Motion A1 (as an amendment to Motion A)

United Kingdom Internal Market Bill - Commons Reasons and Amendments – in the House of Lords at 3:21 pm on 14th December 2020.

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Lord Hope of Craighead:

Moved by Lord Hope of Craighead

At end insert “but do propose Amendments 1F, 1G, 1H, 1J, 1K and 1L in lieu—

1F: Clause 10, page 7, line 23, at end insert—

“( ) The Secretary of State must by regulations under subsection (2) exclude the application of the United Kingdom market access principles to a statutory provision or requirement that gives effect to a decision to diverge from harmonised rules that has been agreed through the common frameworks process.”

1G: Clause 15, page 9, line 27, at end insert—

“( ) “Common frameworks process” means the process, established by the Joint Committee on European Negotiations, by which a measure of regulatory consistency to enable a functioning internal market within the United Kingdom may be mutually agreed between the United Kingdom and the devolved governments.”

1H: Clause 17, page 12, line 42, at end insert—

“( ) The Secretary of State must by regulations under subsection (2) add the services referred to in a statutory provision or requirement that gives effect to a decision to diverge from harmonised rules that has been agreed through the common frameworks process to the authorisation requirements in Part 3 of Schedule 2 or the list of regulatory requirements, as the case may be, to which section 18 (mutual recognition) or sections 19 and 20 (non-discrimination) do not apply.”

1J: Clause 21, page 14, line 35, at end insert—

“common frameworks process” means the process, established by the Joint Committee on European Negotiations, by which a measure of regulatory consistency to enable a functioning internal market within the United Kingdom may be mutually agreed between the United Kingdom and the devolved governments;”

1K: Clause 25, page 19, line 24, at end insert—

“( ) The Secretary of State must by regulations subject to the affirmative resolution procedure exclude the application of section 22(2) to a provision which has been agreed through the common frameworks process.”

1L: Clause 27, page 21, line 19, at end insert—

“common frameworks process” means the process, established by the Joint Committee on European Negotiations, by which a measure of regulatory consistency to enable a functioning internal market within the United Kingdom may be mutually agreed between the United Kingdom and the devolved governments;”

Photo of Lord Hope of Craighead Lord Hope of Craighead Chair, High Speed Rail (West Midlands - Crewe) Bill Select Committee (Lords), Chair, High Speed Rail (West Midlands - Crewe) Bill Select Committee (Lords) 3:30 pm, 14th December 2020

My Lords, in moving Motion A1, I shall speak to Amendments A1F to A1L in my name.

I am grateful to the Minister in the other place, Chloe Smith, and her Bill team, for taking time to discuss the common frameworks issue with me last Thursday. I am also grateful to the Minister for taking time on a busy day to attend that meeting, and for his very helpful introduction to this debate. As a result of that meeting, both sides now have a much better understanding of the issues that divide us. We are much closer to a solution, but we are not quite there yet, which is why I have tabled these amendments in lieu, and why I will be seeking the opinion of the House on them at the end of this debate, so that we can continue this discussion.

These amendments I now offer to the House contain two very significant changes from those disagreed to by the other place. First, I have removed a provision designed to protect the common frameworks process while it was in progress. It was objected to as it would have created delays and legal uncertainty. I recognise that it was not in the interests of the internal market, so it has gone. There should be absolutely no misunderstanding about that. Secondly, I have changed my approach to the way in which the common frameworks issue should be fitted in to the Bill, now seeking to use mechanisms already in the Bill to achieve that result. Their purpose is twofold: to cure the inconsistency between the Government’s support for the common frameworks on the one hand and its promotion of the market access principles on the other—which does not fit in with the Minister’s word “complementary” a moment ago—and to provide certainty so that everyone will know what the measure that needs protection is and why it is there.

One of the principles agreed between all four nations when the common frameworks process was set up in 2017 was that, as the devolution settlement required, it allowed for policy divergence where this was within devolved competence. However, a decision to diverge will be agreed under that process only if all the parties to it, including the UK Government, are satisfied after careful examination and assessment of its nature and effect that the decision will not create a barrier to trade across the UK. The Bill’s market access principles, on the other hand, operate automatically. As the Bill stands, a measure that gives effect to an agreed decision to diverge can be ignored by traders bringing goods in from other areas. This undermines the opportunity to diverge, rendering it worthless and ineffective. With reference to the Minister’s comment on what I was saying about uncertainty last time, my concern is not with traders bringing goods in across borders; they have the protection of the market access principles and their position is plain. My concern is with traders doing business within their own areas, having to decide what articles they could properly and safely put for sale on their shelves. That is no kind of answer.

The effect of the amendments is that the Secretary of State will be required by regulations to direct that the market access principles will not apply to a measure of the kind I have described. The UK Government will therefore be involved at every stage of the process. I stress that the decision cannot be put into effect unless the UK Government have agreed to it, and it is only the UK Government, through the Secretary of State, who can give it the immunity it needs.

I emphasise once again that my intention is not to create barriers. It is about allowing for policy divergence in ways found by this process to be consistent with the internal market. I hope that those noble Lords who have drawn on their long experience of what makes businesses work, which this House values so much during our debates, are reassured on that point. At heart this is an issue about devolution. It was because of devolution that the common frameworks process, and the opportunity for policy divergence, was instituted with the encouragement of the UK Government in the first place. Their support for that process must involve support for policy divergence too.

As we continue our discussions, it may be suggested that what I am looking for could be met by assurances, but we are dealing here with arrangements designed to last for a long time. They need to bind future Governments as well as this one. That is why they must be in the Bill. The process of refining my proposals has been rather like opening a Christmas present buried within layer after layer of paper. Eventually it is revealed, smaller that the wrapping led one to expect, and one wonders why it took so much paper. I am afraid it has taken me some time to reduce my proposals to their essentials, but that is where I am now. I beg to move.

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

My Lords, I thank the Minister for clearly setting out his objections to the last set of amendments. In his closing words he said that the Government view the common frameworks process as complementary to the market access principles. Listening to the noble and learned Lord, Lord Hope, it was very clear that there is a discontinuity—a lack of complementariness—between the two positions. As the noble and learned Lord set out, a central feature of the framework agreement is to come to an agreed process for divergence between the four nations, within which the UK has a major role. That divergence is killed off by the automatic nature of the market access principles. That is the central point that the noble and learned Lord’s amendments address. In doing so, the new versions of the amendments have taken on board the comments that have come back from the other place, having recognised the level of uncertainty that could have been injected by a previous proposed new clause, which has now been removed. The amendments adopt the regulations within the Bill to facilitate that decision, so that it is consistent with the way that the Bill seeks to operate, but also consistent with the principles of devolution that have served this country so well to date.

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, perhaps we need to remember why we are here. It is really quite simple. When the case for Brexit was all about “taking back control”, we failed to understand that the Government meant taking control to themselves, even over issues that were fully devolved. However, when the Bill was published—without any involvement from the devolved authorities, remember—we soon discovered that it ran roughshod over devolved competences, as the noble Lord, Lord Fox, said, trumping the common frameworks programme.

I have often wondered whether this was deliberate or an oversight, though the lack of prior consultation suggests the former. However, that makes the statement on the publication of the Bill, on 9 September, signed by the Scottish Secretary but not the Welsh Secretary, and by Mr Sharma and Mr Gove, a bit strange in the light of this Bill. It says that the devolved Administrations will enjoy a “power surge” when the transition period ends.

Let us take that at face value. Perhaps the particular construction of the Bill was clumsy—as an oversight rather than deliberate—and perhaps it is right that the Government did not intend to bring back to themselves all the powers long devolved to the other three authorities, but in that case the amendments tabled by the noble and learned Lord, Lord Hope, would rectify the problem. They would simply restrict the market access powers in the Bill, which of course are only about devolved competences, to those where the four-party process failed to reach agreement.

As the Government are one of those four parties, they will be in a very strong position to revert to the Bill, and to Parliament, for the powers they feel are vital for an internal market on areas where disagreement cannot be overcome. That seems, to this side of the House, a simple, clean solution. It would hard-wire in a common frameworks process which the Government themselves described last week in the latest of their three-monthly reports on the frameworks—reports which, I think, we added to Schedule 3 to the EU withdrawal Bill as a requirement for the Government to publish—as

“an agreed approach to ensuring regulatory coherence” in devolved areas. That is absolutely spot on—coherence, not uniformity—and that is probably where we are trying to get to. The problem is that, as written, the Bill adopts “uniformity”.

The same document, which has just been published, despite having talked about coherence, then asserts:

“Common Frameworks cannot guarantee the integrity of the entire UK Internal Market.”

However, the document does not provide any evidence of why the frameworks will not work. It gives no examples of where, within devolved competences, any agreements might not work. Indeed, the Minister, in introducing the debate, again asserted that it would have to be for Parliament alone to decide when the market access rules would not be used, but he did not explain why the four-party process would not be able to deal with that and why they would come to Parliament only when there was a failure to agree. The same document notes the “freezing power” contained in the withdrawal Act, and it also notes that it has never needed to be used, but it fails to suggest where it might be needed.

Therefore, in the Bill the Government are saying that on the one hand the frameworks are very good and have been able to produce coherence but, on the other hand, the Bill allows the market access principles to trump that process, even if it produces agreement.

We have it said before and I say it again: we on this side of the House want an internal market which thrives and serves the needs of business, the professions, consumers and the environment, but it has to be one that respects rather than dismantles devolution. These amendments seem to us to offer the path to achieve that, so we will support the noble and learned Lord when, as I am sure he will do, he asks the House to vote. I hope that in the light of that vote we can, as the Minister suggested, continue the dialogue so that we can reach an agreed position that would safeguard all that has been going on with the devolution settlements and the common frameworks process but, in the last analysis, would of course come back here.

Photo of Lord True Lord True Chair, Intergenerational Fairness and Provision Committee, Minister of State (Cabinet Office), Chair, Intergenerational Fairness and Provision Committee 3:45 pm, 14th December 2020

My Lords, once again, I am very grateful to those who have contributed to the debate. Although the cast is smaller, I know that the interest is no less great. The sense of respect for the devolved institutions, which has gone right across your Lordships’ debates on the Bill, is important and shared by all of us, however we view the question raised in the amendments.

I also thank all those who have participated in the ongoing dialogue outside your Lordships’ House on this matter. Naturally, I will shortly seek to persuade your Lordships not to support the noble and learned Lord’s Motion for the reasons I have given, but the strength of feeling expressed in this House and in the other place is testament to the important role that common frameworks play in intergovernmental working and this country’s future outside the European Union, and indeed within the overall structure of intergovernmental relations within the United Kingdom.

The Government are committed to working with the devolved Administrations to deliver these agreements to the benefit of people from all four corners of the United Kingdom, and we welcome the strong support that has been shown for common frameworks by both Houses, not least by the noble and learned Lord, Lord Hope of Craighead, in his noble efforts to unwrap a Christmas parcel. I am sure that the jewel of mutual respect is there, whatever the outcome of the debates on this question.

Common frameworks allow the Government and the devolved Administrations to engage in meaningful dialogue about how all parts of the country can benefit from the new powers flowing from the European Union. I say to the noble Baroness opposite that they are flowing from the European Union. However, common frameworks are primarily concerned with processes rather than determining specific policy outcomes, and as such they do not obviate the need for the market access principles in these areas. I believe it is common ground across this Chamber that it is for the United Kingdom Parliament and its Members from all four nations to have a role in safeguarding a market across all parts of the United Kingdom.

Common frameworks are not intended to be an all-encompassing solution to the maintenance of that internal market. The Government’s belief is that additional legislative protection provided by this Bill will provide certainty for the status quo of internal UK trade. Broad disapplication of elements of the Bill risks removing that certainty, which is needed for business and citizens in all four parts of the United Kingdom. Again, I believe that is a common objective. For that reason, we believe both common frameworks and the market access principles—if the word “complementary” is not cared for, I will say “working in tandem”—to be necessary to guarantee the integrity of the entire United Kingdom internal market.

The security that this Bill provides is crucial for the people and businesses of England, Scotland, Wales and Northern Ireland. It is essential that we ensure that this certainty is provided in all areas, including in the devolved policy areas, where powers flow from the European Union to London, Edinburgh, Cardiff and Belfast.

Of course, I hear the arguments and representations put forward in the characteristically modest approach of the noble and learned Lord, Lord Hope of Craighead, but the Government’s belief is that we cannot afford to risk denying our citizens the ability to trade seamlessly across the United Kingdom, as they do now. I hope this is something that your Lordships’ House can agree with, and I hope that, in order to provide this certainty, the noble and learned Lord will find himself able to withdraw his Motion. In the event that he is unable to do so, the remarks that I made earlier obviously stand.

Photo of Lord Hope of Craighead Lord Hope of Craighead Chair, High Speed Rail (West Midlands - Crewe) Bill Select Committee (Lords), Chair, High Speed Rail (West Midlands - Crewe) Bill Select Committee (Lords)

My Lords, I am grateful to those who have contributed to this short debate. I would like to pick up on some words that the Minister said in his reply. The words “mutual respect” have characterised the meetings that I have been privileged to take part in as we have moved towards the position that I am adopting. I think it is a very healthy system that allows us to conduct these discussions in such a manner as we seek out the positions that each of us is trying to adopt and possible ways of accommodating them.

At the end of the day, as I have said on a number of occasions, it really is up to the Government. I am looking to them to facilitate in some way the process by which an agreed decision to diverge, which has gone through all the processes of the common frameworks system, may be protected against the sharp edges of the internal market principles. I do not believe that that will in any way disrupt the workings of the internal market; indeed, there are benefits from allowing the devolved Administrations to develop their ideas in a way that is consistent with the internal market by the use of this process and the opportunity for divergence that it allows for.

The Minister has invited me to withdraw my Motion, but in truth I cannot properly do that, given that we are in a process of continuing discussion and we have not yet had a proposal from the Government that provides a solution to the problem that I am seeking to address in my amendments. For those reasons, I wish to test the opinion of the House.

Ayes 332, Noes 229.

Division number 1 United Kingdom Internal Market Bill - Commons Reasons and Amendments — Motion A1 (as an amendment to Motion A)

Aye: 332 Members of the House of Lords

No: 229 Members of the House of Lords

Ayes: A-Z by last name

Nos: A-Z by last name

Division conducted remotely on Motion A1

Motion A1 agreed.