Amendments — Motion K1 (as an amendment to Motion K)

Aye: 305 Members of the House of Lords

No: 236 Members of the House of Lords

Ayes: A-Z by last name

Nos: A-Z by last name

Division conducted remotely on Motion K1 (as an amendment to Motion K)

Motion K1 (as an amendment to Motion K) agreed.