House of Lords
Monday 2 November 2020
The House met in a hybrid proceeding.
Prayers—read by the Lord Bishop of Winchester.
Arrangement of Business
My Lords, the Hybrid Sitting of the House will now begin. Some Members are here in the Chamber, respecting social distancing, while others are participating remotely, but all Members will be treated equally.
Death of a Member: Lord Shutt of Greetland
My Lords, I regret to inform the House of the death of the noble Lord, Lord Shutt of Greetland, on Friday 30 October. On behalf of the House, I extend our very sincere condolences to the noble Lord’s family and friends.
Arrangement of Business
My Lords, Oral Questions will now commence. Please can those asking supplementary questions keep them short and confined to two points. I ask that Ministers’ answers are also brief.
Jammu and Kashmir: Human Rights
To ask Her Majesty’s Government what assessment they have made of the human rights situation in Jammu and Kashmir.
In begging leave to ask the Question standing in my name on the Order Paper, I declare an interest as someone who was born in Kashmir and who has family and friends living on both sides of the line of control.
My Lords, the Government recognise that there are human rights concerns in Indian-administered Kashmir. We encourage all states to ensure that domestic laws are in line with international standards. Any allegation must be investigated thoroughly, promptly and transparently. We also welcome reports that some restrictions are being relaxed and detainees released. We call on the Government of India to lift all other restrictions as soon as possible. We continue to raise our concerns with the Indian Government directly.
I thank the Minister for that Answer. Have the British Government taken note of the four letters written recently to the Indian Government by UN rapporteurs on torture, arbitrary detentions, extradition and custodial killings in Indian-administered Jammu and Kashmir? Furthermore, do we know what the Indian Government’s response was? If there was no response, what course of action do our Government, as a P5 member of the UN Security Council and a defender of human rights, suggest that the Security Council takes?
My Lords, we are aware of these letters and reports that the Government of India have not yet responded. As I said, we recognise human rights concerns and encourage all states to ensure that their domestic laws are in line with international standards. Any allegation of human rights violations or abuse is deeply concerning and must be investigated thoroughly. Where we have such concerns, as I said, we raise them directly with the Government of India.
My Lords, Amnesty International raised particular concerns over the crackdown on civil society and journalists in Kashmir and Jammu. Can the Minister detail what steps the Government have taken to protect press freedom? Have they engaged with the International Federation of Journalists, which has consistently fought for reporting rights in Jammu and Kashmir, as well as globally?
My Lords, I will write to the noble Lord on his final point about formal engagement. As he knows, media freedom and the protection of journalists is a priority for Her Majesty’s Government; we are leading on a coalition with Canada. On the specific issue of Amnesty International and its situation in India, I assure the noble Lord that I have raised that directly with the Government of India.
My Lords, the former Chief Minister of Indian-administered Kashmir, Mrs Mufti, was detained in August last year when the Indian Government stripped the region of its partial autonomy. She was put under house arrest under a law that allows detention without charge for up to two years. She has only just been freed. Have the Government raised this and other arbitrary detentions in the region with the Government of India?
My Lords, I assure the noble Baroness that we have; we raised that specific case.
My Lords, in Indian-administered Kashmir, Kashmiris enter their 16th month of lockdown, with curfews, a ban on communication access, closing of media outlets and widespread arrest of politicians and human rights activists. Will the Government press for a free and independent plebiscite for Kashmiris, as mandated by the United Nations? Does the Minister recognise the urgency of Kashmiris having their voice heard at a time when the BJP Indian Government are deliberately changing the population reality on the ground, in contravention of UN resolutions?
My Lords, as I have said, we welcome the lifting in recent weeks and months of some restrictions in Indian-administered Kashmir, including the restrictions on the internet; 2G and, in certain parts of Indian-administered Kashmir, 4G have been restored. However, we remain concerned, as my noble friend has said, at the ongoing detentions. While we welcome the recent release of the former Chief Minister, other detentions continue, and we continue to raise them. It is the long-standing position of Her Majesty’s Government on any dispute between India and Pakistan that it is for both countries to sit down and resolve their disputes and differences.
My Lords, the population of the Kashmir Valley is 95% Muslim. To allege that Muslims suffer human rights abuses cannot be true. It appears to be propaganda against India by troublemakers and terrorists. Even after the revocation of Article 370, cases of terrorism are sadly still being reported in the union territory of Jammu and Kashmir today. The terrorists are the worst violators of human rights. Does the Minister agree that we cannot accept continued religious hatred against a particular community in Jammu and Kashmir, or acts of terrorism, regardless of their motivation and where they take place?
My Lords, as I have already said, we raise concerns about human rights in Indian-administered Kashmir regularly and constructively with the Indian Government. I agree with the noble Lord—I am sure I speak for all noble Lords on this—that we condemn, without any hesitation, all forms of terrorism. Any targeting of a community because of its religious rights or beliefs is totally against the norms of any functioning democracy.
Is the Minister aware that hundreds of applications for habeas corpus have been lodged in the High Court of Jammu and Kashmir over a 15-month period, arising out of the arbitrary detention without trial of thousands of people —including, as we have heard, political and community leaders—under the public safety Act? The court rules specify a 14-day time limit from lodging an application to the hearing. They have not even been listed, let alone dealt with. This is especially urgent since the shocking wave of arrests on 28 October. Will Her Majesty’s Government join the Jammu and Kashmir High Court Bar Association in its strenuous protests to the Indian authorities against these breaches of the United Nations human rights convention?
My Lords, the United Kingdom Government are clear. We have a constructive and strong relationship with India which allows us to raise candidly and privately issues of human rights abuses, wherever they may occur, or human rights concerns we may have. As I have said, any allegation of human rights abuses must be investigated thoroughly, promptly and transparently. We make that point to the Indian authorities.
My Lords, will the Minister explain why we immediately supported sanctions against Russia when it annexed the Crimea, even though 97% of the people of Crimea regarded themselves as Russian and had supported Russia in its annexation, yet no action has been taken since India’s revocation of Jammu and Kashmir’s special status? It has imposed total lockdown on the majority Muslim population and thousands, as we have heard, have been taken prisoner and many tortured. Can the Minister please explain why we behaved differently?
The issue was raised by the noble Baroness herself; one is a revocation of a constitutional item and the other is an annexation of a territory. They are two very different legal positions. We continue to raise the situation in Indian-administered Kashmir with the Indian authorities.
The Minister will agree that India is the largest working democracy in the world. The rights of her 1.3 billion citizens are protected in the constitution regardless of race, religion or gender—I repeat, gender. India also has the world’s most diverse population, living side by side in perfect harmony for centuries. The rights of all are protected through the constitution, including those of over 200 million Muslims. The same is reflected in Jammu and Kashmir; the province benefits from all rights under the Indian constitution.
My Lords, we of course support Indian democracy. My noble friend is right to raise the constitution of India, which protects the rights and freedoms of all communities.
My Lords, Britain’s partitioning of India on the fallacy of irreconcilable religious differences promoted active hostility between Pakistan and India, particularly in Jammu and Kashmir. Independent reports confirm a significant increase in human rights abuse since the Indian army takeover of the disputed region. Does the Minister agree that Britain has a moral responsibility to work for a greater measure of secular autonomy for the Hindu, Muslim and Sikh populations of one of the most beautiful places in the world?
I agree that Kashmir is one of the most beautiful places in the world. We continue to raise issues of concern with the Indian authorities, and indeed the Pakistani authorities, on ensuring rights and freedom for all.
It is quite clear from the Minister’s words that both sides are not sitting down and resolving their issues, and nor is our Government’s raising of issues with the Indian Government working. There has been a demonstrable escalation in atrocities since the lockdown and split last year. It is clear that UN resolutions are being ignored with impunity. What do the Government believe has to happen before the international community responds, or is the UN to be ignored and regarded as a crocodile with rubber teeth?
My Lords, the Government are seeing progress. As I have already indicated, we are seeing some positive movements on easing the lockdown and the release of detainees in Indian-administered Kashmir, and continue to do so. We have a continuing, strong, progressive and constructive dialogue with the Indian Government which allows us to have very candid and frank exchanges on issues of concern. We raise these regularly and will continue to do so.
My Lords, the time allowed for this Question has elapsed.
Home Secretary: Allegations of Bullying
To ask Her Majesty’s Government when they expect to publish the report of their investigation into allegations of bullying of officials by the Home Secretary.
My Lords, the Government take complaints relating to the Ministerial Code seriously. The Prime Minister asked the Cabinet Office to establish the facts in line with the code. To protect the interests of all involved, the Government do not comment on the specifics of this kind of ongoing process. The Prime Minister will make any decision on the matter public once the process has concluded.
My Lords, justice delayed is justice denied. Surely for civil servants in the Home Office, past and present, this long delay of eight months is intolerable. In accord with natural justice, can the Minister now confirm that no one with a personal or political interest will have had any involvement whatever in the independent investigation into the behaviour of the Home Secretary, the report or the timing of its publication, and that that will clearly rule out any involvement by the Prime Minister?
My Lords, I can certainly confirm that the process is independent, but I can only repeat that, to protect the interests of all involved, the Government do not comment on the specifics of this kind of ongoing process. I repeat that the Prime Minister will make any decision on the matter public once the process has concluded.
My Lords, the last inquiry into the conduct of a Cabinet Minister in 2017 took one month. This has taken eight months so far, although at the beginning, Michael Gove said:
“It is vital that this investigation is concluded as quickly as possible.”
Does my noble friend agree that it is fair to neither the complainers nor the Home Secretary for this matter to last so long? Can he also confirm that the separate case being brought against the Home Office by Sir Philip Rutnam for constructive dismissal is not responsible for this delay as that case is not to be heard until September of next year?
My Lords, I am sorry to disappoint my noble friend so far as the timing is concerned. However, it is not possible to comment on an ongoing process. What I can say in relation to the other matter he has raised is that he will know that they are separate legal proceedings and that, unfortunately, I cannot comment on ongoing legal proceedings either.
My Lords, given the difference in their respective roles, it is not at all unusual for tensions to arise from time to time between Ministers and officials. Indeed, this is healthy if kept within reasonable bounds. Can the Minister assure the House that, whatever the outcome of the current case, the Government will foster between Ministers and officials a culture of robust debate carried out with courtesy and respect on both sides? Does he agree that such a culture is not advanced by the airing of differences in the media?
My Lords, I agree with much of what the noble and gallant Lord has said, in particular that all civil servants must feel free to give independent and open advice, and that Ministers should respect all those who give such advice.
My Lords, is it not the case that the Prime Minister has undermined this process by declaring his full confidence in the Home Secretary from the outset? Is it also not the case that the Prime Minister has form, as we saw with the Russia report, with delaying politically inconvenient reports? How can this process be independent if the Prime Minister is the final arbiter?
The process is independent. The Prime Minister asked the Cabinet Office to establish the facts, in line with the Ministerial Code, and the Independent Adviser on Ministers’ Interests, Sir Alex Allan, has a role through providing further independent advice to the Prime Minister. So far as the process is concerned, I regret that I must repeat that I cannot comment on that while it is continuing.
My Lords, the noble Lord, Lord Young, in response to a previous answer from the Minister, said that the code is an honour code, implying that it is up to the Minister concerned to take responsibility and to resign in the case of a serious breach. Last month, the Cabinet Secretary said to a Commons committee that the Prime Minister is the ultimate arbiter. That seems deeply inappropriate in the current conditions. Does the Minister not think that there is merit in the First Division Association proposal that an independent arbiter, with status outside government, should be the final arbiter in these cases?
My Lords, I stated just now that there is an Independent Adviser on Ministers’ Interests, and that is Sir Alex Allan, who has a role. I have also studied the Cabinet Secretary’s evidence to PACAC on 22 October. He said what I have said, which is that, in the interests of all those involved in the process,
“We are not giving a running commentary on the process.”
That is a quotation from the Cabinet Secretary and I agree with him.
The Minister keeps saying that this is an ongoing process. The review was completed eight months ago. I do not know whether the Prime Minister is a very slow reader or whether, as Laura Kuenssberg has said, this has simply been parked. If it is the latter, can we take it out of the underground garage, please?
My Lords, I have nothing further to add to the replies I gave earlier about the ongoing process.
What sort of behaviour is sufficiently aggressive to be described by the Government as bullying?
My Lords, the Government take bullying very seriously. In 2018, the Civil Service undertook a review of the arrangements for tackling harassment and misconduct within the service. The Ministerial Code is clear that
“harassing, bullying or other inappropriate or discriminating behaviour is not consistent with the Ministerial Code and will not be tolerated.”
That is the position of the Government.
My Lords, no wonder trust in the Government is plummeting. In 2019, the Prime Minister updated the Ministerial Code and in the foreword he wrote:
“There must be no bullying and no harassment. The precious principles of public life enshrined in this document—integrity, objectivity, accountability, transparency, honesty and leadership in the public interest—must be honoured at all times.”
There are no qualifications; there should be transparency at all times. Those are his own words. Can the Minister explain in this case how those precious principles can be honoured in the absence of the publication of this report?
My Lords, I refer again to what the Cabinet Secretary said about the process. On bullying, I underline again what I said earlier. The Civil Service helps those who wish to make complaints. In 2019, we ran a cross-departmental “speak up” campaign to encourage individuals to come forward and report poor behaviours. A further campaign is proposed for this year.
My Lords, is not the irresistible inference both from the delay and from the answers that the Minister has given that the Government have something to hide? What is it?
My Lords, I can resist the inference.
My Lords, one of the main deterrents to reporting workplace bullying is the fear of retribution by the perpetrator. One way of facilitating the reporting of such incidents is through an independent hotline outwith the normal line management structure of the organisation. Having just attended the excellent parliamentary webinar course on Valuing Everyone, in which an independent hotline is paramount, can the Minister say whether the great departments of state provide such independent whistleblowing hotlines?
My Lords, the noble Lord has made an important point. As I have indicated to the House, full assistance is provided to those who make complaints. There is also a facility to make complaints without the disclosure of names. I agree with what the noble Lord has about the Valuing Everyone training, and I confirm to the House that all Cabinet Ministers, including the Prime Minister, have either taken Parliament’s important Valuing Everyone training or have made arrangements to do so.
My Lords, the time allowed for this Question has elapsed and we have dealt with all the supplementary questions.
Terrestrial and Freshwater Protected Sites
To ask Her Majesty’s Government, further to A Green Future: Our 25 Year Plan to Improve the Environment, published on 11 January 2018, what plans they have to bring forward the 2042 target date for the restoration of 75 per cent of terrestrial and freshwater protected sites to a favourable condition.
My Lords, in declaring my interest as chair of the Cornwall and Isles of Scilly Local Nature Partnership, I ask the Question standing in my name on the Order Paper.
My Lords, the Environment Bill requires us to set at least one target in each of the four priority areas, including biodiversity. We will bring these targets forward by 31 October 2022. Our recent policy paper, Environment Bill—Environmental Targets, outlines our initial thinking on objectives for targets, which we will develop over the coming months, including on the condition of protected sites. Before committing to specific targets, we will gather further evidence, including by carrying out a public consultation.
My Lords, I thank the Minister for his Answer, and I recognise his great work on environmental concerns. But does he not agree with me that it is almost inexplicable that the appetite in an environment plan is so little as to have only three-quarters of sites of scientific interest ready and up to standard within 22 years? Is that not utterly lamentable, given the current biodiversity crisis, not just globally but in this country?
The noble Lord asks whether we will bring the target forward. The Environment Bill framework requires us to set targets by October 2022 for a minimum of 15 years, so a target set in 2022 would run until at least 2037. One of the targets we propose is on the condition of protected sites. Any targets, when agreed, would be set out in law through an SI by October. A goal of 75% is ambitious. Some cases, such as peat bog restoration, can take many years of hard conservation work before sites even come close to reaching a favourable condition.
My Lords, the Government recently said that nature-based solutions will be central to the negotiations at COP 26. What progress can the Minister report? What emphasis will there be on a global response in which other nations also restore soils and grasslands to act as carbon sinks?
Our nature strategy, which transcends the climate COP and has direct implications on the biodiversity COP being hosted in Kunming shortly before, is three things. The first is that we want more finance for nature. We are taking a lead in this country, having doubled our international climate finance to £11.6 billion. We have committed to spending a big proportion of that new money on nature-based solutions. We want other countries to do similarly and to mobilise private finance. A second area is targets. The Aichi targets are impressive, but they are ignored by pretty much every country. We want to include a means to hold individual countries to account on those targets. Thirdly, we want to tackle the drivers of environmental destruction, such as dodgy land-use subsidies that incentivise environmental destruction and by cleaning up our supply chains. The UK is showing real leadership in both those areas.
My Lords, could the Minister confirm whether the Government have co-ordinated their efforts with the devolved Administrations on the strong protection of our land and freshwater environment?
Many issues relating to biodiversity and nature are devolved. However, my department, Defra, is in routine negotiations and discussions with the DAs. In certain areas, we work particularly closely together. For instance, we have a target to plant 30,000 hectares of land a year by 2025. A great deal of that burden will be taken up by our friends in Scotland, so we are liaising closely on that and all issues relating to biodiversity and nature.
My Lords, the environmental performance report of 2 October shows that more action and investment is needed by several water companies, which are failing to protect. The Environment Agency has requested that all water companies develop, publish and implement specific plans to reduce the incidence of pollution by the end of this year. Will the Government request that additional monitoring or modelling is put in place if they find any data gaps?
Where water companies do not meet our expectations, we will toughen our regulation and push them to improve their performance. This will include the Environment Agency conducting in-depth audits and reviews of water company management systems and new technologies, such as continuous flow monitoring and event duration monitoring. The results of the Environment Agency’s audits and review will help it and us to target enforcement action appropriately.
My Lords, water pollution is a key cause of the decline in conditions of protected sites. All English rivers are currently failing to meet quality tests for pollution. Given that 40% of water pollution comes from agricultural run-offs, what specifically are the Government doing to get farmers to use fewer chemical inputs?
The principal tool we will use in the coming years is the transfer from the common agricultural policy subsidy system to the environmental land management system. Whereas farmers and landowners have, for decades, been incentivised to convert their land to make it farmable—in many respects grubbing out ecosystems and undermining nature—the new system will make those payments completely conditional on good environmental stewardship. It is probably the biggest bonus that nature and our environment more broadly will have experienced in the last century. Although that is not the only funding mechanism or tool at our disposal, it is undoubtedly the most powerful.
My Lords, does my noble friend agree that it is all very well talking about new targets, but we cannot meet our existing targets? Surely enforcement of our existing targets is the thing that matters. As has already been mentioned, the water companies and some bad farmers are not meeting standards and are not being fined. Clearly, the Environment Agency is not up to the standard required to issue fines. Does he further agree that fines on big companies, such as water companies, are a waste of time, as the ultimate payer is us—the user? The directors should get fined.
I certainly agree that the department, the Government and the Environment Agency should be using every tool at their disposal to ensure that the water companies behave responsibly and with environmental care. My colleague in Defra, Rebecca Pow, has established a new working group with the water companies to better understand, in the quickest possible timeframe, what more government can do and what the water companies should do to improve the quality of our water. I just make the point that bringing sites, whether water or land, into favourable conditions is a big challenge and takes time. Many sites were in poor condition when they were designated as protected sites. Some, such as peat bogs, can take decades to be restored to a favourable condition. The same is true for our river systems, which have had years of interference.
My Lords, I apologise to the noble Lord for returning once again to the question of polluted Welsh water running into English rivers. The farming rules for water in England have no counterpart in Wales. In his Written Answer to my Question on 27 October, the noble Lord said that his department had not been in touch with Wales and he cited devolution as the reason. I put it to him, respectfully, that we should cut through bureaucracy in the cause of common sense.
The noble Lord makes an extremely good point. I am afraid I am not in a position to update him on the letter I provided most recently. However, I will take his message back to the department with a view to making progress and, as he said, cutting through the red tape and bureaucracy.
My Lords, what hope do we have of being able to deliver what is an unacceptably distant and unambitious target, when we do not yet have a comprehensive baseline of natural capital assets against which we can measure progress? When can we expect to see those baselines, so that we know that progress is happening?
A number of pieces of work will help us to better understand the economics of biodiversity. One, as the noble Baroness knows, is the Dasgupta review, which we commissioned some time ago and is due to be produced very soon. She is right that we also need a more comprehensive audit or inventory of our natural capital in order to understand best how to introduce policies tailored to improving biodiversity. That work is ongoing. It is an enormous undertaking, and my department has been in discussions with the Treasury about working together to ensure that we are able and resourced to fill the gaps.
My Lords, by any measure, biodiversity in this country is now falling, at least in part because protected nature areas tend to be in small pockets that lack the necessary food webs and resilience for proper biodiversity. Can the Minister assure us that the zoning proposals in the planning White Paper will not make this situation worse?
I can give that assurance. Our planning reforms are intended to speed up decisions that can and should be sped up. We are determined to maintain and improve on the high standards we have set for our environment. We recognise that our biodiversity has been in sharp decline for decades; this transcends any one Government. We have put the levers and funding in place to begin the painful but necessary process of reversing those trends.
My Lords, the time allowed for this Question has elapsed.
Tax Avoidance: Base Erosion and Profit Shifting
To ask Her Majesty’s Government what steps they are taking in their discussions relating to the Organisation for Economic Co-operation and Development’s Base Erosion and Profit Shifting 2.0 Project to prioritise a fairer settlement for those less economically developed countries who lose income as a result of tax avoidance by multinational corporations.
My Lords, the UK remains committed to the OECD’s base erosion and profit shifting 2.0 project. We robustly support the discussions being taken forward in the OECD’s inclusive framework group. That includes more than 100 jurisdictions and ensures that less economically developed countries have an equal say in developing international solutions. The UK continues to champion international initiatives that build capacity in developing countries.
I thank the Minister for her answer. As she will know, low-income countries lose more of their income than do middle-income ones—some 9% as opposed to 3%—as a result of profit shifting by multinational companies. In the light of this, will Her Majesty’s Government prioritise the needs of low-income countries with a view to finding a process that will help them better than those presently on offer? I note that the Tax Justice Network is equipped and ready to take on this task if commissioned to do so.
The UK is committed to BEPS 2.0 being an inclusive process. Capacity building and technical assistance remain key priorities for the UK as they empower developing countries to draw on more of their own resources as key enablers of the sustainable development goals. This includes a £47 million package from the UK to support developing countries’ tax and public finance systems, including the OECD’s work on international tax standards to tackle evasion and avoidance.
My Lords, I underline what the noble and right reverend Lord, Lord Harries, has brought into focus. The loss of corporate tax—about 3% from high-income economies compared with 9% for low-income ones—further exacerbates the impact of coronavirus on trade and tourism. For example, sub-Saharan Africa currently faces its first recession in 25 years, with up to 14 million people driven into extreme poverty. Can the Minister assure the House that Her Majesty’s Government will urgently offer the OECD technical support in the form of revenue analysis along with support for legislative and policy measures so that countries that wish to implement unilateral tax reforms will have the wherewithal and advice to do so in the best way?
My Lords, I can make that commitment. By their very nature, these proposals will benefit low-income countries by expanding their tax rights and reducing the incentive to shift profits away from such jurisdictions. As I outlined in my previous answer, the Government are also committed to putting resources behind capacity building to ensure that low-income countries can also benefit from these measures.
My Lords, I welcome this extremely important Question. We have discussed pillar 1 before in this Chamber. My noble friend is aware of my views that the digital services tax is not working. The pillar 2 blueprint was published a few weeks ago. Although it is complex, it has four concrete proposals to ensure that international companies pay the minimum level of tax. One of these, the subject to tax rule, looks the most effective, as it encourages withholding tax. Can the Minister assure the House that the Government will support this?
My Lords, I assure my noble friend that pillar 1 remains the UK’s number one focus, partly so that we can achieve a multilateral agreement to replace the digital services tax, which was intended to be only temporary. We also recognise that a global solution will need to include outputs on pillar 2. We are working to ensure that these proposals, including the one referred to by my noble friend, are balanced and appropriately targeted, and have the support of all those involved in the negotiations.
My Lords, I draw attention to my entry in the register of interests: I am an unpaid senior adviser to the Tax Justice Network. The OECD has released aggregate country-by-country data from 26 countries including the US, China, Japan, France and India. This suggests that there is considerable international consensus around transparency. The UK has blocked the OECD from releasing its aggregate data. It would be helpful to know why. Furthermore, the analysis of the OECD’s data shows that Bermuda, a British Overseas Territory, is responsible for $10.9 billion of tax avoidance and evasion. This is particularly hitting low-income countries. Why do the UK Government continue to indulge these fiddle factories?
I am not aware of the particular issue that the noble Lord raises, but I will look into it and write to him. The UK is committed to progress on this initiative, which we started back in 2013 when we hosted the G20.
My Lords, the UN Conference on Trade and Development estimates that developing countries lose up to $200 billion every year in fiscal revenues due to a lack of in-country tax take. Why does CDC, the UK’s FDI, regularly use tax havens, which results in less money for health and education, the undermining of good governance and the consolidation of conditions in which corruption can flourish?
I do not recognise the picture that the noble Baroness painted. The UK stands behind the international action being undertaken through the OECD and the progress being made in tackling tax avoidance and evasion. Since 2010 the UK has invested more than £2 billion extra in HMRC to tackle evasion. This has brought dividends in narrowing the tax gap, which is at a near record low.
My Lords, I suggest that there is a lack of consensus, especially relating to the new proposed OECD framework. In view of that, what progress has been made on action 14—the peer review process, which ends in 2021—to improve dispute resolution between jurisdictions?
My noble friend is right. These negotiations are complicated, and they involve more than 100 jurisdictions. Although it is difficult, I welcome the progress that we manage to make. My noble friend is also right about action 14: the peer review process is under way. More than 45 jurisdictions have been reviewed so far and around 990 recommendations issued as a result of that process.
The noble Lord, Lord Kirkhope, is right: there is no consensus. When we in this country condemn companies that do not pay tax—we even have the digital tax—everyone is supportive, but developing countries are a different kettle of fish. We must win the argument for ensuring that the “taxing country” principle applies to developing countries. Will the Government make sure that supportive measures are taken not only within the OECD but within the United Nations to ensure that developing countries get their fair share of tax?
The noble Lord is right that this is not only an issue for developed countries but is essential for developing countries and their tax take. The UK believes that the OECD should be the primary standard-setting body for international tax standards, but we are absolutely committed to ensuring that the voices of developing countries continue to be central to those discussions. This is why we have been keen to build on the progress the OECD has made in integrating the interests of developing countries. The inclusive framework has over 100 non-OECD member states and 66 from less economically developed countries, to ensure that those voices are front and centre of these discussions.
My Lords, can the Minister comment on the progress of any of the 15 actions that are aiming to tackle tax avoidance and improve international tax rule coherence, and to ensure that profits are taxed where economic activity and value creation occur? Are the Government focusing on any specific areas, and has the pandemic had an impact on global co-operation in this area?
I am pleased to tell my noble friend that progress is still being made on these actions, despite the global pandemic. On 12 October, the OECD published its Reports on the Pillar One and Pillar Two Blueprints, regarding the new work going forward. The UK is working with the OECD to support multilateral implementation, having supported and implemented all the key components itself. The OECD published a progress report this year on actions taken.
My Lords, the time allowed for this Question has elapsed.
Nagorno-Karabakh: Genocide Emergency Alert
Private Notice Question
To ask Her Majesty’s Government, further to the genocide emergency alert issued by Genocide Watch about the situation in the Nagorno-Karabakh region, what assessment they have made of their obligations as a signatory to the 1948 Convention on the Prevention and Punishment of the Crime of Genocide.
My Lords, as a party to convention on the crime of genocide, the UK is fully committed to the prevention and punishment of genocide as appropriate under the convention. We remain deeply concerned about the impact on civilians of the conflict in the Nagorno-Karabakh region and continue to call for urgent de-escalation and a return to negotiations.
My Lords, I thank the Minister. For weeks, Turkey and Azerbaijan were preparing to commit genocide, and Azerbaijan continues to target civilian settlements, including a maternity hospital, with heavy weapons, cluster bombs and drones. According to Genocide Watch’s 10 stages of the genocidal process, Azerbaijan has already reached stage 9, extermination, and stage 10, denial. Will Her Majesty’s Government fulfil their duty to protect and make urgent representations to the UN Security Council to impose an embargo on the sales of arms to Azerbaijan and demand that Azerbaijan immediately stops all offensive attacks?
My Lords, we remain deeply concerned about the conflict, regret the lack of progress towards a peaceful settlement and, of course, condemn any targeting of civilians. There is an OSCE arms embargo in place related to the Nagorno-Karabakh conflict and we believe that that is sufficient to ensure that the international community is not inadvertently party to attacks on civilians from either side. We will continue to make urgent representations to stop all offensive attacks, both directly to the parties and through the OSCE and the UN Security Council.
My Lords, this is one of the frozen conflicts at the edge of Europe. The difficulty is that it could grow out of control as a number of other powers, such as Russia, Turkey, Iran and the rest, are interested in the south Caucasus. Will the Government show a little more activity in this respect and use their influence to ensure that the troublesome individuals and players in the field are reined in somewhat?
My Lords, I agree with the noble Lord that this is a deeply complex and historic conflict and that it presents a risk to regional stability. We are absolutely trying to avoid any instability within the region. The UK is taking an active role. We are not co-chairs of the Minsk Group, but we fully support it, and we are working with our international partners bilaterally and multilaterally. We have regular contact with the Foreign Ministers of both countries and continue to urge the de-escalation of this conflict. We know that there will not be a military solution, and we need to see both parties return to the negotiating table. The UK will continue to press for that.
My Lords, does the Minister agree that we have to look at this in the round, bearing in mind that there is a long history of distrust and a search for revenge in both parties? As the noble Baroness, Lady Cox, said, Genocide Watch gives Armenia a rating of eight and 10, so it is not without some blame or concern. Could the Minsk Group be kicked into life? Could the Government make sure that the US, this week or next week, takes this problem seriously and make sure that there is some activity there? At the least we need observation on the ground of what is going on, because knowing that if you commit crimes you pay a price might be a way of reining people in.
I thank the noble Lord for his question. I agree that we must see both sides come to the table and that both sides need to compromise. We fully support the Minsk Group, which has been working hard to make progress. We have seen meetings in Moscow, Paris and Washington but, sadly, despite these efforts there has not been a sustained ceasefire. However, significant efforts will continue and we will continue to support the co-chairs in their work to bring about a sustainable peace.
My Lords, the present Turkish Government are very sensitive to allegations of an Armenian genocide 100 years ago. Does this not underline the need for Turkey, a valued member of NATO, to be unambiguous in its dealings with the current conflict, not only by ensuring that arms are not supplied to those involved in the murder of women and children but by showing in the clearest possible way that it is urging the parties to seek peace? What discussions has my noble friend had with the Turkish Government?
My Lords, we agree with my noble friend that Turkey needs to be part of the solution. The Prime Minister discussed the situation in Nagorno-Karabakh with President Erdoğan on 28 September. We have had ongoing conversations with Turkey. Most recently our Foreign Secretary spoke to Turkey’s Foreign Minister. Turkey is a key NATO ally and sits on the front line of some of the most difficult and serious challenges we face. We encourage all external actors not to escalate the situation and to become involved in bringing about a peaceful solution.
My Lords, the noble Baroness has reminded us that we are signatories to the 1948 convention on the crime of genocide that places a duty on all its signatories to prevent, protect and punish. My noble friend Lady Cox reminded us that a maternity hospital has been bombed in Nagorno-Karabakh by Azeri forces. That is a war crime. What action are we taking to ensure that those responsible for war crimes are held to account? Important though it is to bring people back around the table, it must surely be a central objective of Her Majesty’s Government that those who are responsible for war crimes and genocide are appropriately held to account.
My Lords, the UK is fully committed to the principle that there must be no impunity for the most serious international crimes. We continue to voice our support for this principle and continue to support the work of International Criminal Court and the international tribunals to tackle impunity for these crimes. All allegations of war crimes or other atrocities must be investigated, prosecuted and, if appropriate, punished. We completely condemn any attack on civilians.
Will the Minister comment on whether Her Majesty’s Government believe that the criteria used to recognise Kosovo and the principle of internal self-determination which protects minority rights equally applies to the Armenians and Nagorno-Karabakh and on whether recognition might, as in Kosovo, prevent the possible ethnic cleansing of Armenians, which has historically characterised territorial border conflicts in that part of the Caucasus?
My Lords, we support the Minsk principles which ensure that there is an interim status for Nagorno-Karabakh and provide guarantees for security and self-governance. However, ultimately, future determination of the final legal status of Nagorno-Karabakh will need to be done through a legally binding expression of will.
My Lords, despite my initial concerns about the role of the US in the Minsk process, I am pleased about what has been attempted in recent weeks—certainly the brokering of the ceasefires which, as the noble Baroness mentioned, have sadly so far failed. The international community has a responsibility to promote and facilitate peace. As the noble Lord, Lord Pickles, said, we cannot ignore the role which outside actors are playing. Will the Minister tell us a bit more about what we are doing within NATO diplomatically to ensure that our concerns about Turkey’s actions are properly and adequately conveyed?
My Lords, I agree with the noble Lord that we have a responsibility to promote and facilitate peace. That is what we are trying to do in this conflict. I also agree that the US is playing an important role. I mentioned the talks that are happening in Washington and the strong statements from the both the heads of state and the co-chairs of the Minsk Group.
NATO does not have a direct role in the conflict, but the Secretary-General has expressed concern over the escalation of hostilities. NATO is calling for all sides to cease fighting immediately and to find a way towards a peaceful resolution. We strongly support that stance.
The Minister has just said that NATO does not have a role in the conflict. That is certainly true, as things stand, but clearly the position in the Caucasus could easily escalate, particularly given Turkey’s involvement. Can the Minister be a little more forthcoming about the activity that the Government are undertaking, in particular working to try to change Turkey’s position and to get it involved in seeking peace?
My Lords, I mentioned that we are having regular conversations with Turkey at all levels to assist it in playing a constructive role in bringing about an end to this conflict. Of course, we are aware of its strong partnerships and military relations in the region but it is important that it plays a role in bringing both sides to the table and encouraging negotiation.
My Lords, the escalation of conflict is exacerbated by Azerbaijan’s constant use of hostile propaganda. This is not conducive to effective peace negotiations. Will the Minister support Genocide Watch’s call for world leaders to condemn such hate speech and promote an end to hostilities and the implementation of a new ceasefire?
My Lords, we fully support a new ceasefire—that is indeed what we are calling for. As I said, we regret that the ceasefire conversations have not brought about a sustained ceasefire, but we continue to encourage both parties to start a ceasefire.
On hate speech, the UK works to combat intolerance and hate globally and to promote tolerance and respect. I join my noble friend in her condemnation of hate speech.
My Lords, the noble Baroness mentioned civilians. Is the Minister aware of reports of the use of phosphorus by Azerbaijan in attacking woodlands in Karabakh? This is extremely dangerous for civilians as not only is it toxic but it would also ignite the very woodlands to which they have been forced to flee by Azerbaijani shelling of towns. Can the noble Baroness ascertain whether these reports are true? If they are, what actions might the Government take?
My Lords, we have seen a number of reports highlighting some terrible incidents affecting civilians. We will continue to monitor that carefully. Over the weekend, we announced new UK aid support, which is directly targeted to help thousands of people who have been affected by the conflict. That support includes urgent medical supplies, food and safer shelters. It is a £1 million aid package in response to an appeal through the International Committee of the Red Cross.
My Lords, I welcome the Government’s assistance for aid. Almost a month ago Canada halted arms sales to Azerbaijan’s backer and ally, Turkey, in the Nagorno-Karabakh conflict. Will the UK do likewise?
My Lords, we continue to monitor developments in the region closely and consider all export applications thoroughly against a strict risk assessment framework. We keep all licences under careful review. The UK complies with the OSCE arms embargo relating to the Nagorno-Karabakh region. This is considered as part of our export licensing process.
My Lords, reliable reports suggest that Azerbaijan, supported by Turkey, continues to deploy illegal weapons against civilian settlements in breach of international humanitarian law and Geneva conventions. Will Her Majesty’s Government produce an urgent plan of protection, economic support and development for Nagorno-Karabakh?
My Lords, we will continue to do our utmost to end violations of international human rights law and, where appropriate, international humanitarian law. We are working to prevent the escalation of conflict and to help alleviate the suffering of those who are affected. I mentioned the new aid package to which the UK has contributed. We do not believe that there is a military solution. We think the best thing for the people of the region is for both parties to put aside any preconceived judgments and come to the negotiating table to bring about a peaceful settlement.
My Lords, the UK’s obligations are clear and binding—to prevent and suppress actions of genocide. Will Her Majesty’s Government refer the matter to the appropriate judicial authority in the UK or request a competent body of the UN to mandate the International Criminal Court to initiate investigations?
My Lords, we will continue to support the work of the International Criminal Court and international tribunals to tackle any war crimes that have been committed. We are looking carefully at Genocide Watch’s report and will continue to work with all our international partners to ensure that anybody who commits war crimes or other atrocities is properly investigated and prosecuted and, if appropriate, punished.
My Lords, all supplementary questions have now been asked.
United Kingdom Internal Market Bill
Committee (3rd Day)
Relevant documents: 14th Report from the EU Select Committee, 24th and 26th Reports from the Delegated Powers Committee, 17th Report from the Constitution Committee, 8th Report from the Joint Committee on Human Rights
My Lords, hybrid proceedings will now resume. Some Members are here in the Chamber respecting social distancing, others are participating remotely, but all Members will be treated equally. If the capacity of the Chamber is exceeded, I will immediately adjourn the House.
I will call Members to speak in the order listed in the annexe to today’s list. Members are not permitted to intervene spontaneously. The Chair calls each speaker. Interventions during speeches or “before the noble Lord sits down” are not permitted.
During the debate on each group I invite Members, including Members in the Chamber, to email the clerk if they wish to speak after the Minister. I will call Members to speak in order of request and will call the Minister to reply each time. The groupings are binding and it will not be possible to degroup an amendment for separate debate. A Member intending to press an amendment already debated to a Division should have given notice in the debate. Leave should be given to withdraw amendments. When putting the question, I will collect voices in the Chamber only. If a Member taking part remotely intends to trigger a Division, they should make this clear when speaking on the group. We will now begin.
Clause 25: Other exceptions from section 22
107: Clause 25, page 19, line 24, at end insert—
“(d) in relation to any part of the United Kingdom, the profession of patent attorney or trade mark attorney.”Member’s explanatory statement
This amendment would add patent attorney and trade mark attorney to the list of legal professions the regulation of which is excluded from Clause 22.
My Lords, Amendments 107 and 108 in my name aim to clarify the scope and application of the professional qualification clauses of the Bill. Amendment 107 adds patent attorneys and trademark attorneys to the list of legal professions excluded from the application of the automatic recognition principle in Clause 22. As well as work related to trademarks and patents, trademark and patent attorneys may carry out broader regulated legal activities which require an understanding of the underpinning legal system in the part of the UK in which they practise. Accordingly, we are bringing them into line with the other legal professions to ensure that they are not caught by the automatic recognition provisions of the Bill. These exclusions ensure that access to these professions is not affected in any way by the recognition provisions of the Bill. Part 3 will not affect how these professions are regulated, nor will it change what activities trademark and patent attorneys are able to perform.
Amendment 107A has been tabled by the noble Baroness, Lady Bowles, in response to this government amendment and seeks to probe the effects of the amendment in respect of authorised reserved legal activities under the Legal Services Act 2007. In respect of this amendment, I reassure the noble Baroness, Lady Bowles, that nothing in the recognition provisions of the Bill, or in the government amendment, changes how reserved legal activities are authorised under the Legal Services Act 2007, and her amendment is therefore unnecessary.
Amendment 108 is a technical amendment to provide clarity on the type of qualifications and experience requirements to which Clause 22 applies. It ensures that where qualification requirements are attached to specific activities, those requirements are disapplied by automatic recognition only if they apply to activities that are essential to the practice of the profession in question—in other words, if they amount to a barrier to access to the profession as a whole. This will ensure that Clause 22 does not apply to qualifications or experience requirements for activities which are not essential to the practice of the profession, such as optional service activities which professionals may choose to offer.
I recommend that government Amendments 107 and 108 be accepted, as they provide clarity on the scope and application of automatic recognition principles. I regret, however, that I am unable to support Amendment 107A, for the reasons I gave earlier. I hope that the noble Baroness will feel able not to press her amendment. I beg to move.
My Lords, I am a retired patent attorney, which is what made me curious about Amendment 107. I guess that is an interest of some kind, though no longer pecuniary.
In this group I have tabled Amendment 107A, which is intended to clarify what has become a confused situation. It can accurately cover all the legal professions named in Clause 25, although the confusion relates only to patent and trademark attorneys. Essentially, it says—as I think the Minister agreed—that there is no change to the status quo under the Legal Services Act 2007, which was the Government’s intention all along.
The background to this is that patent and trademark attorneys may be in the unique situation of being regulated and qualified on a UK-wide basis, while, through their sectoral professional qualifications, also engaging in four specific English and Welsh reserved legal activities, no matter where in the four nations of the UK they qualified, reside or practise. They do this as patent attorneys or trademark attorneys, not as lawyers.
The purpose of that unusual provision is, broadly, to enable conduct of litigation for all in the specialist England and Wales Patents Court, and for associated matters such as deeds and oaths to be dealt with. That unique construct does not fit within the definition of Clauses 22 and 23 for the professions when they are identified as patent attorneys or trademark attorneys because you cannot work it out so that there is a relevant part and the other part. Noble Lords are welcome to try—it takes quite a few pieces of paper. The point is that it is the same for all patent and trademark attorneys, wherever they are.
However, somewhere the niggling thought arose that perhaps it was confusing, or that the mutual recognition would apply notwithstanding that Clause 22 did not apply and would somehow extend the enjoyed England and Wales reserved activities to Scotland or Northern Ireland courts, deeds or oaths. Amendment 107 has, therefore, been proposed. It has the effect of defining patent and trademark attorneys as a legal profession in Clause 25, thereby putting them into Clauses 23 and 22 and simultaneously taking them out again. This hokey-cokey amendment was meant to stop confusion. It has, however, also created its own confusion, perhaps best illustrated in an explanation from the Ministry of Justice that said:
“If trademark and patent attorneys were not excluded from the UKIM bill, then one of your practitioners authorised to conduct litigation in Northern Ireland, for example, could potentially argue that under the automatic recognition principle IPReg must also allow them to conduct litigation in England and Wales without meeting the normal IPReg authorisation requirements for doing so”.
However, that does not fit the present circumstances that I have just explained. The patent or trademark attorney in Northern Ireland is qualified to conduct litigation in England and Wales but, actually, not to conduct litigation in Northern Ireland—and that is not the only wrong explanation that has been offered. Indeed, a few moments ago, the Minister referred to attorneys being qualified in respect of the part of the UK in which they practise. There is no such provision for patent and trademark attorneys. They just have that extra bit of add-on, no matter where they practise, which relates to being able to access the England and Wales Patents Court. That is quite fundamental, because that is where you would see appeals from the comptroller and so on.
I believe that a true analysis of the facts ends up as I have said, that these particular professions were not in the original construct, but some people might have been confused. Now they are defined as in and out again but, unfortunately, this leads to other confusions, suggesting divisions in the profession that do not exist but which have just been replicated in the words of the Minister. If the Minister and an MoJ official can get it wrong, who else might? A wrongful accusation, no matter that it can be refuted, is still damaging. My amendment clarifies that the status quo is maintained. It neither adds nor subtracts anything, other than giving clarity—something to point to on the same page as the confusing hokey-cokey.
My Lords, I support the noble Baroness, Lady Bowles, in probing the effect of these two government amendments. As a well-known supporter of a well-functioning IP profession, right across the United Kingdom, I have to say that I am still confused. It seems to me that, in the UK single market, the rights of these various attorneys should be fully reciprocal. Can my noble friend confirm that that is the intention? Will he further kindly reflect on whether it is the effect and, if they are not reciprocal, whether that is justified? Indeed, is there any read-across to the problems that we have encountered on the lack of reciprocal rights for EU and UK attorneys? We have discussed this elsewhere. I know that the department has had a rethink, but are we quite there?
My Lords, the next speaker on the list, the noble Lord, Lord Liddle, has withdrawn. I call the noble Lord, Lord Smith of Finsbury.
My Lords, first, I declare an interest as the chairman of the Intellectual Property Regulation Board—IPReg—which regulates all patent and trademark attorneys. It is fair to say that, when the Government’s amendment first appeared, there was considerable alarm among the profession as to what exactly the impact would be of including patent and trademark attorneys in the list in Clause 25. There had, sadly, been no prior consultation with the Chartered Institute of Patent Attorneys, the Chartered Institute of Trade Mark Attorneys or, indeed, IPReg.
Since the publication of the amendment, the Government have assured us that there is no intention to change the status quo. I hope that the Minister will be able to give us clear confirmation this afternoon, on the record, that this is indeed the case. There are two things to say. First, intellectual property, its protection and the facilitation of its creation are crucial for our nation’s economy. IP will be fundamental to our economic recovery in the years ahead and we should do nothing to damage it. Secondly, patent and trademark attorneys are not just any other lawyers. Many start off with a scientific background and skill set. Their legal training is bespoke and rigorous, and they are, rightly, regulated separately from the general mass of solicitors.
The current situation across the UK works well. No matter where someone is based or where they trained, they can secure the necessary qualifications, apply to IPReg to go on the recognised UK register, and thereafter practise generally across the UK and undertake specific reserved legal activities in England and Wales. The wording of Clauses 22 and 25 and the impact of the Government’s amendment are, I have to confess, a bit impenetrable. It is difficult to understand exactly what the impacts are. Will the Minister therefore please confirm that the current position as I have outlined it, for UK-wide regulation and applicability, for both reserved and unreserved activities, is endorsed by the proposed wording of the Bill and not in any way endangered?
My Lords, I declare a possible interest as a solicitor qualified in England and Wales and I share all previous speakers’ support for IP professionals, who ensure that we have the necessary intellectual property protection in the UK. I strongly support my noble friend Lady Bowles’s Amendment 107A and share her confusion, not to say bafflement, at Amendment 107. She has drawn attention to the obscurity of the drafting. Why are patent and trademark attorneys included and then excluded?
My noble friend has been, if anything, very kind to the drafters of the government amendment. Not only is it obscure but, as we have heard from the noble Lord, Lord Smith, there seems to have been no proper consultation with the professional bodies and regulators such as CIPA, CITMA and IPReg before it was tabled. This is all compounded by the use by both officials and the Minister of the term “automatic recognition” in communication with my noble friend, when we should be talking about qualifications.
Why has automatic recognition, from which exemption is needed, been introduced? As an interloper on this Bill, perhaps I can ask the most fundamentally naive question: why do we need not just Clauses 22, 23 and 25 but Part 3 in the first place? Are these the emperor’s new clothes? Even the Explanatory Note is rather obscure in its rationale, saying:
“There is currently no overarching system or consistent approach for the recognition of professional qualifications between the nations making up the UK internal market. Therefore, if professional divergence increases across the UK, professionals could have greater limitations on their ability to practise across the UK than exists currently.”
What professional divergence is threatened or envisaged? There is the continuing need for professionals covered in this part to be suitably qualified, but why do we need a new piece of legislation simply to preserve the status quo? I am sure the Minister has the answer at his fingertips.
My Lords, it is a little disappointing that, in a Bill that is vital for the future of our country, there seems to have been some misunderstanding; somehow or other the key role of patent and trademark attorneys has been misunderstood. They are vital to the future of our country because, as it happens, we are quite good at producing ingenious new products, processes and systems of manufacture that are patentable. Equally, we are good at marketing products that require trademarks. Here is an area where we really are at the forefront of Europe’s activity—and, many would say, the world’s—so this is crucial, and we need to be clear that it is going to operate properly without any hiccups.
In my judgment, we need to defend some of our trademarks in particular. When we are marketing on our own outside the EU, I believe that we will get challenges. I have worked overseas and seen it happen there, and I do not see why it might well not happen here in the UK. As we move forward on that challenges dimension, I recall that, as I think one or two of my colleagues know, I worked in south Asia for two years. When I was in India, there was a system of mutual recognition for trademarks in certain categories of products. I wonder whether that is an element of the new deal we have done with Japan.
On my final point, I declare an interest in that I have a son, a lawyer, working in the Cayman Islands—in other words, the Overseas Territories. Given the confusion that we have had today, I am not entirely clear whether in the Overseas Territories a qualified patent lawyer or trademark attorney, who is a UK citizen qualified in the law and in whatever elements are needed for such attorneys, is able to operate although they are not actually in a part of the UK.
My Lords, intellectual property lawyers, patent agents and attorneys are incredibly important for the future. I thoroughly endorse the remarks made by the noble Baronesses, Lady Bowles and Lady Neville-Rolfe, and my noble friend Lord Smith of Finsbury.
Honestly, confidence in this Bill was weak to start with. That mess-up just then on patent attorneys was appalling, and it made me look at the rest of Part 3. Could the Minister first of all identify what the problem is that Part 3 is dealing with? We had a clue between 11.30 pm and 11.45 pm on Wednesday evening when the noble Baroness, Lady Scott of Bybrook, who sadly is not in her place, said the following:
“The purpose of the professional qualification provisions in the internal market Bill is to ensure that professionals can, in most cases, access their profession in all parts of the UK, by ensuring that there is an overarching system for recognition.”—[Official Report, 28/10/20; col. 375.]
Clause 22 says that where you are qualified in one place, you can be qualified in another, while Clause 25 says that Clause 22(2) does not apply to existing provisions. Let us be clear what is happening here: the Government are saying that we are not making any change to the existing position in relation to professional qualifications, and as far as I am aware—and this is nothing to do with the EU—there is absolutely no problem about the current position. The effect of Clause 25(3) is that these provisions do not apply to any change in the future. Am I right about that? They are making no change for the past but they are bringing in these provisions in relation to the future. Why is that, when there is no problem about the past or the future? The Government are causing problems everywhere with this. I ask them to explain to the House and the wider public why on earth they are doing it. They have messed up the one area that we have looked at so far. Why should anyone have any confidence in this Bill?
On a separate point, I refer the Minister to what the noble Lord, Lord Dunlop—on the government side—said on day one in relation to this matter:
“The timetable for the Bill appears to be predicated on the end of the transition period on 31 December this year, but what is the real risk of regulatory divergence between then and the completion of the common frameworks process in 2021? The House is aware that the European Union (Withdrawal) Act 2018 already confers on Ministers so-called Section 12 powers to freeze devolved competence in relation to EU retained law.”—[Official Report, 26/10/20; col. 88.]
So, if there is any problem about this, it can be dealt with by the Government’s Section 12 powers. That applies not just to this but to wider issues.
Why are the Government bringing forward such an obviously unthought-out Bill that is doing damage to what—and I say this with respect to the noble Lord, Lord Naseby—even the noble Lord, Lord Naseby, thinks is a mess-up, and he is a supporter of the Government’s Bill? Why on earth are they messing everything up like this? Could they please give an answer to what the noble Lord, Lord Dunlop, said on day one? Is he right? If so, the urgency goes.
I thank all noble Lords who have spoken in this short debate on this important subject. I shall start by replying directly to the noble and learned Lord, Lord Falconer, and the noble Lord, Lord Clement-Jones, who spoke about Part 3 and why we felt the need to bring these proposals forward. The Bill is intended to ensure that divergence in professional regulation between the four nations of the UK does not increase barriers for professionals living and working in different parts of the UK. As our economy continues to develop and new sectors emerge, it is possible that new regulated professions will be created and there may be changes to existing qualification requirements that could make it more difficult to access the profession in another part of the UK. These new professions may well be crucial to the UK’s economic future. As in other areas, we do not want barriers to trade across the UK in these sectors. Internal market provisions will apply where part of the UK regulates a new profession, access to which is limited to those holding certain professional qualifications or experience. The provisions will also apply to existing professions where there are changes to the requirements for the qualifications or experience needed in order to access the profession concerned. Currently, while the recognition of professional qualifications between the four nations can and does occur, there is no overarching framework that ensures that it does. The Bill creates such an overarching framework to guarantee that recognition of qualifications between the four nations will be possible and barriers will be minimised.
I am happy to give the noble Lord, Lord Smith, and my noble friend Lady Neville-Rolfe the specific assurance they asked for: nothing in the recognition provisions of the Bill, including the exclusion, affects the current situation. IPReg will continue to be able to decide whether and how trademark and patent attorneys should be allowed to carry out the regulated legal activities that it is designated to regulate in all the different parts of the UK.
The government amendment aims to bring patent and trademark attorneys in line with other legal professions and to place them outside the scope of the recognition provisions of Clause 22 of the Bill. Legal professionals have been excluded from the scope of the provisions on the recognition of professional qualifications in acknowledgment of the different legal systems that exist in the UK. This will ensure that the regulation of and access to these professions, including trademark and patent attorneys, are not affected in any way by the mutual recognition provisions of the Bill and will be completely unaffected. That is why we need Amendments 107 and 108.
I have received requests to speak after the Minister from the noble and learned Lord, Lord Falconer of Thoroton, and the noble Lord, Lord Fox.
The noble Lord, Lord Callanan, referred to the idea of new professions being invented. If this happened, there would be a professional body that would need government recognition in some form. Could he give us an example, perhaps, of a new profession emerging without a professional body in relation to which there is a substantial risk? If there is no such example or evidence, it is incredibly unconvincing. The second and separate example he gave was an existing profession giving rise to a particular requirement that would create a barrier to entry in one part of the United Kingdom for another. Could he give an example of when that has happened in the past?
By the very nature of it being a new profession or qualification, it is quite hard for me to give examples of what might happen in the future. There are all sorts of new technologies; even in the noble and learned Lord’s legal profession, there may be new technologies, ideas and proposals that will come forward. There is the whole world of artificial intelligence or gene editing—there is a massive range of new and potential professional areas, bodies and qualifications that may come forward. That is the point: we want the current situation in many of these professions to be unaffected, but, in the case of new professions, it is entirely possible that the individual nations of the UK might seek to regulate them differently, and we want no new barriers to trade to emerge.
I have also received a request from the noble Lord, Lord Purvis of Tweed, but I first call the noble Lord, Lord Fox.
My Lords, with all due respect to the Minister, I am sure he understands how unsatisfactory that answer was. My noble friend Lord Thomas of Gresford talked about the gobbledegook of future-proofing, and this is gobbledegook. First, could the Minister tell your Lordships’ House what past examples lead the Government today to this conclusion? Secondly, why is there a problem with bringing any future issues to the Government and your Lordships’ House bespoke in the event that the Minister proves correct and something turns up? To seek to produce a Bill that covers all of the unknown unknowns that are going to happen in the history of time seems overambitious.
I think we are just going to have to differ on this one. We do not want to be returning to the House to create unnecessary difficulties and disagreements in the future; we want to ensure that, before any of these difficulties arise, we have put in place, as in the rest of the Bill, a framework that covers the whole of the United Kingdom to regulate how we will manage and control these issues in the future. That is all we are seeking to do. I understand the points that noble Lords are making. There are differently regulated professions in some parts of the UK already; we accept that and that the status quo is there, but we think that, in future, these things are best regulated on a UK-wide basis, and we want no new barriers to trade to emerge.
My Lords, this has nothing to do with powers repatriated from the European Union; it has everything to do with our internal United Kingdom approach. When was the last time that a professional body regulated by law was established where the Government considered there to be major barriers across the United Kingdom?
The noble Lord will be well aware that there is European directive on this subject, and mutual recognition of professional qualifications, so, even in the EU law space, it is accepted that the nations of the EU have different ways of recognising different professional qualifications. I commend Amendments 107 and 108 to the House.
Amendment 107 agreed.
Amendment 107A not moved.
Clause 25, as amended, agreed.
Clause 26 agreed.
Clause 27: Interpretation of Part 3
108: Clause 27, page 20, line 35, at end insert—
“(1A) Provision that limits the ability referred to in subsection (1)(a) to individuals with certain qualifications or experience falls within section 22(1) only if the activities affected by the provision are, in a significant number of cases, essential to the practice of the profession in question.” Member’s explanatory statement
This amendment would provide that provision imposing qualification requirements on particular professional activities falls within Clause 22 only if the activities are, in a significant number of cases, essential to the practice of the profession in question.
Amendment 108 agreed.
Clause 27, as amended, agreed.
Amendment 109 not moved.
We now come to the group beginning with Amendment 110. I remind noble Lords that anyone wishing to speak after the Minister should email the clerk during the debate. Anyone wishing to press this or anything else in this group to a Division should make that clear in the debate.
Clause 28: Functions of the CMA under Part 4: general provisions
110: Clause 28, leave out Clause 28 and insert—
“Office for the Internal Market
“(1) An Office for the Internal Market (“OIM”), which will report to the Department for Business, Energy and Industrial Strategy, is established.(2) The functions of the OIM are as follows—(a) monitoring the health of the internal market, and(b) advising and reporting on proposals and regulations, and their actual and potential impact on the internal market.”Member’s explanatory statement
This amendment seeks to probe why the OIM is established within the CMA and instead attaches it to BEIS.
My Lords, I rise to move Amendment 110 in my name and that of my noble friend Lady Noakes. My noble friend the Minister has been kind enough to write to me following the debate on where the new office for the internal market should sit. However, I remain to be convinced that the Competition and Markets Authority is its appropriate home. For this reason, I have tabled an amendment attaching it to BEIS. To make that effective, I am also supporting the noble Baroness, Lady Bowles of Berkhamsted, in opposing Clauses 28 and 29.
I will put it simply and bluntly: no case has been made for locating the new office in the CMA, except, I suppose, that it is already an independent agency and the department has some involvement in the appointment of its well-paid top brass. However, the CMA is generally highly sceptical of business, especially the bigger businesses that operate across the UK, which need to flourish if the economy is to recover. That is my past personal experience with various different hats on.
We need an office—call it what you will—that can do two things: it needs to be able to monitor objectively and to advise sensibly on difficult and developing internal border issues. These are highly politically charged, as we can see from experience during Covid. Therefore, we need an office that reports directly to BEIS and, arguably, we need a Minister for the Single Market, in the same way that we had a commissioner in Brussels when we were an EU member. Actually, I prefer the notion of a single market to that of an internal market. Most of us, including the devolved Administrations, had a great deal of time for the single market when we operated within it. Indeed, I devoted some of my career to advancing it because of its benefits to consumers, manufacturers, services, other businesses and, of course, GDP.
I am sure the Minister would agree that not everything done in Brussels is wrong, and I believe we need an in-house and a political dimension. Therefore, for me, the right model for this office is the Intellectual Property Office, which has a chair and a board from outside but also a strong CEO reporting to a BEIS Minister and advising on both policy and enforcement as well as negotiating internationally and across the UK. If BEIS, for some reason, cannot do all of those things in an in-house office, the monitoring role could go to the ONS, which is well regarded in statistical matters. However, above all, the office must be subject to ministerial direction. Recent experience with Ofqual, PHE and even the CMA itself does not persuade me that the approach in this Bill is right. It is not too late to make a change.
I note that Amendment 155 in the name of the noble Baroness, Lady Hayter, has been added to this group. I have a great deal of respect for the noble Baroness and worked with her successfully on consumer legislation in the past. However, I am not convinced that a consumer duty makes sense here, certainly not without balancing provisions on business and the economy. Business stands to lose so much from this new legislation already and from the inappropriate appointment of the CMA as the office of the internal market, and this is at a time when business is more and more adversely affected by the never-ending Covid nightmare. I think we should reflect further, but, for now, I beg to move.
My Lords, I have given notice of my intention to oppose Clauses 29, 30 and 41 standing part. This is part of a full set of not stand part notices that signals concerns, in principle and to specifics, throughout Part 4 and Schedule 3. I will also probe what has been left unsaid about what the CMA or the OIM will do in total regarding the internal market. I thank the noble Baroness, Lady Neville-Rolfe, for supporting my opposition to the clauses standing part. We have some common concerns, but we are not entirely in the same place. I will be interested to hear her response to some of the points I will make as the debate develops.
There are three parts to my concern. First, as I said at Second Reading, it seems odd to use the powerful investigatory might of the CMA—or a lookalike OIM—whose information-gathering powers, with accompanying enforcement and penalties for non-compliance, bear down on individuals and companies, but where the main purpose, from weighing up the clauses’ wording, is to advise administrations about their own and one another’s regulation, and not anything the companies themselves have caused. This is extraordinary.
Secondly, there are aspects in the Bill that relate to business activity. However, this is not articulated, except that businesses are presumably among those who could make a proposal to the CMA for it to undertake a review under Clause 31. I am left asking: what else is happening that has not been said? Thirdly, there is the matter of making the CMA or the OIM properly representative of the four nations.
Overall, this seems an authoritarian, unexplained and unfinished state of affairs. The use of the CMA is a hangover from when Mrs May envisaged a corresponding body to the European Commission for all competition and state aid matters. State aid considerations have now dropped away to WTO-type considerations of distortive and harmful subsidies that will not be looked at by anyone; the Trade Remedies Authority might have to respond on incoming international complaints, but the domestic side is bare. That still leaves the market access principles to be enforced somewhere.
The Government’s response to the internal market consultation says that the expansion of the CMA’s remit will not position it as an enforcer. In a letter to my noble friend Lord Purvis after last Monday’s debate, the Minister confirmed that the OIM will provide expertise in scenarios where the economic impacts of particular regulations lead to disagreement between one or more administration, and that the non-binding assessments will ensure a technical underpinning to otherwise political discussions. Under the heading:
“On the Office for the Internal Market, disputes and governance”,
the letter to my noble friend Lord Purvis says:
“The Bill does not introduce new enforcement bodies, but instead relies on enforcement of regulatory compliance provisions in existing goods regulation to ensure that enforcement of regulatory compliance takes account of the opportunities offered by the market access principles of mutual recognition and non-discrimination”.
Does that mean that the CMA or the OIM will take account of the opportunities offered by market access principles? Does the CMA enforce the regulatory compliance provisions in existing goods regulation?
The impact assessment also mentions businesses and stakeholders. Page 29 says that stakeholders can “raise complaints” on internal market matters. This could arise by way of Clause 31 and seeking a review. However, the word “complaints” smacks of adjudication. It would be helpful if the Minister could explain whether that will be the case. Is it related to the mentioned regulatory compliance? How will that work?
The impact assessment goes on to say:
“Any dispute resolution mechanism will be based on existing arrangements … However, these processes do not replace a potential court challenge; businesses and individuals might choose to enforce their rights in a court if a UKIM matter remains unresolved, potentially incurring substantial legal costs, time and effort.”
I do not dispute that the courts are a final point of recourse, but what is the implied prior process? Is it business disputes with national administrations, business on business, or both? Is this related to the CMA enforcing or underpinning compliance in goods regulation?
Those are some of the issues and questions that sit behind my opposition to the clauses, and behind my amendments. My Amendment 113 would delete the separate provision of the CMA being an adviser to the Secretary of State. Along with later amendments, this would avoid the suspicion that the body will become captured by the UK Government by both volume of work and physical location. If such a provision is kept in, it must be available on equal terms to all nations. Indeed, that is what was promised on page 9 of the response to the internal market consultation.
Amendment 111 says that the CMA
“must not engage in dispute resolution.”
I tabled the amendment because I want to probe on the business side of things, as I have explained, who is doing the regulatory compliance with the market access add-on and where. What, if anything, has been or will be agreed with the devolved Administrations to enable this?
A great deal needs explaining, without which the powers provided later in this part are disproportionate and unjustified. Although this is early in our debate on this part of the Bill, I am prepared to return to this matter on Report.
My Lords, I have added my name to my noble friend Lady Neville-Rolfe’s amendment. Like her, I am concerned that the CMA has been chosen as the home for the office for the internal market with very little substantive discussion and certainly no proper consultation. The White Paper the Government consulted on in the summer did not even mention the CMA, and the best the Government could report in their September policy response was that
“a few respondents suggested that the UK Internal Market functions would be a natural fit with the CMA”.
When I say that I do not believe the CMA is the right home for the internal market functions, I hope that will not be taken as a criticism of the CMA. It has done good work over the years, building on that of its predecessor bodies, and its work is respected here and abroad. However, it is not a body that has won universal acclaim. The time it takes on some of its market studies and the lack of impact of some of its findings are often cited against it.
I have three main grounds for seeking a different solution, of which my noble friend’s amendment is one constructive suggestion. First, the CMA’s existing functions are adjacent to the issues that will arise in the UK’s internal market, but they are by no means coterminous. The CMA is fundamentally about competition impacts, whether through mergers and acquisitions or market behaviour. It is also about the protection of consumers. The UK’s internal market is about trade and the avoidance of unnecessary barriers to trade. These are quite different things. The danger is that the CMA could move from being a focused competition and consumer organisation to one that is more diffuse and less targeted. Many organisations have lost their way when they have sought to expand their footprint and have ended up as a jack of all trades but master of none. We cannot afford to take that risk.
While it is planned for there to be a separate panel for the office for the internal market within the CMA, it is inevitable that the functions of the office, and the resources to deliver them, will be intermingled with the CMA’s other functions. It is also clear from the Bill that it is the CMA, and not the office for the internal market itself, which will carry responsibility for the various functions set out in the Bill. We run a very serious risk of the office for the internal market disappearing into the CMA’s back room.
My second reason is that the CMA really has too much on its plate at the moment to contemplate adding such an important new area of responsibility as oversight of the UK’s internal market. There are aspects of its current workings that are not beyond criticism, as I have already mentioned. Importantly, it is about to take on a number of additional activities as we finally exit the EU at the end of the year. If anyone doubts the extent of these additional responsibilities, there are 50 pages of draft guidance on these new activities which the CMA is currently consulting on. These competition functions have already led to a very significant increase in the CMA’s resources and I believe that it was expected that overall staff numbers would increase by 40% as a result. Against that background, it would be crazy to add on significant additional responsibilities. There is only so much change that any organisation can safely accommodate in a given period.
A final reason for wanting to see the office for the internal market set up outside the CMA is to ensure that it has a real presence in our internal market as a respected source of impartial data, analysis and advice. These seem to be the things that the Government want, as set out in this Bill, but setting it up as a mere panel of a much larger, differently focused quango cannot be the right way to achieve that.
My Lords, my purpose in speaking today is to support Amendment 111, which I have signed, and the detailed comments made by my noble friend Lady Bowles. Amendment 111 aims to clarify that the role of the CMA and the office for the internal market is not the resolution of disputes. We already have common frameworks; we do not need a topdown resolver of disputes.
Last week, the Minister said clearly that the office for the internal market is to provide “monitoring, advice and reports”. He said that it will
“have no direct role in dispute resolution”—[Official Report, 26/0/20; col. 70.]
which will be discussed by the Joint Ministerial Committee. There is no reference to a dispute resolution in the Bill. I hope that, for clarity, the Government will accept Amendment 111, which states clearly that the CMA and, thus the new office for the internal market,
“must not engage in dispute resolution”.
The important role of dispute resolution can realistically be achieved only by discussions and compromises between the nation states of the UK. The amendment seeks to make clear what the OIM can and cannot do. In responding to this debate, will the Minister clarify these powers, or lack of them? Clarification, along with dealing with complaints and inconsistencies, is what is needed. That is what your Lordships’ House is set up for and does so well. The various explanatory documents only confuse even further and imply some resolution powers for the CMA and OIM.
Amendment 111, which puts the CMA and its plethora of civil servants back in the box, is necessary if the Bill is to be approved. The Bill is a mistake; the noble and learned Lord, Lord Falconer, summed it up when he said that it was “unthought-out”. I support the amendment.
The noble Lord, Lord Liddle, has withdrawn, so I call the noble Lord, Lord Naseby.
My Lords, when I first read through the Bill, I had some reservations about the CMA, not least because of the number of its investigations that have not exactly gone smoothly, as my noble friend Lady Noakes referred to. As all noble Lords are aware, it arose from its antecedent, the old Monopolies and Mergers Commission. I voiced some of those reservations at Second Reading. I then had another look at the OIM and could not for the life of me understand why it did not have its own status. How could it be right for it to be almost subservient to the CMA? I could immediately see a clash of interests. As has just been said, its role is to monitor, advise and report. That may well clash with the basic element of the CMA. While this amendment may not be exactly right, there is a strong case for it.
I will give an example. I have recently been approached by some outside people because they know that I take an interest in the credit lending market, principally credit unions. It is a difficult market because there is the FCA, which does a good job on the whole, but there is also the ombudsman. People who are in difficulty with credit are prone to appeal to the ombudsman for better treatment, as it goes beyond the normal provisions under which the FCA works. That created a real problem for the genuine lenders—not the fly-by-night operators—because of a clash of interests.
I would not expect my noble friend on the Front Bench to respond in any detail today, but the OIM has to have its own status. It should not be in a position where it is embarrassed by the CMA going against what the OIM thinks is appropriate in any situation.
My Lords, the noble Baroness, Lady Bowles, referred to a letter to the noble Lord, Lord Purvis, following an earlier discussion. I have not received a copy of that. Could all the letters sent following these debates be circulated to all Members of the Committee?
The noble Lord, Lord Stevenson, had it.
I think all speakers in these debates ought to get them. Unless, of course, it is a very private letter to the noble Lord, Lord Purvis—in which case we will leave that between the two of them—all noble Lords should see all the letters that arise from these debates.
When I started thinking about this group, I thought that there were two divergent views, but they are not as divergent as I thought. It looked as if some amendments wanted the OIM, which is an observatory rather than an office, to be almost part of BEIS, with little independence. Our view is to the contrary. Amendment 113 in my name, which is obviously probing, signals that the CMA should not be advising the department but using its powers to intervene as necessary. That did not mean that it should not send messages to the Secretary of State, as the noble Lord, Lord Tyrie, did when, as its chair, he sought more powers for the CMA to intervene. He wanted a proper consumer duty adding to it. The amendment does not say that it should not advise the department but makes the point that it should not be subservient to it.
What we really wanted to emphasise—and here I feel the similarity with what everyone who has spoken has said—was that the CMA should not be subservient, which was the word used by the noble Lord, Lord Naseby. He said that the OIM should not be subservient to the CMA, but we also feel that it should not be subservient to BEIS, especially given that it is really important that the new Office for the Internal Market will not be beholden to any one of the four Governments. That is what is really important: there are four Governments trying to make this invigorated internal market work, not just one of the four Governments. In particular, although I agree with quite a lot of what the noble Baroness, Lady Neville-Rolfe, said, her suggestion that it was akin to—I think she said—the Intellectual Property Office is not right, because that does not have this very strong pull towards the other three Governments, whereas the OIM will have that. I can see why it looked as if it might fit in that model, but I do not think it is right, given that this has a four-nation remit.
My Amendment 155 would, in a sense, add in the consumer duty desired by the noble Lord, Lord Tyrie, into the CMA’s guiding principles. In truth, it is hard not to think—and I think it was the noble Baroness, Lady Neville-Rolfe, who said that the CMA was about consumer representation; I beg her pardon if it was not—that this is about consumer protection, but interestingly enough that is not written into its overarching objectives. I do not think there is much between us on that.
We will come to the exact status of the OIM in a later group with Amendment 115, in the name of my noble friend Lord Stevenson, but I agree with what the noble Baroness, Lady Neville-Rolfe, said that no case has been made for the OIM to be in the CMA. The noble Baroness, Lady Noakes, said there had been no consultation; it just sort of appeared. In fact, I share with her the view that it could disappear into the CMA’s back room. Even if our solution happens to be a different one, we share a diagnosis of that problem. We will discuss in a later group whether we want it to be outside of the CMA, but for now the important point that we are trying to signal is that the OIM should have some independence. We want to make sure that it is not in any way in hock to just one of the four Governments, who must work very closely together if we are to make this internal market work and thrive, as we all wish to see.
My Lords, I thank everyone who has participated in this group. I will seek to take forward the suggestion of the noble Baroness, Lady Hayter, that letters be copied around—I have another batch on my desk to approve once we have finished this debate, many of which, I am sure, are to my Liberal Democrat colleagues. I will ensure that they are circulated to all the protagonists. They are not particularly secret; they just help to clarify and explain the Government’s role and answer the many questions that we have been asked. I hope that is helpful.
I will start with Amendment 110, which seeks to replace Clause 28 with a new clause on the establishment of the Office for the Internal Market. As noble Lords will know, this Bill will create an Office for the Internal Market within the Competition and Markets Authority to carry out a set of independent advisory, monitoring and reporting functions to support the effective operation of the UK internal market. The proposed new clause seeks to create a new and separate public body that reports to the BEIS Secretary of State. The effect would be not to establish the Office for the Internal Market within the Competition and Markets Authority.
Let me say in response to my noble friends Lady Neville-Rolfe and Lord Naseby and the noble Baroness, Lady Hayter, that the Government did consider a wide range of delivery options for the advisory, monitoring and reporting functions of the UK internal market, as set out in the Bill. We concluded that the Competition and Markets Authority is best suited to house the OIM to perform these functions. The CMA is an independent non-ministerial department that currently operates at arm’s length from the Government. It is sponsored by BEIS and Her Majesty’s Treasury and—to answer the question posed by my noble friend Lady Neville-Rolfe—Ministers will be responsible to Parliament in reporting on the work of the CMA and the Office for the Internal Market, even though they operate at arm’s length.
The Competition and Markets Authority has built up a wealth of expertise and experience that makes it a natural fit to take on these additional functions. It has a global reputation for promoting competition for the benefit of consumers and for ensuring that markets work well for consumers, businesses and the wider economy. It will also build on the CMA’s existing technical and economic expertise, which will now support further development of the UK internal market.
I should also explain that it is government policy that new arm’s-length public bodies should be only set up as a last resort and when consideration of all other delivery options has been exhausted. Other delivery options that should be considered include utilising existing bodies in order to deliver any new functions. New public bodies should be created only if there is a clear need for the state to provide the function or service through a public body and if there is no viable alternative—effectively establishing new public bodies as a very last resort. For the reasons that I have set out, we are not able to agree with this amendment. I hope that my noble friend Lady Neville-Rolfe will feel able to withdraw it.
Regarding Clause 28 stand part, this clause defines regulatory provisions on which the CMA, through the OIM, will monitor and provide reports and advice. The purpose is to set out the areas where the OIM will perform functions under the Bill, in order to ensure certainty and transparency for Administrations, businesses and the general public in connection with the effective operation of the UK internal market. Regulatory provisions are within scope if they set requirements for the purposes of the mutual recognition and non-discrimination principles of the Bill for the sale of goods and the equivalent for services. Moreover, regulatory provisions are within scope if they apply to one or more nations but not the whole of the United Kingdom. Clause 28 as it stands forms an integral part of the provisions for the OIM to carry out its independent, advisory and reporting duties in respect of the UK internal market. For these reasons, therefore, I am unable to accept the proposal that Clause 28 should not stand part of the Bill.
On Clause 29 stand part, removing Clause 29 would remove the Competition and Markets Authority’s objective when exercising its functions as the Office for the Internal Market. This clause designates the CMA, in its capacity as the OIM, as having a specific role in the operation of the UK internal market. It is additionally important to note that this clause establishes the statutory objectives of the CMA in its capacity as the OIM. This clause will ensure that the CMA in its OIM role is able to operate effectively as the monitoring body for the internal market, and will ensure there is no confusion between the pre-existing powers of the CMA and those newly conferred upon it as the OIM. Distinct objectives will prevent any operationally problematic blurring of functions. Clause 29 as it stands forms an integral part of the provisions for the OIM, and therefore we are unable to leave it out of the Bill.
Moving on to Clause 41 stand part, removing this clause would leave out vital definitional provisions. This clause provides key definitions for the purposes of this part of the Bill. This includes a definition of the Competition and Markets Authority itself and sets out how widely the operation of the internal market in the United Kingdom should be understood. This clause also defines “Relevant competence” in Part 4 as meaning both reserved and devolved competence so that executive and legislative competence in each territory is included. Clause 41 as it stands forms an integral part of the provisions for the CMA in its capacity as the Office for the Internal Market: it ensures legal clarity and certainty on technical terms used throughout this part. For all those reasons, therefore, I am unable to accept the removal of this clause.
Amendment 111 would require the CMA to not engage in any form of dispute resolution while fulfilling its responsibilities as outlined in Part 4. This addresses the points made by the noble Lord, Lord Palmer. In cases of disagreement between one or more Administrations, the OIM, within the CMA, could be called upon to provide a non-binding report to support intergovernmental discussion. An assessment of economic impacts will ensure a technical underpinning to an otherwise political discussion.
Ultimately, the OIM only supports the resolution of disputes among the Administrations politically, and it does not adjudicate. The Government believe that building upon existing intergovernmental arrangements is the best approach to resolving any potential disputes, and this includes mechanisms such as common frameworks and intergovernmental relations, according to a clear and agreed process. The OIM will have its role in disputes between individuals and businesses, but businesses can request that the OIM consider disputes as part of its regular reporting. It is under no obligation to do so, nor will it have the authority to adjudicate on the specific issues.
Amendment 113 would prevent the necessary flow of information from the Competition and Markets Authority to the Secretary of State as the policy’s sponsor. The clause in question allows the CMA to alert the Government when it thinks adjustments may be needed to the way it fulfils its statutory functions, or it wishes to raise issues of particular concern. This is in line with precedent for similar public bodies and mirrors provisions in the existing legislation underpinning the CMA. Removing this provision would hamper the necessary communication between the Government and the CMA across all the other provisions in Part 4. For that reason, we are unable to accept the amendment.
Amendment 155 would make it an explicit statutory duty of the CMA, under its existing duties within the Enterprise and Regulatory Reform Act 2013, to protect and promote the interests of consumers in respect of the internal market. The clause in question establishes the statutory objective of the Competition and Markets Authority in its capacity as the OIM. It will ensure that the office is able to operate effectively as the monitoring body for the internal market and that there is no confusion between the pre-existing powers of the CMA and those newly conferred upon it. Distinct objectives will prevent any operationally problematic blurring of functions. The OIM will operate for the benefit of all those with an interest in a smoothly functioning internal market, be they regulators, businesses, professionals, the four legislatures or consumers. Explicitly narrowing its focus to consumers would, in our view, be to the detriment of all the other stakeholders I have listed. Therefore, I am unable to accept the amendment.
I have received a request to speak after the Minister from the noble Lord, Lord Fox.
My Lords, I am grateful for the Minister’s response. In her speech, the noble Baroness, Lady Bowles, asked some very specific questions, particularly in the stand part bit of her speech. I listened hard but I could not hear any answers to them, so perhaps the Minister could review her speech and write a letter, promptly, making sure that I and the noble Baroness, Lady Hayter, get a copy.
I see the request has the enthusiastic endorsement of the noble Lord, Lord Foulkes. Therefore, as his biggest fan in the House, I am obliged to follow the idea put forward. I will of course write to the noble Lord, Lord Fox, on that.
My Lords, this has been a good debate on an important group of amendments. We are not all agreed, but most of us are doubtful about the decision to allocate the office for the internal market to the CMA in the way the Bill proposes. I favour an office with ministerial leadership—there is a parallel with the EU’s single market commissioner, which has worked well in many ways.
The noble Baroness, Lady Bowles, made an expert and very strong case from a different perspective. She rightly pointed to the huge powers and penalties involved in giving this role to the CMA, and explained useful background as to why it ended up in the CMA, linked to an earlier time when state aid rules were going to be part of the portfolio. She also highlighted a concern about how the arrangements will work for the devolved Administrations, which the noble Lord, Lord Palmer of Childs Hill, developed in more detail and which was referred to by the noble Baroness, Lady Hayter.
My noble friend Lady Noakes, in an intervention full of wisdom and experience, underlined the lack of consultation, the time that tends to be taken by the CMA to decide things and the risk of it being a jack of all trades and master of none as its responsibilities and staffing grow following EU exit. My noble friend Lord Naseby reminded us of the impact of double regulation in the financial services sector, and favoured a self-standing office for the internal market. The noble Baroness, Lady Hayter, does not want the office to be lost in the CMA either, although she wants it to be independent of BEIS. The commissioner dealt with 28 member states satisfactorily, and they always used to fight for their own independence if I recall correctly.
I am grateful to the Minister for his summing up. He rightly emphasised the international reputation of the CMA, a point I would certainly concede, but that does not mean it is the right body for this task. In any event, there has not been a proper consultation and no published assessment of the pros and cons, which the Minister kindly referred to when he looked at the options. So, I look forward to reflecting further on any letters the Minister is kind enough to write to us and perhaps to further discussion across the House.
We want to get this right: it is a very important matter. We have had some answers on how the details of this quite complicated Bill will work, which I will certainly study, but I give notice that I am likely to return to this issue on Report. I beg leave to withdraw my amendment.
Amendment 110 withdrawn.
Clause 28 agreed.
Clause 29: Objective and general functions
Amendments 111 to 113 not moved.
Clause 29 agreed.
We now come to the group beginning with Amendment 114. I remind noble Lords that anyone wishing to speak after the Minister should email the clerk during the debate. Anyone wishing to press this or anything else in this group to a Division should make that clear in debate.
Clause 30: Office for the Internal Market panel and task groups
114: Clause 30, page 23, line 15, at end insert—
“(3) Before authorising a task group under subsection (1), the CMA must consult the Joint Ministerial Committee on European Negotiations.”
My Lords, the United Kingdom Parliament has a legislative competence to regulate the United Kingdom internal market, but the devolved Administrations have a fundamental interest also. In my view, it is wise to give them a voice in the way it is exercised. This group of amendments is entirely concerned with that. I am assuming that the structures in the Bill are kept as they are, as—as with the last set of amendments—fundamental changes would affect the effect of the amendments I am proposing.
Amendment 114, which I am moving, relates to the task force set up to examine an aspect of the internal market. I am saying that the devolved Administrations should be consulted on that through the Joint Ministerial Committee. Amendment 141 relates to the submission of CMA reports. It is important that this report from the authority looking into it should go to the Joint Ministerial Committee, which has responsibility for the common frameworks. That can include the Ministers from all the devolved Administrations, as well as the UK Minister, and it is extremely important that the report should go to that committee. Admittedly it goes to Parliament, and the members of course are Members of the Parliaments, but the committee as a whole should have the responsibility of having the report given to it.
The third amendment is Amendment 171. The joint committee is a committee which I think—or I understand —functions well; I hope my noble friend the Minister will comment on that when he replies. But, however well it functions, there is the possibility of disagreement. It is absolutely important that when a Minister of the UK Government uses powers to make statutory instruments and applies to Parliament for them, that should be a matter of thorough consultation with the Joint Ministerial Committee. It should come at a time when the formulation is not complete—in other words, at a time when a committee of this sort would be able to discuss the shape of the statutory instrument that would be laid before Parliament. This is a very good way of involving the devolved Administrations in the nitty-gritty, as it were, of the work that will flow from the Bill when it becomes law.
No matter how good a committee is, there is always a possibility of disagreement; I have tried to deal with that. A number of suggestions were made earlier in these debates about how disagreement should be resolved. In my view, the best way of doing it is by putting it to the United Kingdom Parliament, where all the devolved nations are represented constitutionally. If that is to be done, it is essential that it should be by full debate in both Houses of Parliament before a decision is taken. This is preferable to any kind of majority rule, or anything of that sort. It is important that Parliament, including those Members from the devolved Administration countries, has a responsibility in this matter. I think this is the way it should be resolved, and that is my suggestion.
I thoroughly believe that this proposal is fundamental to the smooth working of the internal market Bill in the future. There is always the possibility of misunderstanding unless there is a full discussion of the proposal quite early on. That is part of what I have in mind. I beg to move Amendment 114.
My Lords, it is a pleasure to follow the noble and learned Lord, and to agree with the thrust of his comments. This is the last, relatively small, group on the general concept of the consultation, before we move specifically on to what we would expect to see of the OIM’s relationship with the devolved Administrations. It is important, I think, because of Amendment 171 in the name of the noble and learned Lord. The Government’s ability to make considerable changes, through regulation, to any part of this legislation—which could have far-reaching implications for the devolved Administrations—without any requirement for consulting is worrying.
We can look at what is currently under way with regard to consultation. I reflected on the Minister’s previous response to the noble and learned Lord, Lord Falconer of Thoroton, and my noble friend on the regulation of professional services and consultation. I ask the question because the consultation on The Recognition of Professional Qualifications and Regulation of Professions: Call for Evidence, which closed on 23 October—so a very recent closure—was a call for evidence to ask for views on whether there should be a UK-wide system of regulation for professional services. On page 15, under “Future considerations” in the section on the internal market, it says:
“determine whether or not there would be merit in having a UK-wide, cross-sectoral strategy for the regulation of professions (potentially underpinned by regulatory principles).”
But in this Bill we are debating it, because the Government did not wait until the closure of that consultation process before bringing legislation forward and say that this is now absolutely necessary, whereas the consultation by the business department, which closed on 23 October, simply requested people’s views.
I would be grateful if the Government would publish the responses to that consultation and update the House on the consultations on the White Paper which had been requested. I understand that the Government indicated that they would publish those consultations by 9 October, so an update on the status of that would be helpful. The Government’s ability to make regulations without consulting the devolved Administrations, under the last schedule of the Bill, does require consultation. I very much support the thrust of the noble and learned Lord’s amendments.
Turning to Amendments 114 and 141, I note that the Government’s proposal, relating to the CMA and the OIM, in this Bill is that before an appointment to the CMA board, as a chair of an OIM panel, or as a member of a panel, there must be a consultation with the devolved Administrations—so far, so good. But there is no requirement for the CMA then to consult on the establishment of a task group or a panel, so I wonder what the Government’s thinking is on that. The Government will consult the devolved Administrations on an appointment to a panel, but then there is no requirement for that panel to consult before it starts its work.
On the point that the noble Baroness, Lady Neville-Rolfe, recognised in the previous group, some of the work of the OIM in these areas will touch on very sensitive issues, with regard to the devolved powers or the decisions. Given that under this legislation there will be the ability to disapply devolved legislation—legislation in the competence of any of the home nations—there being no requirement to consult before that work commences is highly problematic. The legislation goes further to say that the CMA, after a request, “may” provide a report on proposals by one of the Governments for legislation within the UK; but, of course, if it may, it may not. If it does not consult after a request has been made by one of the nations—one of the Governments—in the UK, there is no ability to know the reasons for the CMA’s decision. The necessity now for the CMA to consult is important, given that a request can be made to report on a specific proposed regulatory provision, without the requirement to consult the body proposing to make that regulatory provision, which is quite extraordinary in my view.
We do not even know, at the very least, what process the CMA would follow in the establishment of a task group to investigate a proposed regulatory provision; nor will that devolved Administration necessarily know the basis on which the task group will investigate. These are basic principles that the noble Lord is correct to highlight.
The area where I would question not necessarily the Minister but the Government is the status of the JMC, specifically its EU Negotiations sub-committee. Last week, in response to requests for clarity on the Government’s view about the correct place for intergovernmental relations, the Minister gave a slightly contradictory summation of how those relations are working in the JMC. In the first part of his speech, on the operations of the discussions on the frameworks, he said:
“It is regrettable that the Scottish Government walked away from discussions on the internal market”.
That is a very sharp view from the Minister, but he concluded his remarks in the very same speech by saying that,
“for all powers, UK Government officials will engage with the devolved Administrations in the spirit of the devolution memorandum of understanding. This system has worked well for 20 years and continues to do so.”—[Official Report, 28/10/20; cols. 306-07.]
Either it is working well or it is not—if some parts of it have walked away. What is the Government’s intention as to where the internal market will fit in as far as the JMC’s operations are concerned?
The JMC has its plenary, its Europe sub-committee and its EU Negotiations sub-committee. I am not sure when the JMC (EN) is meant to conclude, and it would be helpful if the Minister could state that. Then there is the Minister Forum and the domestic JMC, as well as the Finance Ministers, quadrilaterals, joint executive committees and three other areas. There is also a mechanism for dispute avoidance and resolution. What is the Government’s intention on the element of the JMC under which the internal market will be reviewed and overseen?
In a joint letter to me, my noble friend Lord Fox and the noble Lord, Lord Stevenson of Balmacara, the Government indicated that the existing JMC operations will be the mechanism for the operation of the internal market. There is no sub-committee of the JMC to consider that. If there is no sub-committee, only the JMC Plenary can do so and, surely, the JMC Plenary, chaired by the Prime Minister, cannot be the mechanism through which these elements of discussion about the internal market will be governed.
I wish to note something in passing, given the fact that the Minister said that it was the Scottish Government who walked away from considerations. With regard to the JMC Plenary, according to the Institute for Government:
“It met most recently on 19 December 2018. In July 2019, Prime Minister Boris Johnson committed to holding a JMC Plenary meeting but this had not yet happened as of the beginning of June 2020.”
An update on the status of the Prime Minister’s chairing of the JMC would be helpful. Under this legislation, where will the internal market fit in within the JMC mechanism if not under JMC (EN), which deals specifically with European negotiations?
The noble and learned Lord, Lord Mackay, referred to dispute resolution mechanisms. I want to address a couple of comments there. The Minister indicated that it is not the Government’s intention to bring about a new dispute resolution mechanism for the operation of the internal market. However, the protocol on disputes, which dates back to devolution, and the mechanism that has been in place since 2010 cannot be a mechanism for the operation of the internal market.
First, it is up to the UK Government whether they recognise the triggering of a dispute under that mechanism. We saw an attempt by the Welsh and Scottish Governments to trigger a dispute when the previous Government made an agreement with the DUP to fund Northern Ireland specifically, without consequential funding for Wales and Scotland. The Government simply did not recognise that dispute—so it is at their discretion whether they consider something a dispute, which would trigger the mechanism. There is also no mechanism in any of the dispute resolution processes that could bring about the automatic annulment of a piece of devolved legislation, which is what the powers under this legislation would bring about. Currently, if there is a dispute, legislation must specifically repeal a measure; this Bill goes considerably beyond that. There is no mechanism in the JMC that I can identify through which we can resolve disputes, if there any.
On the operation of this legislation, if it is decided, as a result of either a request from a CMA investigation or the position taken by the UK Government, that a piece of devolved legislation is contrary to market access principles—and that would be extraordinary but is nevertheless theoretically possible under this Bill —or if the UK Government are asked by the CMA to annul a piece of legislation that they passed on behalf of England and which is against the market access principles, through what mechanism will that resolution be made? At the moment, the Government are proposing no mechanism for that; it is simply something for another piece of legislation. We come full circle to the Constitution Committee’s report, which said that this “needs to be clarified”.
I am grateful to the noble and learned Lord for proposing these amendments. We need much greater clarity on how intergovernmental relationships will work under a JMC mechanism, if that is indeed the Government’s position, and how disputes will be avoided in the first instance or there will be resolution at the end of them.
The noble Lord, Lord Liddle, has withdrawn so I call the noble Baroness, Lady Humphreys.
My Lords, I thank the noble and learned Lord, Lord Mackey of Clashfern, for tabling the amendments in this group.
In what is becoming an extremely welcome defence of the devolved Administrations and their devolution settlements in debates on this Bill, these amendments point the way to involving a forum that already exists when discussing and agreeing to regulations under the Bill: the Joint Ministerial Committee on EU Negotiations. The amendments would require the Competition and Markets Authority to consult the JMC on EU negotiations; they would also ensure that regulations are brought before the committee and discussed by it before being laid before Parliament.
The amendments are entirely sensible. The JMC on EU Negotiations appears to be the ideal vehicle for such oversight and deliberations. The amendments also open up the opportunity to discuss the way in which the JMC operates, to examine whether it is fit for purpose and to envisage its future role. Of course, the Joint Ministerial Committee on European Negotiations is a sub-committee of the Joint Ministerial Committee—a committee made up of Ministers from all four national Governments. On looking at the memorandum of understanding that underpins the JMC’s operations, it seems an ideal candidate for this oversight role. It is worth examining its wording. According to the memorandum, the JMC should provide
“central co-ordination of the overall relationship”
between the UK and the devolved nations and, among other things,
“consider devolved matters if it is beneficial to discuss their respective treatment in the different parts of the United Kingdom”
“consider disputes between the administrations.”
It seems an ideal candidate indeed, as I am sure we all would agree. This is exactly the sort of forum that we need, not just to have oversight of regulations brought forward by the CMA but to consider all issues arising from the relationship between the four nations. But the reality is slightly different. The JMC has the potential to be a forum to guide devolution issues and resolve them, but the committee itself seems to operate on an almost ad hoc basis.
My noble friend has already pointed out the difficulties with the Joint Ministerial Committee (Plenary), which is supposed to meet at least once every year. Like him, I look forward to hearing when the Prime Minister will be willing to chair another of its meetings. The Joint Ministerial Committee on EU Negotiations, to which these amendments refer, was initially expected to meet monthly. It did so until February 2017 but then ceased to operate for eight months, and its meetings have been held on an irregular basis since then. It met five times in 2019 and, I believe, has met three times so far in 2020. I would be delighted if the Minister could prove me wrong and tell me that it has met more often.
Despite the obvious drawbacks in the way that the JMC and its sub-committees operate, I am extremely grateful to the noble and learned Lord for tabling these amendments, because they point a way forward. The JMC and its sub-committees, actual and potential, could have a vital role to play in resolving issues that arise in and around the operation of the UK internal market, but first we need to resolve the long-standing issues surrounding its constitution. The frequency of meetings and the question of who controls the agenda, for example, all have to be placed on a statutory footing. The JMC and its sub-committees, operating efficiently, regularly and fairly, have the potential to allay the fears of the devolved Administrations and allow for the consensual and co-operative government they seek. I support these amendments.
My Lords, when I read the Bill and the amendments to it that have been tabled, I asked myself, “Why?” Of course, my noble and learned friend Lord Mackay is a very experienced attorney and parliamentarian, but the whole purpose of the CMA is to be independent of government. It is not there to be dictated to because one of the devolved Administrations does not like the look of what the task group is going to be doing. That would be absolutely wrong. The whole basis of the CMA and OIM is that they are independent of government. They publish their results, monitor properly and advise, but the amendment would seem to put in another tier of management, like Europe in reverse. That is very wrong, and it would find no favour with me at all.
My Lords, I support Amendment 114, moved by the noble and learned Lord, Lord Mackay. It is right that we take the opportunity to look at the role and relationship of the Competition and Markets Authority and its relation to the Joint Ministerial Committee.
The single market is important to all of us. Perhaps I may give a practical example of smooth working, which is so essential. In the words of the noble and learned Lord, Lord Mackay, smooth working will ensure that our products are able to be sold in one part of the country and in any other. Nothing would distort that more than if access to the markets were limited. All my family are sheep farmers. They sell their products, produced in Wales—ram lambs, lambs and ewes—in markets in Carlisle and Exeter on a modest scale. It is important for them to ensure that they have easy access to all markets. That is the kind of practical example that we look at in the functioning of our future relationships.
In addition, there is the devolution settlement for each country. Whitehall has been very slow to wake up to the fact that there are four legislatures in so many fields within the United Kingdom, as we have seen recently in the divergences relating to health. It is important that that is recognised. I keep a constant watch on anything that might be done to undermine the devolution settlement. The very fact that powers are coming from Brussels to Westminster entitles us to concentrate ever more sharply and keep an even more watchful eye on the machinery.
The machinery for the CMA is set out in Clauses 28 to 35, which are all very detailed. We are putting into legislative effect the fruits of detailed negotiations between the four Governments since 1997. Those involved should be congratulated on what they have been achieving, and nothing should be done to undermine those achievements. In all these clauses there are detailed provisions regarding reports, regulations and default provisions. I may have missed something but I see no reference to consultation. Consultation is the essence of the amendment moved by the noble and learned Lord, Lord Mackay. The Joint Ministerial Committee will represent all four nations. They will know where the shoe pinches and what is of concern in their own countries. In fact, they will be the better means by which to ensure the smooth working in the future to which the noble and learned Lord referred.
My Lords, I support my noble and learned friend Lord Mackay of Clashfern on this group of amendments, particularly Amendment 114. Having the correct dispute resolution mechanism is extremely important. If the Government can find a better one than what has been suggested, I would be interested in the Minister giving us a clue as to what it might be.
The Government have found that the Scottish Administration object to the Bill, particularly the internal market element. My noble and learned friend has drawn on many years of legal and parliamentary experience in trying to find a way for the devolved Administrations to have a forum for formal comment on the arrangements for reinforcing the single market and any SIs.
The Joint Ministerial Council on EU Negotiations has already received wide acceptance in its role of setting up the conditions for negotiating market frameworks. I declare my family interest, which is in a livestock farm in Scotland and in the Scottish agricultural industry. As the noble and learned Lord, Lord Morris, pointed out, the industry as a whole in Wales and Northern Ireland is desperate to see a properly functioning single market across the UK, let alone within the EU. It finds the framework concept so far very reassuring, but it appears that the Scottish Government are looking for more.
I have a reason to declare an interest of another kind in this whole process, in that the dukedom that I represent in your Lordships’ House derives from the role that my six-times-great-grandfather played in promoting the negotiations for the Act of Union. This of course was a desire to get a single UK market at that time, as there were so many areas where Scotland had previously had no way of gaining benefit. The settlement that they agreed left Scotland with much lesser constitutional powers than currently exist; none the less, they were determined that certain characteristics of Scottish life should remain, and they do so to this day. Therefore, I have always watched these developments with care.
Several of your Lordships were here when we debated the Scotland Bill, sometimes quite late into the night. At that time, it seemed incredible that all the items necessary for the administration of the UK could be defined in a schedule, with Scotland having jurisdiction over everything else. We were assured that this was not a worry, because Westminster always retained the final say. Noble Lords—my noble friend the Minister is probably conscious of it too—may remember, during the progress of the Scotland Bill in 1998, a slightly bad-tempered evening in Committee, which was asked to begin sitting at 6 pm and spent some time on the future relationship between Westminster and the new Administration. I was never quite sure if this was a formally prepared answer, but when trying to bring the argument to a head, Lord Sewel uttered the familiar words:
“Clause 27 makes it clear that the devolution of legislative competence to the Scottish parliament does not affect the ability of Westminster to legislate for Scotland even in relation to devolved matters … However, as happened in Northern Ireland earlier in the century, we would expect a convention to be established that Westminster would not normally legislate with regard to devolved matters in Scotland without the consent of the Scottish parliament. If problems do arise the solution is for the Scottish executive and the United Kingdom Government to resolve the matter through political dialogue. That is what differences between mature parliaments and Executives will be concerned with.”—[Official Report, 21/7/98; col. 791.]
This is where we find ourselves today. Any formal reiteration of this power always recognises the full content of this text, but the element that receives much more exposure—to the point where people begin to think that it is the only part of the legislation—is the need for legislative consent Motions whenever uncertainty arises. The encouragement to progress to political dialogue is most certainly relevant to where we are at the present time. In the present circumstances, it would not be ideal for the Government simply to implement UK legislation. Perhaps the Minister can tell the House what stage discussions with the Scottish Government have reached? It seems to me that these amendments are suggesting a form in which the Government’s proposals can be formally conveyed, with a chance that the final positions of both sides can be opened for scrutiny.
My Lords, I am grateful for the quality of this relatively short debate on a really important issue. In his speech, the noble and learned Lord, Lord Morris, emphasised the need to avoid a threat to the devolution settlement. When the noble and learned Lord, Lord Mackay of Clashfern, stirs, and tables amendments, it is important for us all to listen. Clearly, he is very concerned about the route that this Bill is taking, as is the noble Duke, the Duke of Montrose, who articulated strong reasons for a consultative and consensus approach to regulating the internal market of the United Kingdom. I am also grateful to him for bringing up again the Act of Union, because this is a live treaty; it still exists and reflects on the issue which we are discussing. We should always remember that.
The noble and learned Lord, Lord Mackay, talked about the need for the devolved authorities, or the Joint Ministerial Committee, to be involved in the nitty-gritty of the market. My noble friend Lord Purvis of Tweed set out the dangers and the discontinuities within the current state of the Bill that make that process impossible. Therefore, it is important for the Minister to explain how this will work, because there are so many missing pieces in a jigsaw puzzle which, frankly, still does not have a picture, and which make it very difficult for us to understand what the Government are seeking to achieve and why.
My noble friend Lord Purvis asked many questions and he raised the issue of triggering disputes. The issue of when a dispute is triggered is central, as is the one which has surfaced in many different debates: the mechanism for resolving disputes. The noble and learned Lord, Lord Mackay of Clashfern, suggested one way; perhaps the Minister can comment on that.
My noble friend Lady Humphreys and other noble Lords have pointed out that the JMC, and its variety of committees, seem to have stalled, not because of any lack of faith from the devolved authorities but because of the Prime Minister not convening a meeting of the Joint Ministerial Committee (Plenary). Can the Minister explain the delay and say when the next meeting will occur? My noble friend Lord Purvis also raised the important question of structure. Where does this all fit in with the JMC’s current operations?
It is the Government who have sought to drag the CMA out of its current area of reserved issues and focus it on devolved issues. I say to the noble Lord, Lord Naseby, that it is not this amendment, but the Government, that have decided to do that. They are pulling the Office for the Internal Market into an as yet undefined dispute role. It is very clear, as the noble and learned Lord, Lord Mackay, set out, that if advice and reports are being submitted, then the JMC must be party to the same information that the UK Government are getting. It is also clear that we have no real idea of the Government’s intention for the operation of this Bill.
These are important amendments that reveal yet another problem in the Bill. First, they deal with the role of the CMA, which under this Bill is intended to monitor and give advice on the working of the internal market. As I understand the way that Section 30 envisages that the CMA will operate, it will authorise an Office for the Internal Market task group to set up groups to look at particular issues. The amendment tabled by the noble and learned Lord, Lord Mackay of Clashfern, seeks to ensure that, before such a task force is set up, there is confidence that the appointment of the task force, the terms of the task force and what it is doing have broad buy-in from all the relevant parts of the United Kingdom. Can the Minister explain how, without the amendment tabled by the noble and learned Lord, Lord Mackay of Clashfern, this was currently going to be achieved?
For example, the CMA’s parent department is the business department, which is a UK government department. The CMA has a number of board members and panel members; how many of them at the moment have experience of Scottish, Welsh or Northern Irish business issues? As the Bill makes clear, the CMA will be appointing a task force where there is a difference between one part of the United Kingdom and another regarding regulatory or statutory requirements. On what basis do the Government envisage these task groups being appointed and set up? Is there any objection to adopting the noble and learned Lord’s suggestion of how to ensure that you get all the other parts of the country involved, as opposed to only BEIS or the CMA? If not, can the Minister put forward an alternative suggestion?
The last of the three amendments from the noble and learned Lord is equally significant, if not more so. Amendment 171 suggests that, if regulation is to be imposed which is different from one part of the country to another, the Joint Ministerial Committee must be consulted, and if there is disagreement within it then Parliament must be informed of the reason for that disagreement and why the Government are not accepting the dissident view. My understanding—although I could be wrong about this; the noble Lord must correct me if I am—is that the Government envisage that disagreement in relation to this will be dealt with and resolved by the common frameworks process.
We strongly support the common frameworks process. I also support what the noble and learned Lord, Lord Mackay of Clashfern, and all noble Lords, with the possible, though unsurprising, exception of the noble Lord, Lord Naseby, agreed with: we want something which is more than just the common frameworks without some statutory recognition to provide a means whereby, if there is disagreement, it can be dealt with collaboratively.
The noble and learned Lord, Lord Mackay of Clashfern, suggests this method in Amendment 171. At the moment, I have been persuaded that the suggestion that the common frameworks process be recognised in the Bill looks more attractive. Could the Minister indicate the Government’s position on Amendment 171 and on whether the common frameworks process should be recognised in the Bill? That would definitely provide a solution.
My Lords, it gives me great pleasure to seek to reply to this extremely interesting debate. I agree with the noble and learned Lord that this is an extremely important area to consider. There were times in the speech of my noble friend the Duke of Montrose when I reflected that I was probably the 14th Mr True in the context of this discussion. I pay tribute to his ancestors for their long service to the Crown and the country of Scotland. It is true that the Act of Union is still of fundamental importance.
I am extremely grateful, as always, to my noble and learned friend Lord Mackay of Clashfern. Everybody who spoke recognised the good, unionist motivation to seek conciliation and collaboration which lay behind his amendments. I think that was shared by even my noble friend Lord Naseby. Often in debate we are asked to measure quantity and quality; although my noble friend was alone until now in saying that these amendments were perhaps not right for the Bill, I welcome his support.
Turning to the speech and proposals from my noble and learned friend, his Amendments 114, 141 and 171 seek to place obligations on the Joint Ministerial Committee on EU Negotiations—my noble and learned friend suggests this should be the core body—to be consulted on a number of considerations relating to the operation of the internal market.
I have been asked about the work of intergovernmental operations. The JMC (EN), which is the subject of these amendments, is a sub-committee chaired by my right honourable friend the Chancellor of the Duchy of Lancaster. It meets at regular intervals to facilitate political engagement between the UK Government and the devolved Administrations on the outcome of the UK’s exit from the EU, of which this Bill is one consequence. In total, since 2016, it has met 25 times, including the meeting that took place on 3 September 2020. The JMC system provides central co-ordination for the IGR machinery. I will come back to that later.
Before I address the amendments individually, I stress that the Government agree that the internal market should be underpinned by an effective system of governance and consultation between the four Administrations of the United Kingdom. However, we argue that the Joint Ministerial Committee on EU Negotiations is not the most appropriate or effective intergovernmental structure to engage on such technical considerations. As I mentioned, it was established in 2016 and has been valuable since then; it involves Ministers from each Administration.
I say with all respect to the noble Lord, Lord Purvis of Tweed, that there is no antithesis in regretting—as I hope he does—the decision of the Scottish Administration to withdraw from internal market discussions last March, as I referred to in a recent speech in your Lordships’ House, while seeking to continue co-operative work in the broad area of intergovernmental relations and through the common frameworks process. I will return shortly to the points on that made by the noble and learned Lord, Lord Falconer. The United Kingdom Government seek co-operation and understanding between the different Administrations. We want effective governance and consultation.
Through the review of intergovernmental relations, which is going on at the moment, as your Lordships are aware, we are working together with the devolved Administrations to revise and update the existing JMC system. Good progress is being made and we look forward to reporting on our finalised governance and parliamentary reporting structures in due course. As such, it would be counterproductive to pre-empt the conclusion of the review of intergovernmental machinery and place these obligations on the existing Joint Ministerial Committee, which would perhaps not be the most appropriate forum.
The noble and learned Lord, Lord Falconer, asked how disputes relating to the internal market should be resolved. Where disagreements relate to the internal market impacts of specific regulations that fall under a common framework policy area, it is anticipated that they will be considered through the dispute resolution mechanisms for individual common frameworks. The Government remain committed to resolving issues, including those relating to the UK internal market, at the lowest possible level. Most conversations on the UK internal market should therefore take place at departmental level to consider the impact on the UK internal market of individual policies at the technical level. This will be done through increased and improved engagement across all UK government departments and their devolved Administration counterparts. The proposal for reforming the formal process for avoiding and resolving intergovernmental disputes was jointly drafted by officials from all Administrations and endorsed by Ministers.
The UK Government are committed to the principle of dispute avoidance, as all Administrations continue to work closely behind the scenes to resolve issues through constructive dialogue, rather than detailed procedure. In the past, differences rarely escalated into disputes—in only four instances, I am informed. We can therefore expect the principle of dispute avoidance to remain central to managing disputes in the future.
My noble and learned friend suggested a specific function for the JMC (EN) on these issues. Amendment 114 requires that the committee be consulted prior to a task group of the Competition and Markets Authority being set up. We have already written into the Bill, in paragraph 2(3) of Schedule 3, that the Secretary of State will consult devolved Administrations prior to the appointment of panel members to the office for the internal market. The noble Lord, Lord Purvis of Tweed, referred to this. He said that it is just appointing the panel members but, in appointing members to a panel, it stands to reason that the devolved Administrations, being consulted, will be aware of the purpose for which that panel is being created.
In addition, we need to think carefully before compromising the independence of the CMA. The CMA is an independent non-ministerial department with a global reputation, as my noble friend Lord Callanan argued on an earlier group. Ministers have no day-to-day involvement in its operations. So that the advice and outcomes of the OIM’s work is trusted, its advice and future panels must be seen as impartial. There can be no suggestion of political interference, at any point. The involvement of a political engagement forum would therefore not be appropriate, in our judgment.
Amendment 141 then requires that all periodic reports by the office for the internal market on the operation of the UK internal market are laid before the JMC (EN). Subject to Clause 31(7) and Clause 34(3)— which the noble and learned Lord, Lord Falconer, pointed out, are governed by Clause 30(1)—the OIM will lay reports to the UK Parliament and each of the devolved legislatures. It will be for the relevant Administrations and legislatures, which receive the reports, to determine the most appropriate course of action, rather than a committee such as the JMC (EN).
Finally, Amendment 171 places an obligation on UK Ministers to bring regulations proposed under powers in the Bill to the JMC (EN). It suggests that, in the absence of agreement, UK Ministers would be obliged to lay reasons for the failure to agree before both Houses of Parliament and to table a Motion for a debate on the proposed regulations and the disagreement. I understand why my noble and learned friend is searching us on this point, but this mechanism is likely to introduce considerable delay in the implementation of policy to protect the internal market. Such a process would not facilitate timely discussions, given the frequency of such JMC (EN) meetings, and could undermine Parliament’s responsibility to legislate for the internal market as a whole.
I do not normally like to go with technical objections to amendments, but this amendment, as well as creating a new procedure for all powers across the Bill, would change the way regulations are made for Northern Ireland. It would require all the devolved Administrations to consent to regulations for Northern Ireland. Even if my noble and learned friend were minded to go forward on this route, and I hope he is not, we would have to respect the particular regulating arrangements for Northern Ireland in the Bill.
In summary, I hope noble Lords agree that, although these matters are important—I do not resile from the importance of the considerations raised and I will reflect on the debate—there are clear limitations to using the JMC (EN) in this capacity, particularly for measures relating to the office for the internal market, where there are already provisions in place to report directly to the Senedd, Holyrood and Stormont. With this in mind, I ask that this amendment be withdrawn.
I have received requests to speak after the Minister from the noble Lords, Lord Fox and Lord Purvis of Tweed. I call the noble Lord, Lord Fox, first.
I appreciate the Minister’s reply on the important points put forward. Whether the amendments of the noble and learned Lord, Lord Mackay, are adopted or there is some other form of regulating the relationship between the UK Government and the devolved authorities, does the Minister agree that there can be a smooth-running internal market only if there is trust between the UK Government and the devolved authorities? Could the Minister say what the Government’s assessment is of the effect on that trust of publishing the Bill?
My Lords, I strongly agree on the principle of trust between all parties in a negotiation. It is not always there in every negotiation, but this is more than a negotiation; it is a relationship. It is a life together, which we all wish to carry forward as the four nations and peoples of these islands. Standing at this Dispatch Box, I have sought to assure the House of the Government’s total commitment to proceeding with trust and respect. That has to come from every Government and institution in the United Kingdom. I go no further than that. I do not believe that seeking to set out a common approach to the management of the UK internal market in the UK Parliament, to which all four nations of this kingdom send representatives, should in any way undermine trust.
My Lords, can the Minister confirm that the discussions of the intergovernmental review, the conclusions of which we are asked to await, will specifically cover the operation of internal market legislation? Until now, as the Minister knows, legislative consent has been denied by both Wales and Scotland. The Minister repeated today that he regretted that the devolved Administration of Scotland has walked away from single market considerations. Will the intergovernmental fora that were referred to specifically cover the internal market?
Secondly, in their joint letter to my noble friend Lord Fox, the noble Lord, Lord Stevenson, and me, the Minister and the noble Lord, Lord Callanan, stated that the office for the internal market will have a role in providing independent advice in the dispute resolution process. With regard to the devolved Administrations in the intergovernmental fora, has it been confirmed that the OIM will have a role in dispute resolution?
My Lords, I believe I heard my noble friend Lord Callanan addressing this point in the previous group and that there was talk of a letter. I may have misheard but, if such a letter were proposed, I would not want to interpose my rather excessively considerable body between my noble friend’s pen and your Lordships’ House. But I take the point. If it is not covered in the response that my noble friend Lord Callanan has promised, I will address it. I am not pleading for an institutional parsing of the text in my comments, but I repeat that we are jointly exploring a number of options to strengthen the impartiality of the intergovernmental dispute resolution process. We hope it can be carried forward successfully.
My Lords, I am grateful for the general support for my proposal to require co-operation between the devolved Administrations and the UK Parliament. I am sorry that my good friend, my noble friend Lord Naseby, does not care for it. I am not sure why that is, because I do not think that what I am proposing would damage in any way the independence of those seeking to set up a task force. All I am concerned about is that the task force should be familiar with the various areas of the United Kingdom that will be affected by the dispute in question. However, I have to be thankful for the support of your Lordships for the general principles that I am trying to further.
I am using the JMC (EN) because I understand that, at the moment, it is the body that is running the common frameworks policy. I want to make it absolutely clear that I am strongly supportive of the common frameworks policy and of bringing together in that connection various important matters. The system seems to work well. I am happy to use any organisation that the Government come out with for continuing that work with a degree of friendship.
I indicated in my speech at Second Reading that although the Scottish Government had stood apart from the situation in a formal way, they were apparently encouraging support for trying to resolve the main problems of the internal market in the common frameworks policy. As far as I can make out, that is the position. Needless to say, I got that information from the Scottish Government. It is a description of our situation which shows a certain degree of separation and co-operation at the same time; I very much welcome that co-operation.
The general point of who will eventually run this is a matter that I cannot anticipate. Therefore, when I use the JMC (EN) in my amendments, I am simply using what I understand is the present situation. The Government may well be able to produce a better system and, if they do so, I will be glad of that. In the meantime, I think that there is general acceptance of the view that the devolved Administrations need to be closely involved. After all, in Scotland at least there is a very strong interest in this, because something like 60% of its exports go to the rest of the United Kingdom. An internal market that functions properly and fairly is very much in Scottish interests, and I certainly would like to do everything I can to promote that.
In the light of the very good response I have had from my noble friend Lord True, I am happy to withdraw my amendment.
Amendment 114 withdrawn.
We now come to the group beginning with the question that Clause 30 stand part of the Bill. 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.
Debate on whether Clause 30 should stand part of the Bill.
My Lords, for the general reasons that I elaborated in the earlier group, I do not consider the CMA to be the right body, or the OIM the right structure, so in this group I give notice that Clause 30 and Schedule 3 should not stand part of the Bill. Clause 30 is about the setting up of task groups in the OIM and Schedule 3 contains more OIM detail.
Perhaps I may correct a small misspeak in the previous group. I referenced accidentally Clauses 29 and 30 instead of Clauses 28 and 29. I also pointed out then that this is part of a wider aim that Part 4 and Schedule 3 should not stand part, but as the Minister will know, it is not possible to put all of that in one amendment and debate it—we have to go through it clause by clause. However, I do not need to be reminded that removing one clause would leave the rest of them standing in a slightly awkward way. My solution is that we should get rid of them all.
I have also put forward Amendment 116 to probe how an independent OIM would look. It covers broadly the themes or principles that keep recurring as we move through the Bill and which need to be picked up, even when forced into the CMA straitjacket. I also heard what the Minister said about not creating new bodies. I recognise that there is a money aspect to this, but the point is that we need something that is better than the current proposals.
The first paragraph of Amendment 116 mentions having an MoU between the Administrations about the market access principles, and then the OIM being set up to assist in oversight. The message is simple: these matters should be consensual, and a consensually agreed body should be representing the four nations, rather than an imposed one that could potentially pay only lip service to the devolved authorities, or that does not necessarily have the right range of knowledge and abilities.
Proposed subsection (2)(a) envisages transparency, other than for commercially confidential information; maybe there could be some confidentiality for the Administrations in some instances too, but there should be a presumption of transparency, because how else are consumers or anyone else to know whether their views have been properly taken into consideration? Proposed subsection (2)(b) states that the board must include nominations from all of the devolved authorities and from the regions of England. I accept that the regions suggestion is as yet unstructured, but the principle I seek to convey is that it is no good just having the view from Westminster, it needs to be more “on the ground”, which is the enormous benefit of devolution.
The proposed third subsection says:
“Any task or investigatory group within the OIM must have a minimum of five persons drawn from all four nations of the United Kingdom.”
I have not tied the structure to the CMA-type panels, because I do not see that they are needed. However, whatever investigatory teams are used, there should be national diversity, not just cosmetically and not because it is political, but because there are genuinely different sets of knowledge and perspectives. The “minimum of three” task force of the CMA structure is clearly too few.
The proposed final subsection refers to the original CMA, not the OIM, and states that when in the ordinary course of its business the CMA conducts an investigation that requires consideration of the internal market, it shall also appoint balanced inquiry panels from all four nations. This could be in mergers, for example. I note that this part of my amendment contains thoughts that are somewhat similar to Amendment 153 tabled by the noble Baroness, Lady Hayter, which we will get to on Wednesday.
That is my vision of the starting principles for the OIM and how the Government’s construct could also be improved. I do not understand why the Government have given it copy-and-paste structures that derive from those that the CMA has for its investigations, and I question whether that is appropriate. This also underlies the clause should not stand part notices both in this group and generally.
The CMA deals broadly with large companies, which may be doing things that do not serve the public interest in terms of competition, and where it has powers to enforce mitigating measures. Strong information and enforcement powers are needed to be able to persuade businesses to co-operate and, importantly, the businesses will have done something to bring it on themselves.
The purpose of panels is to have a pool of expert talent available, over a range of sectors—in particular to look at things such as mergers, monopolies, cartels and competitive pricing—without having to have everyone on the payroll except for daily rates when used in an investigation. It is almost a gig way of working, if you like. It is a method of insulating the investigations from the board to reinforce independence, but it also has the effect of making panels less than accountable. It creates, and is intended to be, a closed structure, constructed not to be transparent or accountable. I do not see that as the right philosophy concerning work that relates to the internal market, and I really would like someone—well, the Minister—to explain why it was chosen and what benefits it brings.
I know the Minister does not like EU comparisons—I can say that because the noble Baroness, Lady Neville-Rolfe, started it—but think of the difference between the impenetrable DG Competition and the transparency of DG Internal Market. I had oversight of both; they are worlds apart and so, too, are CMA competition investigations and internal market monitoring. There really is no culture fit.
The OIM may, as indicated on page 29 of the Explanatory Memorandum, be dealing with businesses, possibly in the area of direct or indirect discriminations. These are matters of public interest. When it concerns the goods or services to which we may or may not have access, or if a business or anyone is up to shenanigans, we should know. It would not be shielded in a court hearing.
The remainder of my amendments in this group relate to improving the Government’s structure along similar lines to those I have elaborated regarding my hypothetical independent OIM. Amendment 127 relates to an investigatory panel size of five not three, Amendment 128 says that panels must be drawn from all four nations, and Amendment 130 relates to transparency.
My Lords, I will speak to the amendments in this group to which I have added my name: Amendments 117 and 118, and Amendments 120 to 124. The noble and learned Lord, Lord Thomas of Cwmgiedd, and the noble Baroness, Lady Finlay of Llandaff, have also signed these amendments, which have been put forward with the agreement of the Welsh Government.
Clauses 28 to 40 of this Bill establish a new Office for the Internal Market, within the CMA, as other noble Lords have already noted. The OIM will have reporting, monitoring and advisory functions and information-gathering powers; it will monitor the health of the internal market and provide advice on the economic impact of proposals and regulations, including their impact on trade, investment and competition. It will publish reports available to stakeholders and devolved Administrations. The problem is that all this is to be provided within the existing structure of the CMA, which is a body established and designed to work within the UK Government structure.
These amendments relate to the status, role and membership of the CMA, which was established in 2013 as a non-ministerial government department, accountable to Parliament via its sponsor department, which at the moment is BEIS. Although the CMA works at arm’s length from the Government, BEIS gives it a strategic steer that outlines the Government’s strategic priorities. The Secretary of State appoints, or removes, the chair and board of the CMA, and it produces an annual report for the Secretary of State. It is the CMA which represents the UK Government abroad on relevant issues.
The CMA was designed to deal with purely reserved matters, whereas the Office for the Internal Market is designed to have functions in relation to the devolved Administrations as well. The OIM is therefore a mismatched limb, grafted on to the CMA. For instance, Schedule 3 includes measures to establish an OIM panel and task groups. The Secretary of State must simply consult the devolved Administrations before these appointments. That is inadequate, as it provides no guarantees of agreement from the devolved Administrations before appointments are made and no guarantees of balanced representation.
These amendments seek to address these problems and to be fully respectful of devolution, including requiring the Secretary of State to get the consent of the devolved Administrations to appointments, although with the provision that they must respond within one month so they cannot unreasonably hold up the work of the OIM. Importantly, these amendments would also adjust the structure and relationship of the CMA so that it will no longer be a purely UK Government and parliamentary vehicle. The DAs would each be able to appoint and remove a CMA board member, subject to the usual five-year term and the CMA’s annual plan and annual report would be laid before the devolved legislatures as well as Parliament. Thus the parent organisation, the CMA, is structured to ensure that its offshoot, the Office for the Internal Market, works genuinely for all parts of the UK.
I spoke in an earlier debate about the hybrid role of UK Ministers, who are expected by this Bill to operate at one moment as English Ministers, acting in the specific interests of England, then to switch hats into their UK role and act as impartial arbiters between the interests of the four nations. This Bill requires a similar constitutional contortion from the CMA in relation to its baby, the Office for the Internal Market. There is a reason why the referees in Saturday’s rugby internationals did not come from either of the nations represented on the field—and we all know that. You cannot guarantee an even-handed approach unless you have the structures in place to ensure that, and it has to be built into and throughout the appointments of the organisation, into its remit and reporting processes.
As the noble Baroness, Lady Randerson, has very carefully explained the purpose of these amendments, I can be much briefer than I had intended.
The amendments are directed at the CMA and the Office for the Internal Market as set out in the Bill, but the principles behind these amendments would apply to any different structure that emerged, as the noble Baroness, Lady Bowles of Berkhamsted, envisaged. It seems to me that the critical point for this House to consider is that whatever structure is established must command the confidence of all the nations of the United Kingdom. Secondly, it is obvious that there will have to be a body that exercises independent powers and makes judgments that may go against one part of the United Kingdom or another part of it.
Thus, it is important to ensure, as these amendments seek to do, that the appointments both to the Competition and Markets Authority and to the office for the internal market take into account the change in the CMA’s role and cater for the new role of the OIM—assuming that these roles will be given to them when the Bill emerges from Parliament.
It seems to me that there is one useful analogy to make. Because the CMA has certain quasi-judicial and independent functions, it must be set up in such a way that those who are affected by its decisions know that those appointed to it have their confidence. They must also have a proper knowledge of the different constituent parts of the UK. When this House enacted the Constitutional Reform Act in 2005, a statutory provision was included that there had to be judges from Scotland and Northern Ireland; Wales was dealt with as part of England, and I will say nothing about that today. But recent experience of devolution legislation has shown how important it is for a body such as the Supreme Court—and for this body—to have representatives who know and understand the position in each of the constituent nations.
I need not elaborate on the detail of how this provision will work. I stress that the body must comprise those who understand the different nations of the UK and are able to provide it with confidence in its decision-making. It must address the point to which the noble Baroness, Lady Randerson, referred—namely that, more and more, Ministers are seen not simply as UK Ministers but as Ministers of England.
My Lords, I speak in support of Amendments 116, 127 and 130, to which I have added my name. I agree with the arguments put forward by my noble friend Lady Bowles, who put it much better than I can.
The aim of the amendments is to seek to bring some clarity to the office for the internal market. Gosh, it needs some clarity. I am unsure that we even require this quango. If it stays in the Bill, then please let us flesh out how it could work. Does the Minister accept that, if the office for the internal market remains, there is still much ambiguity in this Bill? It is not even constructive ambiguity; it is ambiguity pure and simple. Can he explain it?
Amendment 116 seeks to add a clause which should be the bed-rock of the Bill. There has to be an understanding agreed between the Secretary of State, Welsh and Scottish Ministers and the Northern Ireland department in order to make the internal market work, be transparent and involve all the devolved authorities.
Amendments 127 and 130 underline the need for transparency and representation. I hope the Minister can accept that the amendments seek to clarify and flesh out what the Bill means in respect of the office of the internal market and to get rid of any ambiguity. Amendments 116, 127 and 130 seek to do that.
My Lords, as other noble Lords have explained, the aim of these amendments is to ensure that not only is the office for the internal market appropriately constituted and organised so that it is accountable to all four democratically elected legislatures of the United Kingdom but also that the Competitions and Markets Authority—if this is to be the home of the new office—should be reconstituted to reflect the fact that its functions no longer relate exclusively to reserved matters.
I say “if” the office for the internal market is to sit within the Competitions and Markets Authority. Other noble Lords have already addressed that issue thoroughly and made clear that it is neither necessary nor desirable. The more radical attempts by the noble Baroness, Lady Bowles, and the noble Lord, Lord Stevenson, to establish the office for the internal market as a truly independent and unattached new body are far more logical and would ensure the proper functioning of the office. The noble Baroness, Lady Bowles of Berkhamsted, explained this very clearly. Their proposal has great merit. We will all be interested to hear the Minister’s arguments as to why a truly independent office is deemed undesirable.
Ministers keep claiming that passing the Bill is extremely urgent. If it is that urgent, perhaps he could explain why it would not be possible to initially brigade the office for the internal market under the CMA as an interim measure until it can be established by statute. After all, that is what seems to be happening with the Trade Remedies Authority. If I am correctly informed, the Government found it easy enough to establish a new body—the Trade and Agriculture Commission—as an independent statutory body.
If there are compelling arguments supporting the current proposal then it is imperative that the CMA can demonstrate that it really can command the trust of the devolved Governments and legislatures. If the Minister cannot give us those arguments during this debate, can he write to us specifying the justification? Nothing in these amendments suggests that it would be impossible for the CMA or for the OIM to function should a future devolved Government simply not want to engage.
The right of appointment of a board member to the Competitions and Markets Authority is important, but the board could function without one or more of these members. In the case of the OIM panel—where the devolved authorities would have to be fully engaged in appointments—if consent is not forthcoming within one month then the Secretary of State could proceed without their consent as long as he made a statement as to why proceeding without consent was desirable. That seems to strike an appropriate balance between ensuring the operability of the new arrangements and ensuring that the devolved institutions have confidence in a body that will have such significance for the future integrity of devolution.
My Lords, I am delighted to follow the noble Baroness, Lady Finlay of Llandaff. As she has made so many of the points that I intended to address, I shall not repeat them and I shall curtail my comments accordingly. I agree with the telling arguments made by the noble Baroness, Lady Randerson, and the noble and learned Lord, Lord Thomas of Cwmgiedd. I shall also limit my remarks because of the diabolical communications between Wales and Westminster this afternoon. Noble Lords may see this as an ironic reflection on the amendments that we have just been addressing.
I oppose Clause 30 standing part of the Bill and support Amendment 117, to which I have added my name and to which the noble and learned Lord, Lord Thomas, has spoken. Like the noble and learned Lord, I shall desist from being drawn into the argument that Wales has so often been treated as part of England; that is for another day.
In the earlier debate on Amendment 110, the noble Baroness, Lady Bowles, said that the CMA should be equally available to all four nations. During the debate on the last group of amendments, the noble and learned Lord, Lord Mackay of Clashfern, argued that the devolved Governments should have a voice. This is why I have added my name to Amendment 117.
The Bill is reinventing the CMA as a hybrid body with the OIM—very different from the widely respected body that has hitherto existed. The CMA has to be restructured accordingly.
The Bill is bringing the CMA into a highly controversial area, as it will be dragged into polarised arguments between the Governments of the four nations. Several noble Lords have already raised doubts about whether it is in any way appropriate that the CMA should be used in this way. If the CMA is going to act as an adviser to the Government, it has surely to be an adviser to all four national Governments within the UK. It has to be equally responsive to all four Governments and not beholden unto one Government more than the other three.
It is in that context that I support the amendment requiring there to be a nominee of each of the devolved Governments on the CMA board. Unless this is delivered, the CMA will be seen as the referee and as a body beholden unto one of the teams between which it potentially has to adjudicate. This will inevitably lead to conflict, and it is to give the devolved Governments greater confidence in the CMA that Amendment 117 proposes having a nominee of the devolved Governments within its structure. Having rejected earlier amendments to amend the statutory functions to avoid these dangers, the very least the Government can do is accept Amendment 117, or alternatively bring forward on Report an amendment to achieve a similar purpose. I urge the Minister for once to take a sympathetic approach to this constructive amendment.
My Lords, it is a pleasure to follow the noble Lord, Lord Wigley, and all previous speakers in the debate. I wish to speak especially in support of Amendments 117, 118, 125 and 131. As Amendment 131 is in the next group, I shall not speak in that debate as I am listed to do.
These amendments concern the future governance of the Competition and Markets Authority—the CMA—and the creation within it of an office for the internal market, or OIM, under the Bill. These amendments seek to ensure that appointments to these bodies are representative of the four constituent legislatures of the UK and that, in overseeing the internal market within the UK, the OIM does not effectively act as an arm of the UK Government and therefore of only one nation, England.
These proposals are important because they are part of the emerging architecture of what Robert Shrimsley of the Financial Times has called the “one-legged economic strategy” of No. 10, namely the “levelling-up” of the UK regions and nations, which appears to mean allowing No. 10 to subsidise favoured industries without any willingness to partner with either the devolved Administrations or, for that matter, regional and local government, such as mayors. In July, the Financial Times quoted an individual close to these discussions as saying:
“The current plan is an odd combination of reserving state aid [for control from London] but then agreeing to a free-for-all. They just want to be able to bung money at things and do not want UK internal market legislation cutting across that.”
The Bill therefore seeks to create a UK-wide, or at least a Great Britain-wide, regime for market access overseen by the new office for the internal market within the CMA that undermines the current devolutionary settlements, certainly for Scotland and Wales and potentially for Northern Ireland, depending on the outcome of the UK trade negotiations.
The provisions of the Bill to curtail the scope of EU state aid rules that could potentially apply through Article 10 of the Northern Ireland protocol, which the Prime Minister agreed to last year, reflect objections by No. 10 to possible “reach back” into the UK by these EU rules. The Government now seek to give the Westminster Government legal powers to control UK state aid, which will potentially replace the estimated £2 billion average annual European Union structural funds previously distributed to the UK’s devolved nations and regions. Just as the Government are resistant to demands by the EU for a level playing field between the UK and the EU, neither do they apparently wish to see the UK’s internal market subsidy regime between England, Scotland and Wales, and possibly in the event of no deal even Northern Ireland, overseen by an independent UK regulator.
The reason why Scotland and Wales in particular are so unhappy about the Bill is that the arrangements proposed are seen by them as undermining the very principles of devolution. This is because the Bill not only curtails devolved competence in specific ways, for example, by making state aid a matter reserved to Westminster, but will ironically also cut much more deeply into areas of devolved competences to regulate economic activity in relation to goods and services than did the previous EU rules. This is because areas of permissible exemptions from similar EU internal market rules, including public health, environmental protection and the protection and promotion of local heritage, do not appear to be exempt from the proposed UK internal market rules. The Bill also gives the Westminster Government new spending powers in devolved areas with no obligations to consult the devolved Administrations.
The previous Conservative Government of Theresa May envisaged that post-Brexit there would be a new legally enforceable regime for state aid under the CMA. However, the arrangement now envisaged for the office for the internal market is that all appointments to its board and the panel of task force members will, like those currently at the CMA, which is a non-ministerial department of the UK Government, be made by Ministers at Westminster and that the role of the new office will be purely advisory.
Amendments 117 and 118 would give each of the devolved Administrations the power to appoint a member of the CMA board itself and would also ensure that the consent of the devolved Administrations is obtained for appointments of the chair and members of the office for the internal market panel. The Bill as it stands provides only for consultation with, as opposed to consent from, the devolved Administrations in relation to such appointments. Amendment 125 would require the CMA to lay its annual plan, proposals for its plan and its annual report before each of the devolved legislatures. Amendment 131—I accept that it is in the next group—contains similar provisions related the involvement of the devolved Administrations in appointments to the OIM and would strengthen the independence and enforcement powers of the OIM so that it would not be effectively an agent of the Crown.
In addition to crucial aspects relating to undermining devolution in the UK, there is an additional disturbing element to what the Government are trying to achieve here. As pointed out by the Institute for Government, under the Bill as it stands the office for the internal market will have very limited powers. Its reports may be useful in gathering relevant information about how the internal market functions, but there is no obligation on any of the Governments to act on them.
In the Conservative manifesto of 2017 there was a promise to use the returning £2 billion average annual EU structural fund money to set up a UK shared prosperity fund. The March 2020 Budget said that the fund would be realigned to match domestic priorities. The Government have yet to publish a consultation on this fund, but the Welsh Government have already made clear that they are strongly opposed to the idea of the fund being administered from Westminster.
The devolved Administrations have vocally expressed their opposition to the proposals relating to the Bill’s blueprint for the future UK economy, which they say was drawn up with no consultation or respect for divergence between the nations. Nicola Sturgeon has pronounced it “an assault on devolution” and the Welsh Government called it
“an attack on democracy and an affront to the people of Wales”.
I have previously argued that the rarely convened Joint Ministerial Committee, which was created to allow the UK Government and the devolved regions to discuss issues relevant to devolution and consider any disputes between the Administrations, should adopt a modified form of the EU system of qualified majority voting so that the Westminster Government would need the support of at least one of the other three nations for a measure to go forward. Such a measure is supported by the Welsh Government, but not—unsurprisingly maybe—by the chair of the committee, Michael Gove.
The Covid crisis has emboldened the UK’s devolved Administrations to make decisions that significantly diverge from those in Downing Street, and they are thought by many to have shown greater surety in their handling of the pandemic than has Westminster. Far from rewarding them for their competence, however, the Government are exploiting Brexit as an opportunity to impose an autocracy on Great Britain, and potentially on Northern Ireland as well, in respect of these internal market rules.
Brexit has also exposed the lack of autonomy at local government level within England. Without independent regulation and arbitration between levels of government, there is potential for pork-barrel politics in relation to the shared prosperity fund if such funds are to be controlled from Westminster. Referring to this proposed fund on 23 September, Michael Gove said in the other place:
“We will, of course, spend that money on what the Prime Minister has called the levelling-up agenda”.
He went on to refer to parts of the country that now have Conservative MPs, saying,
“it is vital that their advocacy on behalf of their constituents … is supported”.—[Official Report, Commons, 23/9/20; col. 973.]
As Greater Manchester mayor Andy Burnham recently discovered, under this Government local leaders hold little sway when it comes to differences with Whitehall if they are not Conservatives.
These amendments seek to correct that gross imbalance in the Bill and to make some provision for the independent governance of the internal market and UK state aid in the post-Brexit future. They have my strong support.
My Lords, it is a great pleasure to follow the noble Baroness, Lady Finlay, and the noble Lords, Lord Wigley and Lord Hain. I agree with much of what they have said. The noble Baroness was particularly clear in setting out the issues that arise with this group. I have attached my name to, and will speak to, Amendments 119 and 126, in the name of the noble Baroness, Lady Hayter of Kentish Town, who I thank for originating them.
They share the purpose of many amendments in this group: to ensure that the devolved nations have a voice in the operation of the internal market—the market that will govern much of what they can regulate and what protections they can provide to their peoples, as the Committee discussed last week in the group starting with Amendment 15.
As the noble Baroness, Lady Hayter, has not yet spoken, I will briefly address the detail. I interpret Amendment 119 as something of a back-up to Amendment 118, which would ensure that the Government have to obtain the consent of devolved Administrations before appointing the chair and members of the CMA’s office for the internal market panel. Amendment 119 says “seek consent”. I prefer Amendment 118, but it is important that at this stage we offer a range of amendments to the Government.
Amendment 126 refers to the membership of the OIM panel, saying that it should include representatives from each of the four nations of the United Kingdom. The purpose of these two amendments, as in so many of the amendments in this group, is—to adapt the well-known phrase— to ensure that there is no regulation, or deregulation, without representation or democracy.
In briefly making the case for these amendments, I go back to the first group debated today, which, as your Lordships will recall, related to professional qualifications. I quote the words of the noble Lord, Lord Callanan, in that debate:
“There is the whole world of artificial intelligence or gene editing—there is a massive range of new and potential professional areas, bodies and qualifications that may come forward … in the case of new professions, it is entirely possible that the individual nations of the UK might seek to regulate them differently, and we want no new barriers to trade to emerge”.
In that one short statement, the Minister managed to sum up the disturbing intention of the Government to centralise in Westminster decision-making on extremely important areas of public policy that are currently devolved; the reasons for the objections to this Bill held by many, particularly those concerned with defending the devolution settlements; and the case for these amendments. Even if the protections that the still relatively new institutions of the nations have been able to create for their peoples stay in place, they will not be able to react to social, economic or technological changes, or strengthen existing protections.
To go back to the single-use plastics example that was discussed extensively under Amendment 15, if the Welsh Government want to provide extra protections for their people and environment from these deeply damaging products, they can rush to get measures under the wire now, before the internal market replaces the single one. For what happens after that, I cannot think of better examples than those provided by the noble Lord, Lord Callanan—gene editing and artificial intelligence, where different regulations might be applied by the devolved Administrations in their areas of competence. That would include areas ranging from agriculture to education, from food safety to transport. We need to ensure that the devolved Administrations can keep control.
My Lords, I listened carefully to noble Lords who spoke b