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?
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.
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 before me. The devolved Administrations are failing to recognise that both the CMA and the office for the internal market are fundamentally UK-wide bodies working on UK-wide issues. They are not bodies where territorial interests will be played out. The devolved nations are part of the United Kingdom, which exists and is not just a federation of four independent nations. There are clear United Kingdom functions, which is why we have UK Ministers looking out for the interests of the whole United Kingdom. We should not regard the UK as somehow morphing into an equivalence with England, which the noble Lord, Lord Hain, came close to saying, even if he did not actually say it, when he spoke earlier.
Furthermore, these significant independent public bodies should not be seen as having nominees or representatives on them: it is important that you get the best people to contribute to the functions given to these bodies by statute. Those people will require qualifications and experience. It does not matter where they come from: the most important thing is to get the right quality of individual on those bodies to carry out their functions. Any sense that those individuals become the possessions of devolved Administrations could take them into political alignment, which would have a very negative influence on the effective operation of the independent bodies.
Schedule 3 already requires consultation with the devolved Administrations over the appointment of the chair and panel of the office for the internal market. That is the normal formulation. I do not think that there is a precedent for what is proposed, for example, in Amendment 117: direct appointments by devolved Administrations to independent UK-wide bodies. That would take us in a direction that could undermine the independence and coherence of those bodies. I hope that noble Lords will not pursue their amendments.
My Lords, as the noble Lord, Lord Hain, has said, much of the debate on this group has coincided with the next group and Amendment 131, and with what I was going to say on that group, so I will not exercise my right to speak then.
The word “confidence” has been used consistently, and it is the one thing currently missing. We do not have the support of any of the devolved Administrations for these measures, and it worries me that if we follow the same pattern in future, areas of conflict will arise, because there is no consensus on what we are trying to do. I take the point made by my noble friend Lady Noakes that this is a UK-wide body and you cannot expect the United Kingdom Government to be held to ransom by any of the devolved Administrations. I would not wish to see that.
Equally, however, we have, in our haphazard way—I have drawn the attention of the House to this before—provided devolutionary powers to these regions. As I said last week, we have a collision between the powers of the devolved institutions and what we are now trying to create. It makes sense, therefore—whichever way the Minister intends it in practice—to ensure that the devolved regions feel confident that they have someone at the table, in this new body, who understands their local circumstances and will speak up on their behalf, as well as exercising the UK-wide powers.
I must say that as far as my own region is concerned, while the Government will not allow the truth to pass their lips, from both the economic and state-aid points of view Northern Ireland is left in the European Union. We will be operating on EU state-aid rules and operating an EU regulatory regime. While we are all on the same page today, over time there will be differences. I do not believe, nor I do see any evidence, that Whitehall fully understands that. If we want proof of that, we were told a year ago to tear up any pieces of paper we were given and throw them in the bin; on 1 July we were provided with £25 million to ensure that our traders could deal with the paperwork and the administrative burden that they were going to be confronted with; and by 29 August that had risen to £355 million.
It is perfectly clear that there is a border in the Irish Sea, there are differences and the regime that businesses in Northern Ireland will have to operate under could well be very different over time, so having representation on this body is the minimum that we wish to achieve. I do not want to see a veto—I do not want to see a body that is crippled by disagreement—but people have to be realistic: if you give powers to the devolved Administrations then you cannot be surprised if they take offence when Whitehall says, “We know best and we will do things that you don’t agree with”.
I would say that we have created our own problems. I would like to see in response to some of these probing amendments the Minister address the point about how we get buy-in if we do not have broadly-based representation on the body that understands the different social, legal and economic contexts, particularly when one part of our United Kingdom is left under EU regulations and state-aid rules. I look forward to what the Minister has to say in that regard because we want to succeed. We have to move forward coherently and with restored confidence, because I have never seen it at a lower ebb than it is today. It would be so much better if the JMC were functioning as it was originally intended and if it were a forum where we could jointly work together on solving our problems. What we have achieved at the moment is a stand-off with the devolved Administrations, none of which support this legislation.
My Lords, it is a pleasure to follow the noble Lord, Lord Empey. I support Amendments 117 and 125, to which four noble Lords with a special interest in Wales have put their names. I should like to add a Scottish point of view when I say that the amendments that they propose have everything to commend them, and the arguments that they put forward are ones that I entirely endorse and support.
The key point underlying both these amendments was expressed by the noble Baroness, Lady Bowles of Berkhamsted, when she said that these matters should be consensual and the body taking the decision should represent all four nations. Whatever the structure of that body, and indeed whichever body we are talking about—the options are before us in these various amendments—it has to command the confidence of all four nations.
Sub-paragraph (2A), as set out in the Bill as it stands, provides that before making an appointment the Secretary of State must consult the Scottish Ministers, the Welsh Ministers and the Department for the Economy in Northern Ireland. However, consultation, as the noble Baroness, Lady Randerson, put it so well, is not a guarantee of an even-handed approach being carried through all the processes that the body is responsible for conducting, so it does not give the confidence that is needed. The crucial point underlying all these arguments is that, whatever the structure, it must be designed to minimise the risk of suspicion and conflict.
I thought the noble Baroness, Lady Noakes, made an important point when she drew attention to the fact that the CMA is a UK body and that it seeks to operate in the best interests of all four nations. I am sure that is right, and of course one would not want in any way to question its ability to do that. The problem is that the decisions that it takes are seen as decisions taken in Westminster, and that that is true of decisions taken in Whitehall as well. From the distance at which the devolved Administrations are operating, it is easy to fall into the trap that the noble Baroness would wish us not to—I would not wish to do it myself—which is to regard these bodies as English and not truly representing the UK. That is the risk that we run if we do not pay due attention to the desire of the devolved Administrations to be properly represented on these bodies. It is important that that should be recognised, not only for its own sake in supporting the devolution arrangements but also to avoid the risk of the bodies themselves being misunderstood, particularly when they take decisions that are regarded as unpopular in the devolved Administrations.
Amendments 117 and 125 are extremely important. I congratulate the Welsh Government, those who have brought the amendments forward and those who have spoken in support of them, and I offer them my full support.
My Lords, I also offer my support to these two amendments. It is a privilege to be able to follow two such wise speakers as the noble and learned Lord, Lord Hope of Craighead, and my noble friend Lord Empey. Implicit in their speeches was a recognition of the fact that the United Kingdom is on the verge of becoming the broken kingdom. The Government underestimate at their own potential peril just what dangers surround us. I beg my noble friend who will wind up this debate—for whom I have a genuine regard, as I have said many times before—to take seriously the points made by the noble Lord, Lord Empey, the noble and learned Lord, Lord Hope of Craighead, and the noble Lord, Lord, Hain, all of whom, coming from different parts of the United Kingdom, speak with a tone of real concern and sorrow because they passionately believe in the UK, as do I, and they know it is in peril.
We have to be extremely careful. I will speak for a moment or two longer than I would otherwise have done. I too, like the noble Lords, Lord Empey and Lord Hain, will not trouble the House in the next series of amendments because they rather overlap with these, and in many ways I would have liked them to have been grouped together so, like both noble Lords, I will speak as if they are.
My noble friend Lady Noakes was right to talk about our dealing with the United Kingdom. However, we have had 20 years or more of devolution and in the case of Northern Ireland considerably longer, although much more fractured from time to time. Therefore, we cannot behave as though ours were the only elected legislative body—of course, we in your Lordships’ House are in a unique position. We cannot behave as if there were just one Parliament; some of us may wish that there were but there is not. Therefore, to neglect what has been built up over the last 20 years would be sheer folly. We have to have a proper regard for the Scottish Parliament, the Welsh Senedd and the Northern Ireland Assembly, and to make sure that in this new world where the United Kingdom is no longer part of the European Union, we pull together, work together, recognise what each constituent part brings to the United Kingdom and strive to ensure that it remains the United Kingdom.
I deeply regret the fact that we are rushing pell-mell towards 31 December. The crisis that has engulfed the United Kingdom over the last seven or eight months, unique and grave as it is, ought to have made the Prime Minister and his Government realise that there would have been real merit not in trying to undo Brexit—that has happened—but in trying to get the very best possible relationship and, therefore, taking more time. I deeply regret that, but, as they say, we are where we are. It is therefore tremendously important—utterly vital—that we go into the new year as a united kingdom, each nation complementing the other and, as a collective country, moving forward.
We have seen over the last few months, with the way devolution has operated in Scotland, Wales and Northern Ireland, that the constituent parts of the kingdom have behaved differently with regard to Covid. I am not making any value judgment, but I would say that we have made our fair share of mistakes in this part of the United Kingdom. We have made some sweeping judgments, which we will be debating on Wednesday, and, in many things, other constituent parts of the United Kingdom have behaved perhaps a little more wisely than we have.
One point that has cropped up time after time in this very interesting debate is that we must command confidence. The prime duty of the United Kingdom Government here at Westminster is to command that confidence. I urge my noble friend the Minister to ensure that the bodies we are talking about tonight are able to command that confidence—that the office for the internal market does not become an office where dissension rules the day but where all the constituent members, from the constituent parts of our country, can recognise that they are complementary one to another, each with a contribution to make. It is therefore important that all four constituent parts are represented within this office by people in whom we can all trust. The noble and learned Lord, Lord Thomas of Cwmgiedd, said that we really did have to be able to trust each other. He made a number of very valid points which I hope my noble friend the Minister will take on board.
I do not want to sound too much of a Jeremiah, but I have never felt more worried for the future of our country than as we enter 2021—for its continued existence as a united kingdom, for its prosperity, and for our ability to come out of this crisis in a way that gives us a new and bright future.
The Government must practice a degree of humility as they realise that they have not had all the answers right in these last few months. If they are to get them more right in the next few months, they must not behave as though they have a monopoly of wisdom— they have not.
My Lords, it is always interesting to hear the reflections of the noble Lord, Lord Cormack, and I have a tremendous amount of sympathy with a great deal of what he said. However, I think he must come to understand—if I may put it this bluntly—that we have moved on and we are perhaps at a stage now where the future strength of our four nations working together will have to be rooted in an understanding of their separate identities and democratic systems, which complement our own.
I happen to believe that the road we should be exploring far more often is that of a federal United Kingdom. I hope that does not hurt the noble Lord; I feel that that is how our people can become strongly united in the way forward. In some ways, the determination to leave the European community has made this more urgent and important than ever. Our success as four nations depends upon our mutual co-operation and our recognition of interdependence.
Our debate this afternoon has been on a theme to which we have returned several times during the passage of this Bill, and it is crucial. We must have a situation in which the peoples of Scotland, Wales, Northern Ireland and England feel a sense of ownership in what is being done, and a genuine sense that it is being done on their behalf rather than being dependent on a dominating lead from England, and finding ways of talking to them to try to meet their needs in the best way possible.
We simply have to make sure that there is common ownership of what is being done. That is why the amendment by my noble and respected friend Lady Hayter is so important and I am so glad to see it—although I am slightly intrigued by the groupings as I think it is closer to the perhaps more detailed Amendment 131 tabled by my noble friend Lord Stevenson. As we go forward, I am sure that we will fail if there is any feeling that there is not common ownership and agreement about the things that are being done. This will take time and effort because, as has already been said, it is not just an administrative matter but a trust-building matter. These amendments are desperately important, and I hope that the Government will take them seriously.
My Lords, it is a pleasure to follow the noble Lord, Lord Judd, and so many other noble Lords. I support the thrust of this group of amendments, particularly those in the name of the noble Baroness, Lady Bowles, who explained her reasoning with such clarity. I also support the aims of the wholly reasonable amendments in the names of the noble Baroness, Lady Hayter, and the noble and learned Lord, Lord Thomas of Cwmgiedd. I particularly support Amendments 116, 117, 121, 128 and 129, echoing the calls for specific representation of all the devolved Administrations in the operations of the office for the internal market. I also support the aims of amendments like Amendment 118, which call for the devolved Administrations to be properly involved in both the OIM and the CMA.
I hope that, when responding to this group, my noble friend the Minister can accept the intention of these amendments and return on Report with proposals to help dispel the impression that the establishment, as currently proposed, of this office for the internal market represents a power grab by the English Parliament, which shows wholly insufficient respect for, and inclusivity of, the Parliaments of each devolved nation in the United Kingdom. As the noble Lords, Lord Empey and Lord Hain, my noble friend Lord Cormack, the noble and learned Lord, Lord Hope, and the noble Baroness, Lady Randerson, rightly say, surely, representation of each devolved Administration is the minimum that is required to reassure each nation that its own particular interests will be taken into account by a representative with local understanding.
I also agree with other noble Lords that the CMA seems an inappropriate home for this new office for the internal market. Of course, I understand and support the aim expressed by my noble friend the Minister in earlier groups to avoid establishing more arm’s-length bodies if there is a viable alternative to use. However, the CMA does not seem to be a viable alternative for this purpose: it is an organisation sponsored by two government departments, BEIS and the Treasury, and it aims to promote competition for the benefit of consumers, which is primarily concerned with large businesses, competition issues, mergers and oligopolistic power. It does not have experience in monitoring an internal market across all four of our nations, particularly with the interests of so many small firms in each sector being at stake. Therefore, I believe that the office for the internal market does not really belong in the CMA, and, whether or not it is there, it absolutely must have representation from all four nations of our United Kingdom.
My Lords, it is a pleasure to follow the noble Baroness, Lady Altmann, and other noble Lords in this very robust but genuine and philosophical debate about the role of the CMA and the office for the internal market. The general thrust of the debate has been that there needs to be a degree of independence in this body but also that it should embrace the devolved legislatures as well as that within Westminster and Whitehall. As the noble Lord, Lord Judd, said, to protect identities and recognise and acknowledge democracies that Westminster and Whitehall put in place with the devolved settlements, it is important that they are recognised. The best way to do that is through membership on an equal basis on the CMA and office for the internal market panels.
Like the noble Lord, Lord Hain, I was intending to address Amendment 131, which is now in the next group, because I agree totally with its sentiments, as well as Amendments 117, 118 and 119 in this group. It is interesting that, in its recent report, the Lords Constitution Committee states:
“The Government should explain why the Competition and Markets Authority is the right body to have oversight of the monitoring of the UK internal market”.
Perhaps the noble Lord will provide reasoning for that —I hope he does—because none of the noble Lords who have spoken this evening, apart from the noble Baroness, Lady Noakes, have seen any merit in this organisation doing the job that will be required if this legislation is implemented.
The Lords Constitution Committee also states:
“The Government should seek to make the Office of the Internal Market more clearly accountable to the different legislatures in the UK.”
If you want their buy-in—and, as the noble Lord, Lord Empey, has said, there is no buy-in in Scotland, Wales or Northern Ireland—it is going to be an uphill struggle for the Government to achieve that.
In looking at various aspects of this over the last few days, there is no doubt that members should be appointed by all four Executives on an equal rather than proportionate basis, with substantial stakeholder input from the business sector. It should have a dispute resolution capability and sufficient powers of enforcement. Its remit should include measuring additional costs of GB goods to Northern Ireland and the source of the extra cost. Coincidentally, this issue has already been referred to in this debate by the noble Lord, Lord Empey, and an information session was given by the Government to Northern Ireland businesses today, which said that there will be 30 million customs declarations on an annual basis between GB and Northern Ireland. That is the extent of the issue and the extent, for some of us, of the problem and the work required.
There is no doubt that the resources and information necessary to monitor the impact of the UK internal market as it relates to the implementation of the protocol could be covered in Amendment 131, in the name of the noble Lord, Lord Stevenson of Balmacara. I also highlight the capacity to be informed by relevant stakeholders and business and consumer groups. There is a view in the wider business and academic worlds that the Competition and Markets Authority is not a natural fit, as it deals with private, not government, business. The proximity of the CMA to BEIS would always leave it open to accusations of political influence, even though it is a non-ministerial department with strategic influence given by BEIS.
In summary, it is important that that overarching authority should be—here I go further than other noble Lords, perhaps—independent of all political and governmental influence. However, there is no doubt that the work, influence and devolution settlements need to be recognised and, as such, representatives from the devolved structures need to be on the overarching body for it to work and bring some sense to this organisation. I am happy to support Amendments 117, 118 and 119.
My Lords, this is a characteristically interesting and deep group, and it is a pleasure to follow the noble Baroness. Having listened to and thought through all the contributions, I start by asking the Minister a question. Did the CMA respond to the Government’s consultation on their White Paper? If so, will the Government publish that response? Over the years, the CMA, as an independent body, has responded to many consultations on government proposals. What was its response to this? We know, as the Minister has indicated in answers to previous groups, that the Bill was, to put it most kindly, drafted within a constrained period; others may say that it was rushed. It seems there are concerns that the Government have found the CMA to be the appropriate body for a function to identify problems which the Government themselves have not indicated exist yet. It is all to do with future problems.
I will start by reflecting on the very good point made by the noble Baroness, Lady Noakes, who is frequently wrong in these debates. Her points are excellent, but when she shows the working of her arguments, we often come to a different conclusion. I have struggled to find a recent example of a UK body, operating on UK reserved matters, which has a direct role on devolved Administrations and Parliaments for areas within their competencies. Maybe the Minister can indicate where that has been the case. If that is not common practice, then we are in new territory. The closest that I can think of would be the operation of certain UK regulators that, by virtue of the decisions they can make within the reserved functions, could have an impact on devolved ones. We addressed that in the Scotland Act 2016, under which there are, for example, new requirements, which did not exist previously, for Ofgem and Ofcom to lay their reports to the Scottish Parliament. Interestingly, both Ofgem and Ofcom have a statutory duty under that Act to appear before a Scottish Parliament committee. This is part of an advance recognition that the decisions that they can make in regulating a UK market will have an impact.
In response to the noble Baroness, the role that the Government seek for the CMA is now markedly different, because the CMA is not just a UK body operating under explicitly UK issues of competition and regulatory functions. It will now report on non-UK-wide policy proposals made by the UK Parliament for England only, for Wales only or for Scotland only. That is a very different way for that body to operate; it was not the policy intent when it was formed in 2013. It is worth considering in detail, because it is a deviation from the policy intent in its parent legislation.
The CMA is also, fundamentally, about private enterprises in the market and the protection of consumer interests, but it will now have new responsibilities to report directly on decisions made by one Parliament, within its legislative competencies, which do not have private enterprise relationships or consumer interests at their heart. This goes back to the debate about what legitimate aims are. We are moving from a single market which had a wider scope of legitimate aims—environmental policies for example—to a more restrictive one. However, the decisions that will be made for England, Wales or Scotland alone will be within their existing devolved competencies or, indeed, their new ones. It goes far beyond what we have at the moment.
Neither have the Government explained fully why they do not believe that they have existing powers under Section 139 of the Enterprise Act 2002, which allows Secretaries of State to intervene in the market, or Schedule 3 to the Competition Act 1998, which gives the Secretary of State powers to make an order prohibiting an agreement or concerted practice which has the effect of preventing, restraining or distorting competition. If the thrust of the argument was that the CMA will continue to operate as far as competition or market operation is concerned, then the Government have existing powers. However, the proposal is that the CMA will now have the power to report on proposed legislation within the devolved Administrations. I did not get much from the Government’s Explanatory Memorandum on the proposals, so I studied the impact assessment, which was far more telling about what the Government intend for the OIM. It struck me that, given the current tight financial framework, the £5 million a year cost of the OIM, with 55 staff, seemed rather excessive to be operating on an annual report and, potentially, being asked to report on proposed legislation in three years’ time, but not having the power to report on existing legislation. What will those 55 people be doing at a cost of £5 million a year? It is quite extraordinary.
Page 35 of the impact assessment was interesting. Ministers have said, with full assuredness, that these powers are absolutely necessary for the oversight of the internal market. Page 35 says that
“the inherent uncertainty associated with quantifying benefits that depend on hypothetical regulatory scenarios means that the benefits of delivering UKIM functions are presented qualitatively.”
So even in the impact assessment, they do not know the benefit of the operation of the office for the internal market; it is currently all hypothetical. I wonder why, as my noble friend Lady Bowles of Berkhamsted and other noble Lords have indicated, the Government are rushing to have this established now, when the only function for the 55 people in it, spending £5 million of taxpayers’ money a year, is sitting waiting to work out what the hypothetical benefits could be of regulatory scenarios that are themselves hypothetical.
Worryingly for the devolved Administrations, the impact assessment goes a little further on who will be gathering the information about the functioning of the market overall. The impact assessment says:
“The development of a central repository of information and expertise will ensure the most robust and consistent practice when it comes to the estimation of UKIM impacts.”
Let us not forget that these are hypothetical at the moment. The Governments in Wales and Scotland already look at forming and developing policy for their legitimate aims of legislating on the environment or other areas. However, that “central repository of information” somehow gives the impression that the Government believe that they will not continue to have their own economic development departments to forecast what they consider beneficial, because the central repository of information and expertise will somehow supersede these.
The policy analysis that is put into legitimate policy proposals for legislation and regulations in Wales, England and Scotland are very valuable tools that they themselves will have. However, if that is being denied them, then it is very questionable as to what the Government’s intentions are for this. Do the Government believe that the OIM will be able to be the arbiter for what the market access principles are overall? The OIM will be asked to give an annual report and then a five-monthly report on developments under Clause 31. The report may consider,
“developments in the operation of the internal market, for example as regards … (i) competition”,
but it does not say between whom. Is this competition within businesses or is it about policy competition, as in: will each Administration seek to have an aim to meet a policy objective differently from another Administration with a similar policy objective but seeking to do it in a different way? That was the first one. It goes on:
“(ii) access to goods and services”.
By whom? Does it mean consumers? Is the OIM reporting on consumer access to goods and services? The third is,
“(iii) volumes of trade … between participants in different parts of the United Kingdom”.
How the OIM will be doing that and how it will be defining competition is questionable.
Clause 31(8)(b) is very worrying and goes to the heart of why so many noble Lords are taking part in this debate. Clause 31(8)(b) states that the OIM will be reporting on an annual basis about,
“the practical implications of differences of approach embodied in regulatory provisions, falling within the scope of this Part”.
This goes to the heart of what devolution is. Devolution is allowing decisions to be made within different component parts of the United Kingdom, potentially taking a different approach that might meet the objectives that they have set that have been endorsed by the people in those countries through democratic elections. The OIM, under this legislation, will be asked to report on the practical implications of the “differences of approach”, not necessarily on the regulations themselves or on the changes to regulations. But what does “differences of approach” mean? If I were a Scottish or a Welsh Minister, or a UK Minister acting on behalf of England, I would say, “I think our approach to meeting this legitimate policy aim is the correct one”. So what does that mean as far as the OIM is concerned?
This leads on to the next point about why there is concern. As my noble friend Lord Fox indicated in previous groups, along with the noble and learned Lord, Lord Falconer, and others, one of the consequences of this is the ability of certain private enterprises to seek to challenge decisions that are likely to be made. It is very interesting that page 36 of the impact assessment, to which I again refer, says about the role of the CMA:
“Administrations, businesses, and consumer groups would be able to seek clarity on the operation of this system and raise concerns around specific decisions taken within it, to an independent body with a suitable remit and mandate to review these issues.”
What that means, as far as the Government’s intent is concerned, is that a private enterprise, which would be able to view a policy choice made within a devolved competence, would be able to ask the OIM to seek clarity, as it says, on the operation of this system and raise concerns.
This brings the CMA into a wholly different situation. Since the whole of the impact assessment of the operational view is hypothetical, my final question to the Minister is hypothetical. What on earth is the incentive for a devolved Administration ever to ask the OIM to carry out a report on any of their policies? In the absence of the OIM being a body that can resolve a dispute, ultimately, if there is a difference in approach on a legislative or regulatory proposal under the internal market, where the devolved Administrations know that the final arbiter is this Parliament on regulations brought forward by UK Ministers to disapply devolved Administrations, why on earth would the devolved Administration ask the OIM to report on it? There is absolutely zero incentive for them to do that at all.
If the issue is whether the devolved Administrations will then ask the OIM to report on a UK proposal for England, as our Constitution Committee report indicated, there is not a level playing field as far as the powers over legislation are concerned. Therefore, UK legislation can disapply devolved legislation, but the Bill will prevent any reciprocal action if, indeed, the OIM says, “Yes, I agree with Wales” and an Act for England will be acting against the interest of the market access principles, because ultimately this Parliament will decide whether that is the case. I really cannot see what the incentives are for the operation.
On a whole series of grounds—the cost and efficiency of the OIM, with £5 million and 55 staff working on hypothetical benefits; the lack of clarity as to the OIM’s role when operating in the devolved Administrations; the concern that the OIM will have a view of making a judgment on a devolved Administration’s different approach; and a lack of incentive—I hope that the Government will listen to our arguments about these amendments. If this is to progress, these amendments really need to be in this legislation.
My Lords, I rather regret that, early on in this debate, the noble Baroness, Lady Randerson, mentioned rugby. I would have thought that this was not the weekend for her to do it, but I am sure that it cheered up others in the House.
It is hard to add much to the case so clearly set out by earlier speakers, and I thank the noble Baroness, Lady Bennett, for covering the amendments in our names, so I do not need to go through them. I will just say that, yet again, the Bill bears testimony to the haste in which it was cobbled together. Perhaps even more serious was the lack of consultation and joint working with the devolved Administrations. How else was it possible to think it appropriate to give the OIM to a non-ministerial government department, accountable only to the UK Parliament through its sponsor department, BEIS, without a thought to the interests, the responsibility, the competences or the rights of the devolved authorities?
As the noble and learned Lord, Lord Thomas of Cwmgiedd, said, whatever structure we end up with must surely have the confidence of all four nations. Indeed, he said that the appointees should have the experience and the expertise of the four constituent nations. That point was emphasised by the noble Lord, Lord Empey, who said that, particularly in the case of Northern Ireland, which will be working in a different regime from the others, it was absolutely essential to build in the requirement that someone with that expertise and knowledge was involved in the governance of this organisation.
Without these amendments, it would simply be the Secretary of State who had the power to appoint the chair and members of the CMA’s board and of its panel—the latter, of course, as we have heard, is responsible for operational and casework decisions. More than that, BEIS is a UK department, which gives the CMA a non-binding strategic “steer”, as the noble Baroness, Lady Randerson, reminded us. Therefore, one Government of the four gives the CMA a steer with that Government’s strategic priorities, to which it is expected to have regard. Placing the OIM in the CMA to monitor the health of the internal market—apart from all the issues about whether it has any expertise to do so—including its impact on intra-UK trade, investment and competition, but with no voice from the other three parts of the UK, appears, at its kindest, forgetful, but at worst, deliberate.
The office for the internal market is meant to update all the administrations and legislatures on developments in the internal market. But the suggested structure leaves this within a UK body, a body set up to deal only with reserved matters.
My noble friend Lord Stevenson will shortly suggest, as we have heard, that the office should not even be within the CMA. But for the purpose of this group of amendments, we seek to ensure that, if it remains there, it should, as the noble Baroness, Lady Bowles, said, be a consensually agreed body. It has to take on a devolved nature and ensure that appointments are genuinely shared with devolved Governments and that its work is reported to all the legislatures—as the noble Lord, Lord Cormack, says, there are four, not simply one. At the very least, the Secretary of State should obtain the consent of the relevant devolved Governments to any appointments, preferably with each being able to appoint one member of the CMA board.
I have a serious point to make to the Minister. I know he is in listening mode because he always is; we have got used to that. I plead with him to not just bat away these amendments. Clearly, they will return on Report, so it seems better for the Government to work consensually with your Lordships’ House but also with the devolved Administrations. As the noble Lord, Lord Empey, says, the current proposals clearly do not have the confidence of any of the devolved authorities. So, for the Government to be resisting these, even at this stage, sends a very serious message.
The CMA or the OIM may, as the noble Baroness, Lady Noakes, says, as is their remit, cover the whole of the UK, but it is hard to understand how, in a devolved world, that is possible if they are appointed by only one of the four Governments. Devolution matters. The union matters. We do not want, in the words of the noble Lord, Lord Cormack, a broken union. A zero response to these amendments would be serious, as my noble friend Lord Hain suggests, and it does look like a power grab, as the noble Baroness, Lady Altmann, says.
Consultation is inadequate. At the very least, there has to be consent, and I hope the Minister will give the House the absolute confidence not just that he is listening but that he will take back the message to those who, I hope, will enable us to have a consensual approach by Report stage.
I thank all noble Lords who have spoken in the debate so far. At the risk of agreeing with the noble Baroness, Lady Hayter, I can say I have been listening very carefully to what everyone has had to say in this debate. We take these matters extremely seriously.
Let me respond directly to the question from the noble Lord, Lord Purvis. No: the CMA did not respond formally to the consultation when we issued it, but as you would expect, there has been extensive, official-level discussion on the design and development of the OIM proposal with the CMA.
Before addressing the individual amendments, I shall set out why Clause 30 and Schedule 3 should stand part of the Bill. I have set out the purpose of the office in previous groupings, and noble Lords will be delighted to hear I will not repeat that here.
The purpose of Clause 30 is to introduce the office for the internal market panel and task groups and allow those task groups to carry out all the functions set out in Part 4 of the Bill on behalf of the Competition and Markets Authority. This will ensure that the CMA, through the OIM, can carry out a set of independent, advisory, monitoring and reporting functions to support the development and effective operation of the UK internal market on an ongoing basis. Building on existing governance arrangements, it allows the CMA to authorise the task groups to do anything that the CMA can do under Part 4. This would include delivering specific pieces of reporting, such as annual health of the market reviews or requested monitoring on the intra-UK trade impacts of specific regulations.
To fulfil those independent functions, Schedule 3 sets out the constitution of OIM task groups, to which functions of the CMA may be delegated by virtue of Clause 30. Schedule 3 also provides for the establishment of a panel from whose members such groups may be selected. In performing its role, the OIM will have the ability to gather market intelligence from UK businesses, professionals and consumers to develop its evidence base. The effect of removing Schedule 3 would be that no public body undertook those independent advisory, monitoring, and reporting functions to support the smooth running of the UK internal market. The Government believe that this outcome would be detrimental to the future health of the internal market and to the benefit of every region and nation of the UK. Thus, it is crucial both Clause 30 and Schedule 3 stand part of this Bill.
Amendment 116 would insert a new clause seeking to ensure that the creation of the OIM was subject to a memorandum of understanding being agreed between the Secretary of State and Ministers in the devolved Administrations. It also seeks to set out how the OIM should handle and use information that it requires to fulfil its functions. It proposes that the office for the internal market panel and task group members should include nominees from the English regions and devolved Administrations. It also proposes who should be members of any internal market work undertaken by the CMA if it undertakes such work separately from the OIM. I will respond to these latter points later, as they are referenced within other amendments.
The Government have considered a wide range of delivery options for the advisory, monitoring and reporting functions for the UK internal market as set out in the Bill. We have concluded that the CMA is best suited to house the OIM to perform these functions. This option was strongly supported by a wide range of stakeholders during the White Paper consultation earlier this year.
The Government have sought to work closely with the devolved Administrations. For example, I would like to say how much the engagement with the Welsh Government to date on this Bill has been appreciated. I believe these conversations have helped enormously to ensure that the purpose and effect of the OIM is understood. The Government are committed to continuing to engage constructively with the devolved Administrations on the establishment of the OIM and how it operates in future in fulfilling its functions as set out. In recognition of the keen interest of the devolved Administrations in the operation of the UK internal market, these appointments will be made following consultation with Ministers from all three devolved Administrations. This will ensure that the panel comprises members who all represent the interests of stakeholders in all parts of the UK. For the reasons I have set out, I am not able to accept the amendment by the noble Baroness, Lady Bowles.
I turn to Amendments 117, 121, 122, 123 and 124. Amendment 117 would allow each devolved Administration to appoint a CMA board member, with Amendments 121 through to 124 setting the terms and conditions of those appointments. The CMA is an independent non-ministerial department with a global reputation for promoting competition for the benefit of consumers and ensuring that markets work for consumers, businesses and the economy. Ministers have no day-to-day involvement in its operations. It is for these reasons that the CMA is a natural choice to take on the functions of the OIM.
The noble Baroness, Lady Randerson, asked how it is that the CMA deals with reserved matters but the OIM can address devolved issues. The statutory objective of the OIM in Clause 29 is designed precisely to draw a distinction with the current CMA objective and functions. This is wholly compatible with operating effectively and independently in relation to devolved matters, with a difference in focus on devolved and reserved matters respectively.
So that the advice and outcomes of the CMA’s work and the members undertaking such work are trusted and continue to be seen as impartial, it is clearly important that board members and the appointments process are seen to be trusted. As my noble friend Lady Noakes said, board members must be seen as capable of overseeing the promotion of competition throughout the entire United Kingdom, rather than as a representative of any one individual nation. It would therefore be inappropriate to risk politicising the CMA’s board by accepting this amendment.
Having different routes to the appointment, resignation and removal of CMA board members would be at odds with the UK-wide remit of the CMA and would have the effect of creating two categories of member. I recognise the keen interest of the devolved Administrations in the appointment process for the CMA board given that the proposed OIM panel chair will, by extension, become a CMA board member. We have stressed during engagement and written into the Bill that devolved Administration Ministers will be consulted on appointments ahead of the OIM becoming operational.
Amendments 118, 119 and 120 propose devolved Administration consent mechanisms for appointing the chair and panel members of the OIM. The first two of these amendments would require the Secretary of State to seek the consent of the devolved Administrations before appointing the OIM’s chair and panel members. As it stands, the Secretary of State appoints the CMA board chair and will appoint the OIM panel members and chair with full and mandatory consultation of the devolved Administrations. The priority will be ensuring that each appointment is on the basis of the relevant range of expertise and, crucially, is someone who can serve the interests of the whole of the United Kingdom.
During this consultation and the appointment process, the Secretary of State will aim to work closely with the devolved Administrations to ensure that their interests and comments are taken fully into account before decisions are made on who should be appointed. These amendments, on the other hand, would encourage a narrowing of expertise and risk the effective establishment of the panel. Consent would give each Administration a veto, which could delay and politicise appointments, which would undermine the OIM from the outset. For those reasons, I cannot accept these amendments.
Amendment 125 would require CMA’s proposed and finalised annual plan and annual report to be laid before each Parliament of the devolved Administrations. I assure noble Lords that the Government share the concern of the noble and learned Lord, Lord Thomas, that adequate opportunities for debate and scrutiny of the CMA’s annual report and other documents exist for the devolved legislatures. The Enterprise and Regulatory Reform Act 2013 requires arrangements to be made to lay the annual plan and report to Parliament; in practice, they are also laid before each devolved legislature. I assure noble Lords that this will continue in future. Should this reassurance be insufficient, the CMA’s annual plan and report are made public, allowing each legislature to scrutinise and debate them if it sees fit. In the light of those reassurances and reasons, I hope that noble Lords will not move their amendments.
Amendments 126, 128 and 129, and subsections (2)(b) and (4) of the new clause proposed by Amendment 116, would require either the OIM panel or task groups to have representatives from each of the four nations of the United Kingdom. This amendment could lead to members of the relevant task groups placing regional or political interests ahead of the CMA’s UK-wide mandate. This would harm the OIM’s ability to monitor the internal market effectively. All panel members chosen to be on each task group should represent the UK as a whole when undertaking reporting for the OIM. For that reason, I am unable to accept these amendments.
Amendment 127 would increase the mandated size of an OIM panel group from three members to five. Having consulted the CMA carefully on this and other points, the Government are confident that three members are sufficient to provide the range of expertise necessary to undertake the work of a task group. Since the panel may need to be able to form multiple task groups at a given time, increasing above this number would reduce the resilience of the panel as a whole and create additional unnecessary expense. For this reason, I hope the noble Lord will not press his amendment.
I have received one request to speak after the Minister, from the noble Lord, Lord Purvis of Tweed.
My Lords, I apologise for detaining the Committee; I know I spoke at length on this group. Can the Minister clarify something that he said at the outset? I heard him say that responses to the consultation supported the Government’s proposals for the CMA having this role, but I have the White Paper and the consultation in front of me. No one asked; the Government did not ask. The CMA is not mentioned at all, as I think the noble Baroness, Lady Noakes, indicated. In fact, questions 3 and 4 do not refer to the CMA, and in the entire section the CMA is not mentioned. To resolve this, would the Government publish the consultation responses before Report, or can the Minister clarify in his remarks that he may have inadvertently misled the Committee?
I will certainly check that, and of course I will respond to the noble Lord if that proves incorrect. We obviously proposed the creation of the office for the internal market in the White Paper and said that we were interested in views—the noble Lord, Lord Purvis, shakes his head but I think we did. I will clarify that for the noble Lord in writing, in one of the many letters that I will be sending him. I definitely remember having discussions at the time of the White Paper with many noble Lords whom I spoke to during the consultation. We certainly discussed at the time how the creation of a new body would best monitor the function and effectiveness of the UK internal market process in the context of the White Paper, but I will certainly clarify that for the noble Lord in writing.
My Lords, we have had an extensive and thoughtful debate, and I thank all noble Lords who have taken part. I thank my noble friends Lord Palmer and Lord Purvis for supporting my amendments, and indeed others who have mentioned them; one who springs to mind is the noble Baroness, Lady Altmann. As ever, the major constitutional issue has taken pride of place over technical issues. I am sure that noble Lords have realised that I am rather interested in the technical issues too, but we will end up having to come to grips with them, so I will not reiterate now.
To comment on some of what has been said—I cannot do justice to all speakers—my noble friend Lord Palmer said that there needed to be much more clarity to the OIM, and that we needed to resolve the ambiguity of its structure, flesh out how it works and find out what it meant in real terms. I think that is also the basis for a lot of other thoughts, whether they are technical or to do with devolution. What comes out loud and clear is whether all parts of the UK will feel that they have voice or ownership. My noble friend Lady Randerson led with the proposals that others have also spoken on and which have the support of the Welsh Government. It is all about having a structure that is workable for everybody and not part of something working inside the UK Government.
The Minister says that the CMA is independent. I accept that to a large extent that may be true, but there is still the problem that its strategy can be directed or steered by BEIS. That is just not the way to give the devolved Administrations confidence when, as has been outlined, the hybrid role of UK Ministers leaves us in the rather unsatisfactory situation of the same person trying to arbitrate. It is like the referee in the rugby match that my noble friend Lady Randerson referenced. Indeed, the noble Lord, Lord Wigley, said that basically the referee cannot be the manager of one of the teams—which rather seems to be the situation that we have here.
Some very valid points were made by the noble and learned Lord, Lord Thomas of Cwmgiedd, who said that judges had to be drawn from the different parts of the United Kingdom who understood everything vis-à-vis their specialist knowledge. I would not hold myself out at the level of a judge. I am not bad when it comes to negotiating things internationally, but I am English and would never hold myself out as being able to represent the positions of the devolved Administrations. I know that there are known unknowns that I do not know, and that is the situation we have to recognise. Whatever the integrity of the people on the CMA, you just do not know that the background is there unless they are drawn from a diverse field. I am very much one of those people who says that you cannot have sectoral interests, but this is different. I do not consider that devolution is political in that sense—we are all trying to get on together.
The noble Baroness, Lady Finlay, made a very interesting point when she suggested that it could perhaps be an interim measure because it has all been brought together very quickly. The noble Lord, Lord Hain, investigated the governance of the CMA and came up with many of the same conclusions as others. The noble Baroness, Lady Bennett, echoed that it is all about a voice for the legislatures and how to keep devolution alive.
As I said, I share with the noble Baroness, Lady Noakes, the view that the CMA is meant to be a UK-wide body and that nominees are not always the best people, but what is good enough for judges is, I think, good enough for the OIM. Yes, perhaps you always have to compromise, but my compromise comes down on the side of voice and ownership; otherwise, the body will never be trusted, as the noble Lord, Lord Empey, said. You have to have the confidence of knowing that people are properly at the table. I acknowledge that we have had rather haphazard devolution but, just because we have left the EU, that cannot be solved with “Whitehall knows best” and by taking back things that properly have been devolved.
The noble and learned Lord, Lord Hope, supported consensual Motions and said that consultation is not a guarantee. The noble Lord, Lord Cormack, warned us of the danger of a broken United Kingdom, emphasising again that there was a need for more time to be taken and for more confidence. The noble Lord, Lord Judd, had a good point in suggesting that we need a federal UK. That would perhaps make things easier, but we are not able to resolve that now—so, as he said, it comes back to understanding separate identities and to ownership.
The noble Baroness, Lady Altmann, supported some of my amendments and wanted the proper involvement of all parties. She also felt that the CMA was the wrong home, and really was not a viable place or a viable alternative to constructing a new body, because of the strategic involvement of BEIS and HMT, and because of it not being sensitive to matters of small businesses and diversity.
The noble Baroness, Lady Ritchie, was I think the first to bring forward the same points about needing a degree of independence and embracing the devolved legislatures, and also the fact that the Constitution Committee had also asked, “Why the CMA?” This was echoed by the views of my noble friend Lord Purvis. I agree with him; I could not find the flagging up of the CMA. It may be that one respondent said “a body such as the CMA”, but I did not see any consultation on it being the CMA or whether it was appropriate. The noble Baroness, Lady Ritchie, and other noble Lords also pointed out that the CMA is used to dealing with private business and enterprise and has a BEIS strategic influence.
I cannot begin to summarise what was said by my noble friend Lord Purvis, but the fact is that the CMA is left trying to analyse hypothetical benefits. It is true that we do not really know how this is all going to work out. If noble Lords follow the logic of my noble friend’s argument, they will find that he concluded by asking what incentive there was for this body to be used by the devolved Administrations. It is not intended to stir up wars between the devolved parts of the UK and the centre, but my view is that, by its set-up, it is likely to stoke rather than resolve concerns.
As I said before, the noble Lord does not like looking to the EU for examples, but it is a bit like when the Commission comes out with a proposal. It always wants to harmonise everything to make it easier and then the member states, notably the UK, get stuck in. You then get down to the nitty-gritty and you solve it. At the moment, we have this sort of overview coming from the Government that gives the devolved Administrations no room to manoeuvre—yet, when they get down to the nitty-gritty in the common frameworks, what happens? You can reach a conclusion.
Does the Minister wish to add anything?
Clause 30 agreed.
We now come to the group beginning with Amendment 115. 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 during the debate.
115: After Clause 30, insert the following new Clause—
“Office for the Internal Market: establishment as a body corporate
(1) Within the period of six months beginning on the day on which section 30 comes into force, the Secretary of State must by regulations establish the Office for the Internal Market (“the OIM”) as a body corporate.(2) Regulations under subsection (1) may amend or modify any enactment including this Act for the purposes of requiring or authorising the OIM to do anything required or authorised to be done by the CMA under this Part.(3) Schedule (Office for the Internal Market) contains further provision about the OIM once it has been established as a body corporate.(4) Regulations under this section are subject to the affirmative resolution procedure.”
My Lords, I move Amendment 115 and speak to Amendment 131. They need to be taken together. We have covered a lot of ground in the last couple of groups, so I will be brief. We have looked at the role, functions and operational mechanisms of the Bill’s proposed office for the internal market and have also covered what happens if and when things go wrong.
The emerging view—although it is not shared by the Minister—is that the Bill has not got this right. Amendments 115 and 131 which, as I said, need to be considered together, take us in a new direction. I take the feeling of the Committee that we are talking about an independent body, which has to be a UK body. As was rightly said by the noble Baroness, Lady Noakes, being a UK body does not mean that it also part of the individuals it is supervising.
That has implications; as the noble and learned Lord, Lord Thomas, said, we will need to ensure that it is not advisory, because it will need quasi-judicial powers to have any authority at all. It needs to have the confidence of the devolved Administrations and a common sense of ownership, as my noble friend Lord Judd said, and it needs to be independent of all the four Governments it will be considering. It also has to have their buy-in—so it is a double whammy in that sense. So it needs to be given powers to deal with the unfair market practices that it discovers, which may well have been introduced in good faith by the various devolved Administrations but which prove in practice to be inimical to an internal market. It also needs to be accountable to all four Parliaments—to the Senate and the Assemblies.
So it begins to look like a very different body from that described in the Bill. If, as I think we all now agree, the managed divergences will be initiated and established on a voluntary basis by the common frame- works process, surely it follows—in terms of symmetry if nothing else—that the body established to oversee these outcomes needs to be given the powers to do so. In accepting these powers, it must be seen to be independent and not bolted on to another body with a different focus and culture. It needs to be trusted to be an unbiased referee.
The noble Baroness, Lady Noakes, got it right when she worried about the danger to the CMA if the OIM, even without the powers I think it should have, were bolted on to the CMA as it currently is. So my model would be Ofcom or even the National Audit Office. The only argument against this seems to be the injunction not to create new quangos—which, coming from a Government who are about to establish the Trade and Agriculture Commission on a permanent basis, feels a bit rich. I beg to move.
My Lords, the noble Lords, Lord Hain, Lord Cormack and Lord Empey, have all withdrawn their names from this debate, so I call the next speaker, the noble Baroness, Lady Bowles of Berkhamsted.
My Lords, I listened with interest to the noble Lord, Lord Stevenson. The separate grouping of these amendments has put an additional focus on some of the intent.
I see the merit in taking time to get it a bit more right and use regulations for the detail, but it seems to me that the moment to legislate is still when there has been agreement between the four nations, rather than in a fixed time period. I am not sure that I condone such a wide ability to amend any Act—could the Act or Acts not perhaps be named?—although I acknowledge that the purpose is limited. However, those are details; I accept the principle and direction the noble Lord is suggesting.
Concerning the new schedule in Amendment 131, I still question the ratio of six Secretary of State appointments to one each for the devolved Administrations, especially in the absence of introducing a regional element for England. Quite controversially, the new schedule also creates powers for the OIM to deal with distortive or harmful subsidies and subsidy races.
Such a provision is the elephant in the room if it is not done at some stage. Third countries could launch trade remedies complaints against the UK if they were affected by distortive or harmful subsidies. From that perspective, it is of great benefit to have a body that is seen to be independent overseeing those matters, rather than being at the political level of government, which is where it seems to be held at the moment. It is the opposite side of, but with the same logic as, the Trade Remedies Authority needing to be seen to be independent. However, regarding the four nations, the scope of intervention would be wider than would interest third countries, unless there is some corresponding agreement with third countries or the EU.
I am not actually sure how it would all work out. As yet, because I have concerns about the CMA—although I accept that looking at subsidies might be something it is better adjusted to do—it will be a little while before I could slip in this enormous power without resolving all the other issues that remain, including powers, unless the noble Lord is suggesting that this is all that the OIM can do. Anyway, I think that there are some good things and some bad things in there, and it is interesting food for thought.
I call the noble Baroness, Lady Jones of Moulsecoomb.
My Lords, the Government are certainly getting a lot of advice during the passage of this Bill. As the noble Lord, Lord Cormack, said, they really ought to know that they do not have all the answers. So I do hope that the Minister listens.
The amendments in this group follow perfectly the Government’s announcement that they are putting the trade commission on a statutory footing. If the Government want to run an internal market, surely it is right to create a fully functioning governance body for that purpose. Merely tagging on a few functions to the Competition and Markets Authority shows a weakness of purpose and a lack of understanding of exactly how everything should run. Giving the new office for the internal market the power to investigate distortive and harmful subsidies could have a powerful impact on wiping out the implicit and explicit subsidies for fossil fuels, particularly unconventional oil and gas fracking. These implicit and explicit subsidies include a streamlined planning process and no requirement for the company to make a bond, unlike the landfill industry, equating to the government underwriting of the clean-up of fossil fuel sites in the event of corporate bankruptcy. So once again taxpayers would pay to clean up other people’s mess.
Just to be clear, the journalist at Drill Or Drop? suggests that the OIM can comment on controversial issues such as fracking, which, as we all know, is a dangerous, polluting, expensive, intrusive and—in view of our global need to limit our carbon emissions—unnecessary process. The OIM could give advice contrary to the devolved Administrations’ decisions. Can the Minister tell me if that is true?
I apologise to the Committee and very personally to the noble Lord, Lord Judd, whom I omitted to call before the noble Baroness, Lady Jones. So I call the noble Lord now.
Thank you. My Lords, I will be brief. I just want to say how much I commend the amendments from my noble friend Lord Stevenson. He is setting out principles which are very important, rather than just the general purpose, and for that we should be grateful. I would also like to put on record that I am glad that he has taken, on previous amendments, the point that what we must be aiming for in all this is a situation in which there is a sense of shared ownership and the shared involvement of all the parts of the United Kingdom.
My Lords, I am grateful to the noble Lord, Lord Stevenson, for introducing these two amendments and giving us the opportunity to probe the very heart of the functioning of the OIM in terms of its independence. Can my noble friend the Minister say how the Government will ensure that this body will be independent? My noble friend will be aware of my concerns and those of others that the Government have got into the habit recently of creating such public corporate bodies and then trying to direct how they operate. Recent examples are, as the noble Baroness Jones of Moulsecoomb, just alluded to, the Trade and Agriculture Commission, which falls within the Department for International Trade, which basically does not provide any resources to those who serve on the commission and, even more recently, the Office for Environmental Protection which, apparently, is to be appointed by and subsumed within Defra. So that is my main concern here, and there is much to commend in Amendment 115 as to how the body corporate is to be set up.
Furthermore, the noble Lord, Lord Stevenson, asks in subsection 2(2) of Amendment 131 for consultation with the devolved Administrations. I would prefer it if went further, as the noble Baroness, Lady Hayter, requested: consent for such appointments should be sought from the devolved Administrations. Presumably, if the Government were to adopt the terms of this amendment, it would be the OIM that would ensure the level playing field, which I imagine is the Government’s intention. However, if it was not the OIM, can the Minister explain which body would, as in subsection 3(2),
“rule that any distortive or harmful subsidies are illegal and should be repaid”,
and, as in subsection 3(4),
“recommend to the Secretary of State changes to the test for a harmful subsidy, the scope of exemptions, and time limits on approvals”?
There should be a body to ensure levelling-up, not just of the regions but between the four nations. I hope that the Government are taking a consistent approach here, in their position on the European Union and their position on state aid between the four nations of the United Kingdom internal market. It would not behove the Government to be seen to be parti pris on their position on competition and state aid in this regard.
I share the concerns expressed by the noble Lord, Lord Purvis, and others, in the previous debate, regarding responses not always being published. I am having great difficulty, and perhaps the Minister can point me in the right direction, but rather than a summary of the responses, it would be enormously helpful if the Government published the responses to the consultation regarding this amendment in full, and preferably before the next stage of the Bill. That would enable us to form our own view of who said what in response to the consultation.
With those few remarks, I would like to put the key questions to the Minister: how do the Government intend to ensure the independence of the OIM, and how do they intend to carry the devolved Administrations with them in this regard?
My Lords, so far there have been four groups of amendments dealing with the CMA and the OIM, and three different Ministers fielding. That perhaps summarises the fragmented nature of this Bill and the unjoined-up nature of what we are seeking to achieve. In those four groups, and this group, amendments have sought, in a sense, to correct and improve this Bill, but there is no point, because this Bill is beyond that stage. Other speakers have sought to probe and get information from the Government, and there has been no point to that either, because the Government have not answered questions. Despite extremely well directed, forensic analysis and questioning, the Government have ducked, dived and shrugged.
In addition to supporting the request made by the noble Baroness, Lady McIntosh of Pickering, for the consultation to be published, I would like this Minister, who is before us for the first time in this debate, to answer the questions on this group, and to undertake, on behalf of the other Ministers, to answer all the questions that the last four groups have presented, because they are all extremely important to understanding what on earth the Government intend to do.
My Lords, I appreciate the comments made in the debate and I appreciate that these amendments seek to correct, improve and debate the issue. Indeed, that is the role of this Committee. Given that, I take issue with the last point made by the noble Lord, Lord Fox.
Amendments 115 and 131 would bring in fundamental changes to the statutory basis for the Office for the Internal Market. They propose making the office a separate, standalone public body, thereby removing its Crown status. The noble Lord, Lord Stevenson of Balmacara, suggested that the new OIM should use Ofcom or the National Audit Office as a model. This would fundamentally change the nature of the OIM. It would change its funding model and would ask it to operate like a regulator, although it is not intended to act as one.
It has already been explained that the Government have concluded that the CMA is best suited to house the Office for the Internal Market to perform these functions, and the reasons were set out in the Government’s consultation response. I will again emphasise the key points. The CMA 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 economy. We will come on to discuss the concerns of the noble Baroness, Lady Hayter, about the interests of consumers being reflected in the OIM.
The Office for the Internal Market will build on the CMA’s existing technical and economic expertise which will now support the further development of the UK internal market. My noble friend Lady McIntosh asked how we can guarantee the independence of the OIM and ensure that we carry the devolved nations with us. The OIM will be independent and will operate at arm’s length from the Government and the devolved Administrations. It will not be an enforcement body and it will not be able to override the decisions of any of the Administrations. As noble Lords will know, the Government are continuing their engagement with the devolved Administrations as the functions are developed further.
In the last group, the noble Lord, Lord Purvis, asked what the incentives are for the devolved Administrations to use the OIM. All of the devolved Administrations have an interest in the smooth functioning of the internal market and the development of effective regulation to support it. The Government are confident that all the Administrations and legislatures will value the expertise and advice of the OIM and the authority of the evidence base that it will build up.
The noble Baroness, Lady Jones, asked whether the OIM will give advice on the decisions made by the devolved authorities. I assure the noble Baroness that the non-binding advice of the OIM will provide a complementary and expert resource to help facilitate better regulation and, should it be requested, this will include regulation developed by the devolved Administrations as well as by the UK Government. The OIM will be independent and will operate at arm’s length from the Government and the devolved Administrations. As I have said, it will not be an enforcement body and it will not be able to override the decisions of any of the Administrations.
An earlier grouping addressed the involvement of the devolved Administrations in the panel membership of the office. I will therefore say briefly that the direct devolved Administration appointments to the panel of the OIM would risk its effective and independent operation. Appointments to the body will be made by open and fair competition and the chair through the robust procedures of the Public Appointments Commission and the Cabinet Office, which operates across the jurisdictions of all of the devolved Administrations.
I turn to UK subsidy control. Clause 50 reserves to the UK the exclusive ability to legislate for a UK subsidy control regime in the future. It is an issue of national economic importance as it is essential to supporting the smooth functioning of the UK’s internal market. We will debate the detail of subsidy control reservation in a later grouping, but I will cover it briefly now. On 9 September, the Government published a statement regarding the future of subsidy control. In that statement, we committed to publishing guidance on the international commitments that will apply to the UK on 1 January 2021, before the end of the year. This will cover World Trade Organization rules on subsidies and any commitments we have made in free trade agreements.
We also set out our intention to publish a consultation in the coming months on whether we should go further than our WTO and international commitments. This will include consulting on whether any further legislation should be put in place. The amendment would create uncertainty and fundamentally undermine the future consultation which will be the mechanism through which decisions regarding future regulations for UK subsidy controls will be made.
In addition, it should be noted that the function of the office for the internal market will be to provide non-binding technical advice, monitoring and reporting on the health of the internal market. It is not the Government’s intention to give it a range of enforcement and regulatory powers, which the proposed new schedule would do in respect of UK subsidy control.
My noble friend Lord True said on an earlier group of amendments said that, in line with GDPR, not all respondents had consented to sharing their views, so publishing only a subset of the consultation would not offer an accurate enough reflection.
For the reasons set out now and earlier, I am not able to accept this amendment. I hope that the noble Lord will therefore withdraw it.
My Lords, I have had no request to speak after the Minister, so I call the noble Lord, Lord Stevenson of Balmacara.
My Lords, I thank those who have spoken in support of the amendments, particularly the noble Baroness, Lady Bowles, who accepted the principles despite having doubts about some of the factual points, and the noble Baroness, Lady McIntosh, for covering a lot of ground and raising questions that will need to be addressed by Ministers. In fact, I do not think that they were addressed in the response this evening. I thank my noble friend Lord Judd for bouncing back after having been ignored and making some very good points about why it is important to seek principles as we go through the Bill, because they are sadly lacking at the moment. The legislation seems a formulaic response, almost an early policy draft of what one might do if one were to regulate an internal market. It does not smack of having had a lot of discussion and debate or even wider consultation. The Government do not seem to have in mind a process whereby they can arrive at a solution to the problem of how we get shared ownership and trust into a system which is broadly voluntary in its basis without it looking as though it is a top-down, heavy-handed approach. There may be political advantages in that in the short term, but in the long term it is not the way to go.
This was a probing amendment to which we heard some responses, but there are still one or two to come. I am left with the feeling that, whatever we call the body and wherever we locate it, if it is capable only of providing non-binding advice and has no powers, it leaves the question of who will police the whole system. What happens, for instance, if the devolved Administration in Scotland decide they want to do something in particular in relation to whisky, chicken or flour—and we now know an awful lot about flour adulteration? Who will police that? Will it be BEIS? If so, can the Government really say, hand on heart, that the right way to approach what is effectively a devolution issue is through a top-down, UK Government-organised structure? I wonder. I beg leave to withdraw the amendment.
Amendment 115 withdrawn.
Amendment 116 not moved.
Schedule 3: Constitution etc of Office for the Internal Market panel and task groups
Amendments 117 to 130 not moved.
Schedule 3 agreed.
Amendment 131 not moved.
132: After Schedule 3, insert the following new Schedule—
“UK SHARED PROSPERITY COMMISSION1_(1) A body corporate called the UK Shared Prosperity Commission is established.(2) The UK Shared Prosperity Commission is not to be regarded—(a) as the servant or agent of the Crown, or(b) as enjoying any status, immunity or privilege of the Crown. (3) The UK Shared Prosperity Commission’s property is not to be regarded—(a) as the property of the Crown, or(b) as property held on behalf of the Crown.Membership
2_(1) The UK Shared Prosperity Commission is to consist of—(a) a Chair and five members appointed by the Secretary of State,(b) a member appointed by the Scottish Ministers,(c) a member appointed by the Welsh Ministers,(d) a member appointed by the Department for the Economy in Northern Ireland.(2) Before appointing a chair and member under sub-paragraph (2)(1)(a) the Secretary of State must consult the Scottish Ministers, the Welsh Ministers, and the Department for the Economy in Northern Ireland.(3) Before a chair can be appointed under sub-paragraph (2)(1)(a), the appointment must be confirmed by the Treasury Select Committee or a committee of either House whose remit covers the Treasury.Funding
3__ The Treasury must pay to the UK Shared Prosperity Commission such sums as the Her Majesty’s Government considers appropriate for the purpose of enabling the UK Shared Prosperity Commission to perform its functions.Powers
4_(1) The UK Shared Prosperity Commission may distribute sums from the Treasury across the four nations and regions of the United Kingdom following an assessment of relative need.(2) The UK Shared Prosperity Commission may conduct an assessment of relative need across the four nations and regions of the United Kingdom.(3) The UK Shared Prosperity Commission may do anything which appears to it to be necessary or expedient for the purpose of, or in connection with, the performance of its duties in sub-paragraphs 5(1) and 5(2).Accounts and audit
5__ The UK Shared Prosperity Commission must—(a) keep proper accounts and proper records in relation to them, and(b) prepare a statement of accounts in respect of each financial year.Annual report
6_(1) The UK Shared Prosperity Commission must prepare a report on the performance of its functions during each financial year.(2) The report must include the statement of accounts in respect of that year.(3) The report must be prepared as soon as reasonably practicable after the end of the financial year to which it relates.(4) The UK Shared Prosperity Commission must send the report to the Secretary of State.(5) The Secretary of State must lay the report before Parliament.Public records
7__ In subparagraph 2 of the Table in paragraph 3 of Schedule 1 to the Public Records Act 1958 (definition of public records), at the appropriate place insert—“UK Shared Prosperity Commission.” Investigation by the Parliamentary Commissioner
8__ In Schedule 2 to the Parliamentary Commissioner Act 1967 (departments subject to investigation), at the appropriate place insert—“UK Shared Prosperity Commission.”House of Commons disqualification
9__ In Part 2 of Schedule 1 to the House of Commons Disqualification Act 1975 (bodies of which all members are disqualified), at the appropriate place insert “UK Shared Prosperity Commission.”Northern Ireland Assembly disqualification
10__ In Part 2 of Schedule 1 to the Northern Ireland Assembly Disqualification Act 1975 (bodies of which all members are disqualified), at the appropriate place insert—“UK Shared Prosperity Commission”Freedom of information
11__ In Part 6 of Schedule 1 to the Freedom of Information Act 2000 (other public bodies and offices: general), at the appropriate place insert—“UK Shared Prosperity Commission.”Public sector equality duty
12__ In Part 1 of Schedule 19 to the Equality Act 2010 (public authorities: general), in the group of entries under the heading “Industry, business, finance etc”, at the appropriate place insert—“UK Shared Prosperity Commission.””
My Lords, I will also speak to Amendments 167 and 168, which are also in my name. I am grateful to other Members for contributing to this group. The group is about another of the black holes that we are discovering in the Bill. This one is about state aid or, as we must learn to call it, subsidy—or, as the Government would have us call it, “the UK shared prosperity fund”, although details about that are incredibly difficult to find.
State aid matters. It particularly matters if people think money is being stolen from them and used for other purposes. The Government have quite a lot to do to try to explain where they are going with this state aid issue, the timescale and how they intend to make progress in bridging the gap between people’s expectations and where they currently are.
We currently get an awful lot of money through state aid; it is certainly money that would be felt if it were not there. It is hard to get a complete picture of it; the best figures that I have been able to find come from the Institute for Government, which suggests that about £20.7 billion is currently available through state aid in two main forms, the European Regional Development Fund and the European structural funds. The regional development fund focuses on physical development—physical capital, as it were—while the ESF, the structural funds, are about employment and young people and are probably best described as human capital. The combination is a significant quantum of money, held by people who I think regard it as not being money provided directly by the UK Government, although of course money technically circulates around and presumably was originally from taxation in the first place.
Two significant points come from that. First, the headline funding from the EU at the moment is matchable. We currently think that about 40% is added on top of the just over £10 billion—£10.6 billion, I believe—that is available directly from Europe to the UK agencies that spend it, so that gives us the figure of about £20 billion when it is matched with local authority and central government funding and from the lottery.
An issue that is hidden, or at least more opaque, in terms of how state aid is organised is the way in which it seems to come in response to different requirements. For instance, the long-standing convention is that there is a regional bias based on deprivation, which takes into account the broader picture across the whole of Europe. In the UK, there are only two counties currently in the most deprived areas—or most in-need areas, I think they are described as—which are west Wales and Cornwall and the Scilly Isles. However, there were recently rumours that, had we stayed in the EU, which we are not, four more might have been put into that higher-needs category. That leaves the question: will the Government continue that process? Will they also think in terms of how individual parts of the country are treated in relation to that?
Secondly, people have recognised that the funding does not use the same indices as for the Barnett formula but with a different set of configurations, not based on population. I think it was also reasonably clear that this was different money. It was much discussed and debated—particularly at the time of the elections to the European Parliament.
We have a new Minister on the Front Bench. I welcome the noble Baroness, Lady Penn. If I do not have this right, I am sure she will be able to give us much more detail. I look forward to her contribution.
This is different, important money. How it will happen does not appear to have been properly thought through yet. The only reference to it that I have been able to find, other than what is in the Bill, was in the Tory manifesto for the last election where it was described as a shared prosperity fund. We all know what happens to manifesto commitments. Nevertheless, it sounded quite good. It aimed to reduce inequality. There was also a figure of £500 million for skills—not for investment in general skills, but to give disadvantaged people the skills they would need in order to make a success of their lives. This is all good. In no sense am I knocking it. There is a bit of a gap between this figure—and the nearly £19 billion we are looking at spending currently. What about the rest? According to the manifesto, there would be consultation, but this has not happened. Announcements were also going to be made in the spending review which was due in the next month or two, though there are good reasons why this has been cancelled. When the noble Baroness comes to respond, it will be interesting to see if she can give us an update about where we are and how it will be handled in future.
We have left the EU. We have to accept that the valuable programmes on which we relied are no longer there. In the Bill, the Government have suggested that there will be a follow up through this shared prosperity fund—or subsidy, depending on how you read it. We accept that this will not happen for some time because there are existing schemes which will run out. It is not as if the money will stop immediately on 31 December. While these schemes continue through to completion, it is clear that they will be running down. There is some time left for consultation, but not much. It is reasonable to expect the Government to come up with something more than just airy-fairy words for what they might be doing. What is the plan? Perhaps it would have been best to have carried out the consultation and made a statement within the Bill as to the way forward, but we will see what Ministers say when they come to respond.
In order to bridge this gap, I have put down an amendment in my name which suggests a new body—a shared prosperity commission. It is important that it should be seen to be independent. It should have an independent board with representation from the bodies likely to be affected, particularly the devolved Administrations. Parliament should be involved, particularly in the process of appointment but also in receiving reports. There must be an annual statement as to what the fund is worth and how much is available to spend. There must be information about its spending focus. It is fine to accept that it will not be based on Barnett—which is the current way in which day-to-day spending is distributed—but it is important that we have some idea as to what its basis will be.
Luckily, the House of Lords is ahead of the game, as usual. A couple of years ago, a Lords committee recommended a new basis for doing this called “relative need”. In Amendment 167, I have set out some of the ideas that were in that report as potential ways forward. This is, of course, a probing amendment. I am not saying that these are the only options, but if you were to set out to try to replace Barnett and to come forward with a proposal, you could do a lot worse than looking at what the Lords committee recommended. Children living in poverty; those on low incomes; areas of economic weaknesses; the age structure in a particular area; ethnic balance; and the impact of climate change and—especially now—of the pandemic would all be different in relation to current government spending. Local interest groups might well be interested and involved in trying to raise funding that would match money coming from the shared prosperity fund.
In the interests of clarity, the amendment also suggests that the distribution route should be through local authorities, sectoral groups and organisations, educational institutions and other bodies. These are not the usual suspects that receive government funding directly from the departments and spend it on behalf of the people through local authorities and similar bodies. There are different ways of doing that, and I am sure noble Lords will put forward other ideas during this debate.
There is not a lot more that I can say at this stage. This is a probing amendment to try to get the Government to step up to the plate and explain what they are doing. In any final announcement, we need: certainty about the funding level; complete assurances that there will be independent processes to determine the aims and how they should be delivered; transparency; equity and, of course, the involvement of Parliaments, not just here but in the devolved areas as well. I beg to move.
My Lords, I apologise; I should have reminded noble Lords that anyone wishing to speak after the Minister should email the clerk during the debate and anyone wishing to press this or anything else in this group to a Division should make that clear in debate.
I am very grateful to the noble Lord, Lord Stevenson of Balmacara, for explaining the place of this in the Bill and for his proposal to try and make something of the provision. As it stands, it seems wholly separate from the other provisions of this Bill. It should not be there, and it is profoundly undemocratic. Its only connection with the rest of the Bill is that it seems part of an attack on the scheme of devolution. I therefore seek to argue that Clause 48 should not, in its current form, stand part of the Bill.
The Bill is concerned with the internal market; it is not concerned with the allocation of government powers to spend money between the devolved Governments and the United Kingdom or English Government. It authorises the UK Government, as it stands, to spend funds in devolved areas—education, roads—and, giving Clause 48 (1)(a) and (b) their ordinary meaning, almost any aspect of government spending, including hospitals.
Therefore, I have a question for the Minister: why is this in the Bill? How is it going to work? Let me put forward some ideas as to why it may be there. First, the Government might, as the noble Lord, Lord Stevenson of Balmacara, has suggested, have the noble aim of investing additional resources into the devolved nations and the other regions of England. If that were the case, they might be doing the work alongside the Governments of the devolved nations and doing it as the English Government in their capacity as the UK Government. If so, why do they need these powers? They have done city deals and dealt with expenditure of this kind without specific statutory versions. If that is the noble aim of this Bill, it seems unnecessary.
There may be a different aim, which again has been foreshadowed by the noble Lord, Lord Stevenson: that the UK Government see themselves as taking over the role of the EU Commission, steering the use of such funding. If the Commission did it, so the argument goes, why should not the UK Government? In other words, it is an example of this Government doing something the EU has done rather well, but which they will never give it credit for. If that is the Government’s aim, it is fair to point out that the European legislation provided for the European Commission to set overall very high-level objectives for funding, and then to negotiate with the devolved Governments of Wales and Scotland as to how these objectives should be reflected in the programmes the devolved Governments designed. The European Commission, at the end of the day, had the veto, but it negotiated with the elected authorities in Wales, Scotland and Northern Ireland, rather than bypassing them in the way the Bill would enable it to.
There may be a third aim, which is that the United Kingdom Government, the Government of England, know far better how to direct spending and cannot trust the Scottish, Welsh and Northern Ireland Governments to spend wisely. Nor, if that is their reason, can they trust the people of Wales, Scotland or Northern Ireland to choose the Government they want, as that entails the choice between different manifestos regarding the way in which money is to be spent on areas of devolved competence.
As it stands, the clause strikes at that democratic choice and the devolution schemes. It will enable the UK Government to spend funds in ways that the UK/English Government think best, but which the people of Wales, for example, may have rejected. That is not democracy. In effect, it would give legislative underpinning to the now discredited principle that the Government in Westminster know best and the people of Wales, Scotland and Northern Ireland, which have Governments with devolved competences, are not to be trusted to spend money wisely in areas of devolved competence.
In short, I can see no justification for these powers which is compatible with the commitment to the integrity of the devolution schemes. Last week, Ministers were asked repeatedly to confirm whether they supported the devolved institutions’ powers to tailor their policies and spending needs to the wishes of the people of the devolved nations. I understand that no such assurances were given. If Ministers wish to overturn the devolution settlements, let them say so. Let them show that the devolution schemes do not work and, in the light of recent experience, that we would all be better off in the devolved nations if only the UK Government could take spending decisions on matters that have been devolved, in place of the Governments in Cardiff, Edinburgh and Belfast.
As it stands, therefore, the clause should not be in the Bill. If there are constraints on how this is to operate, they should be set out in the Bill, or a proposal of the kind made by the noble Lord, Lord Stevenson of Balmacara, should be put in its place.
The Bill appears to invite a clutch of ironic metaphors. In moving the Bill at Second Reading in the House of Commons, the Prime Minister drew inspiration from Adam Smith’s invisible hand but, by contrast, the Bill delivers a clunking great fist, and the Prime Minister’s oven-ready deal is at best not even half baked. The Government assert that substantial powers are coming to the devolved Administrations and, on the surface, that is true. However, the lack of reference to common frameworks, which we have debated, and the subordination of the proposed office of the internal market, on which previous amendments have focused, to the Competition and Markets Authority, all points to a centralising agenda. The state aid and financial powers clauses of the Bill—which, as the noble and learned Lord, Lord Thomas, said, do not appear relevant to the Bill’s stated purpose of regulating the internal market—raise serious questions, providing sweeping powers for the UK Government to intervene directly on a wide range of policy areas without even consulting the devolved Administrations, let alone securing consent and agreement.
At a time when relations between the UK Government and the devolved Administrations are at rock bottom, and with elections for the Scottish Parliament and the Welsh Senedd only six months away, this is absurdly provocative and, frankly, foolhardy. Following the shambolic communication of the emerging lockdown in England over the weekend, confusion reigns today over furlough provision in Scotland. On the one hand, the furlough extension is UK-wide, which is welcome. On the other, it appears that if Scotland goes into lockdown at a later date, comparable support to that being provided in England is not assured. Scottish Conservative leader, Douglas Ross MP, is at odds with the Government over this. It raises the question of whether the Government are trying to force Scotland into a similar lockdown at the same time as England, not because the measures currently being applied north of the border are not working—it is too early to judge that—but just to secure funding for any lockdown. That is not the way to promote trust or make rational, balanced and objective decisions.
The UK Government have a strong footprint in Scotland, entirely consistent with the devolution settlement. I have to say that they do a poor job of making the people of Scotland aware of this. For all the plaudits for the First Minister’s communication skills, compared with the abysmal performance of the Prime Minister, the Scottish economy would, frankly, have collapsed without the billions of pounds of support provided to individuals and businesses by the UK Treasury since Covid-19 hit us. Statutory redundancy and unemployment benefits will sadly see costs rising to the UK Treasury, including for those occurring in Scotland.
The Scottish Government have neither the competence nor the confidence to take on the social security powers devolved. They have failed our education system and their state aid interventions have been disastrous. As such, I think the Committee can see that I do not support the present Scottish Government; in 14 years, they have taken Scotland backwards and pursued a deeply divisive obsession with independence. Nevertheless, devolution means that we have the right to make our own mistakes, and the people of Scotland should hold our elected representatives to account for their decisions or lack of them.
I welcome partnership between the UK and Scottish Governments, and I deeply regret the bad blood between them, from which the people of Scotland are the losers. We still need a strong partnership for recovery, not just from Covid-19 but the disruption of Brexit. The Government at Westminster always have the power to intervene in any part of the UK, so to take such sweeping powers without adequate explanation or justification arouses further suspicion and further damages trust.
The question one has to ask is: when did this come into the Bill? It seems to have been a late addition. It looks as if it has been inspired by Dominic Cummings. We have a Scottish Conservative leader, Douglas Ross, desperately trying to reconnect the Tory party with Scotland and at odds with his own Government, and this Bill does not help him. This is especially so when his near neighbour, my local MP, Andrew Bowie, says that
“this Bill … is just the start. The UK Government is back in Scotland. Get used to it.”
How absurd: the Government never left Scotland, and I do not want them to. I want rid of this Government, who are sowing the seeds of their own destruction.
This Bill is not good for Scotland or the UK. These powers should be removed, and we should seek a partnership in which, where the UK Government wish to put resources into the devolved areas and territories, they do so with the support and consent of the devolved Governments, either by funding those programmes in addition to the Barnett formula or by agreeing to do it jointly, as happened with the city deals. These have been remarkably successful and are sowing the seeds for development in research, economic future planning and a lot of co-operation between the public and private sectors. It can be done well or it can be done badly but, in relation to these powers, it would be better if it was not done at all.
My Lords, it is a pleasure to follow the noble Lord, Lord Bruce of Bennachie, and my noble and learned friend Lord Thomas of Cwmgiedd, who has explained, from a constitutional perspective, why Clause 48 has very little to commend it. I will illustrate why the powers that Ministers want to take for themselves might, in practical terms, be dangerous and damaging.
Under the last Labour Government, the Labour-led National Assembly chose to go in a different direction on education, which was one of the ways in which the late Rhodri Morgan put clear water between his Government, reflecting the unique circumstances of Wales, and the Government in London. The Welsh Government eschewed moves to establish foundation schools, academies and free schools. They have maintained the central role of local authorities in funding and supporting all schools, arguing, not least in rural areas, that an unplanned proliferation of schools would damage the viability of all educational establishments. They have vigorously championed comprehensive education. Whether or not you support this approach, the current Welsh Government have a mandate for it, supported by Plaid Cymru, meaning that more than two-thirds of Members of the Senedd back this policy.
Were the powers in Clause 48 to be granted, the UK Government could choose to fund free schools across Wales. This would positively undermine the policies backed by a majority of the Members of the Senedd and, more relevant still, a majority of the electorate. Even if the funding for such an initiative was genuinely additional to the block grant—I ask the Minister to give an unequivocal guarantee that that would be the case—such an intervention, even though it would give extra money, would undermine the Welsh Government’s education policy. A free school in an area such as Denbighshire could easily dramatically impact on the viability of local maintained schools. This does not seem right.
The cleanest way of dealing with and preventing this threat would be to remove the clause from the Bill. Nevertheless, for my part, I would be prepared to support alternative approaches. At the heart of this is the question of the so-called shared prosperity fund, which I am afraid some in the devolved nations suspect is a way of reallocating the funds that should come their way, especially to west Wales, to benefit the prosperity of England. The proposal of the noble Lord, Lord Stevenson, to establish a shared prosperity commission would dispel such suspicions by allocating replacement funds on the basis of need, not politics. However, as my noble and learned friend Lord Thomas explained, the onus really is on the Minister to give an explanation, which has been lacking to date, of why these powers are needed now when they have never been needed before.
My Lords, I join the previous three speakers in giving notice of my intention to oppose the question that Clause 48 should stand part of the Bill. The grounds for my opposition to Clause 48 are based on paragraph 4(1) of Part 3 of Schedule 5 to the Scotland Act 1998. This is, after all, a devolution issue. That paragraph provides:
“This Schedule does not reserve giving financial assistance to commercial activities for the purpose of promoting or sustaining economic development or employment.”
In other words, it is within devolved competence for Scottish Ministers to provide financial assistance for these purposes. The same is true, I understand, of Welsh Ministers and in Northern Ireland.
The geographical reach of this provision is indicated by the fact that it applies to the whole of the UK. The power being sought would seem to cut across the powers of the devolved Administrations to provide this assistance in accordance with their own policies and order of preferences, although I appreciate that it extends over a wider field of activities. Providing assistance for reasons not at one with those policies and preferences would cut across the devolution settlements and for that reason be regrettable. I was very impressed by the example which the noble Baroness, Lady Finlay of Llandaff, gave of how it could interfere with preferences felt in Wales, and no doubt examples could be found in the other devolved Administrations.
More importantly, I, like others, am looking for further information about how this clause is intended to operate. As the noble Lord, Lord Stevenson of Balmacara, asked, what is the plan? Is it the intention that there should be consultation with the devolved Administrations before this power is exercised? If so, what weight will be given to any concerns that they may have? There is no attempt that I can see in the Bill to repeal the paragraph of Schedule 5 to the Scotland Act 1998 to which I referred, so presumably that power is to survive along with the power being given by this clause. To what extent, with regard to purpose and the amount of money involved, is this intended to reproduce within the UK what until now has been forthcoming from the EU? Can we expect the same amount of benefit to be spread among the nations as we have received hitherto? Will the ability of the devolved Administrations to use the powers reserved to them by the provision I quoted be limited in any way when this clause is brought into effect? If so, is that the intention? How are the funds which may be made available to be divided up between the nations? Can we be given any clarity on that point?
I hope that the Minister can shed more light on how this power is intended to operate, but at the moment, from what we have seen so far, it seems to cut across the devolution settlement and to be highly objectionable on that ground.
My Lords, I tabled Amendment 166, which would amend Clause 48. I thank the noble Baronesses, Lady Jones and Lady Hayman, and the noble Lord, Lord Whitty, for supporting it. As ever, it is a great pleasure to follow the noble and learned Lord, Lord Hope of Craighead.
Clause 48 gives powers to Ministers to provide financial assistance across the UK for a number of purposes, including all economic development and provision of infrastructure. My amendment would set out on the face of the Bill that any financial assistance to be provided must be consistent with the achievement of any applicable climate and environmental goals and targets. As we all now know, we are in the midst of a climate and nature emergency. These powers to provide assistance would be subject to almost no restrictions. The recently published Global Biodiversity Outlook 5 report from the UN highlighted how we have failed to halt environmental decline over the last 10 years, and the 2020 progress report by the Committee on Climate Change says that clear investment priorities to help support economic recovery and the transition to a low-carbon economy are now essential. We need to ensure that financial assistance helps, not hinders, this progress.
My concern is that, if we do not have this amendment, the Government could risk supporting projects, companies or industries that threaten in some way or another to undermine the progress towards meeting our environmental and climate goals. Providing financial assistance for projects that are not consistent with our climate and environmental goals could have major environmental impacts, for instance on roadbuilding, transport and housebuilding. It is also really important that the goals and targets include countries’ respective own targets on net zero—for instance, new targets set under the Environment Bill such as the Welsh recycling targets, which are extremely good.
This is an opportunity to support a progressive domestic climate and environmental policy in all parts of the UK, which is tremendously important ahead of COP 26; Amendment 166 could help achieve this. Indeed, if we do not have an amendment such as this when we turn up in Glasgow this time next year, we could be in a very embarrassing situation. What assurances can the Minister give that these powers will be exercised in a manner that is consistent and compatible with any climate and environmental goals and targets applicable in the relevant parts or part of the UK?
My Lords, it is a real pleasure to support Amendment 166 from the noble Baroness, Lady Boycott, which I have signed along with the noble Lord, Lord Whitty, and the noble Baroness, Lady Hayman. I also, of course, support Amendment 169, tabled by my noble friend Lady Bennett of Manor Castle. These amendments are important because they come back to the crucial question of what the market is for: does the market exist to serve us or do we exist to serve the market?
The noble Baroness, Lady Boycott, used the word “progressive”. We need a progressive agenda. We have to harness and tame the market to make sure that it protects our natural world. The market does not care, and would rather see a woodland turned into logs than exist as a habitat for thousands of species, a sink for carbon, a filter for water, a protector of soils, or the hundreds of other ecosystem services that it provides. In truth, we should be seeing amendments like Amendments 166 and 169 in every single Bill that the Government bring to your Lordships’ House. Their absence is a dereliction of duty by Ministers, not only because we have made promises about the environment, but because we make things worse for everybody when we do not do these things. It is not just about making the market worse; it is society that suffers.
It is a year to the day since the Government announced that the Treasury would conduct a net-zero carbon review following the passage into law of the 2050 net-zero target. This review is still nowhere to be seen. Can the Minister please tell the Committee what has happened to the review, whether it is still happening and, if so, when it will be published?
My Lords, when the debate on this group of amendments started, it seemed that it would be another round of Westminster versus the devolved Administrations, which is a major theme of the group. Nevertheless, there are other issues.
I added my name to Amendment 166, which the noble Baroness, Lady Boycott, spoke to so ably just now. I also support Amendment 169 in the name of the noble Baroness, Lady Bennett, in principle. Both amendments would correct a glaring omission: the absence of any reference to environmental outcomes in either the Bill and the Government’s earlier statements on a shared prosperity fund or my noble friend Lord Stevenson’s otherwise admirable attempt to set up a shared prosperity commission to administer the framework of financial aid across the four countries of the UK.
In effect, the shared prosperity fund concept is a sort of replacement for the EU’s structural funds and regional funds—probably other funding too—which have hitherto been provided back to the UK by the European Union, largely to level up economic and social well-being and performance across Europe. In principle, I like the concept of such a fund or a commission, which may well be a better home for the administration of that framework than the office for the internal market within the CMA, but I must confess to your Lordships that I do not like the term. I racked my brains as to why. I think that it is somehow a bit redolent of the euphemistic terminology of the Soviet era or, perhaps even more worryingly, of imperial Japanese militarily dominated eastern Asia during the time of the co-prosperity zone in the 1930s and during the war. Neither of those historical examples were ever cited by Brexiteers as preferable to the supposed centralisation by Brussels. If that rings alarm bells for me, no wonder it does for the devolved Administrations. Whatever we do, can we perhaps set up a body such as the one proposed by my noble friend Lord Stevenson, but find a better title?
More substantively, if the UK is to distribute aid to business and others to replace and improve on the benefits of the money that we previously received from the EU—which, quite rightly, disproportionately benefited the devolved nations of the UK and deprived areas in England—we need some objective criteria, constraints and rules surrounding that allocation. We also need an institution along the lines proposed by my noble friend Lord Stevenson. His amendment lists a lot of economic and social criteria that such an award of funds would have to take into account, but there are no environmental criteria.
As Amendment 166 in the name of the noble Baroness, Lady Boycott, indicates, the biggest crisis facing us all is the climate emergency. Our international obligations under the Paris Agreement and national commitments under the budget of the Committee on Climate Change surely mean that future state aid of any sort must advance progress on mitigation of and adaptation to climate change, and certainly not lead to effects that undermine our carbon and greenhouse gas targets or make worse the outcome of our industrial system. To that degree, it needs to be an improvement on the operation of some EU funding to sectors and projects that even I, as a passionate pro-European, recognise were not always done well in the EU—that is, some projects, particularly in eastern Europe, undoubtedly damaged the environmental prospects for Europe as a whole, particularly by favouring the substantial further use of fossil fuels.
It is therefore important that any such criteria are written into the terms of the proposed shared prosperity fund, and the commission must reflect those environmental aims. Indeed, any proposition for state aid subsidy, preferred public sector procurement treatment or clearance for planning permission, whether by the UK Government, a devolved Administration, local government or a quango, needs to have attached to it a clear environmental assessment of the impact on the climate, particularly regarding greenhouse gas emissions.
The noble Baroness, Lady Bennett, takes it further than the carbon figures to cover other environmental dimensions, particularly the protection and enhancement of the natural world. Some of what she refers to may be more difficult to measure than greenhouse gas effects, but in reality, if subsidised projects lead to a deterioration in biodiversity and habitats, as did some European projects under the common agricultural policy, that is a contribution to environmental degradation and in many instances leads directly to increases in carbon, methane and other greenhouse gas effects. We should adopt the concepts in these two amendments before we move any further towards something like the shared prosperity system proposed by the Government.
The negative effects of some government subsidy need to be discouraged by the criteria, but positive investment—in renewable energy and other carbon-saving outcomes, for example—needs to be sustained through this system and written into it. The noble and learned Lord, Lord Thomas, was right to say that Clause 48 in its present form should be deleted, but if we are to provide a substitute it has to be an improvement, and an improvement on my noble friend’s amendment—it has to be greener.
My Lords, I speak in support of Amendment 166, in the name of the noble Baroness, Lady Boycott. It is an honour to follow her, along with the noble Baroness, Lady Jones, and my noble friend Lord Whitty. I also support Amendment 167, in the name of my noble friend Lord Stevenson of Balmacara, and its inclusion of the impact of climate change—particularly flooding. That is an issue close to my heart, living as I do near Cockermouth in Cumbria, which has suffered such devastating flooding over the past 10 years.
As we heard today, and in last week’s debate, Part 6 does not rule out working through the devolved Administrations, but—and this needs repeating—sets no requirements to do so, and enables Ministers to spend money directly in otherwise devolved policy areas.
Right across the world it has been recognised that we have to combat global warming and restore biodiversity. It has been agreed that the next round of European structural funds will have tackling climate change and addressing the just transition as a major theme. In May of last year, Parliament recognised, on the Floor of the other place, that we are in a climate and environment emergency. Last week, in his response to Amendment 52, the Minister said that
“the protection of the environment and tackling climate change are vitally important, and something that the Government are, of course, already committed to.”—[Official Report, 28/10/20; col. 339.]
If the Government are serious about achieving this aim, they need to ensure that where direct financial assistance is given it is consistent with these climate and environmental goals. We need to commit to environmentally sustainable, transparent legislation and policies, and apply them to any future trade deals and relationships, if we are to have any hope of tackling climate change. Whatever the formal future relationship between the UK, its constituent nations and the EU, it is vital that we maintain close environmental co-operation and do not risk undermining it through poorly thought-out legislation. As the noble Baroness, Lady Boycott, explained, Amendment 166 could avoid funding being provided for projects that are not compatible with climate and environmental targets and could undermine these goals.
Funding to support the environment needs to be secure as we leave the EU, because we will lose access to so much. I will give a couple of examples that have not yet been mentioned. The EU LIFE programme for environment and climate action has €3.4 billion to support, among other policies, the special conservation areas in the Natura network. The EU maritime and fisheries fund is a €6.4 billion programme, more than a quarter of which supports projects protecting marine environments, developing sustainable fisheries, and supporting the scientific and data-collection aspects of fisheries management. The concept of sustainability involves operating in a way that takes full account of an organisation’s impacts on the planet, its people and its future. That includes how Government operate and the decisions they take. Amendment 166 will help us to secure this for the future.
My Lords, I oppose the Question that Clause 48 stand part of the Bill. I thank the noble and learned Lord, Lord Thomas of Cwmgiedd, for introducing this part of the debate so clearly. We have heard assurance after assurance from Ministers that the Bill does nothing to take powers away from the devolved Parliaments, but the inclusion of Clause 48 certainly belies their assertions.
This clause, were it to stand, would mean that powers would be returned from the EU to the UK Government to spend on areas such as economic development, infrastructure, sport and education, and will therefore give Whitehall the powers to fund projects to replace EU funding programmes in areas that are devolved to the Welsh Government. But these powers are wider than those in the EU funding programme. The EU structural funds have never funded health, housing or education, and the inclusion of this clause on financial assistance has given cause for concern. It gives rise to a number of questions, to which I hope the Minister will respond.
Our building regulations, and fire and energy safety standards are different in Wales. If the UK Government choose to fund our housing associations to build more social housing, which regulations and standards would apply? As the noble Baroness, Lady Finlay, has said, there are no academies or free schools in Wales; the Welsh Government have rejected their implementation. Clause 48 would allow the UK Government to fund education projects in Wales. Does this mean that the UK Government would march in, with no consultation, and build these schools in Wales?
The intention of the UK Government to implement the M4 relief road scheme is provocative, to say the least. It is an issue the Senedd has examined and debated in detail. It made the decision to reject the scheme on the grounds of cost and impact on the environment, and to develop plans for another route. It is an arrogance that the UK Government feel they can overthrow its decision.
The UK Government fail to understand that they have no mandate to operate in these areas in Wales. In this House, we are expected to honour the manifesto commitments made by the Government in a general election and not to vote against them. In Wales, at the last Assembly elections, the people of Wales gave the Welsh Government a mandate based on their manifesto commitments. What right do the UK Government have to act against the expressed wishes of the people of Wales? For years, we have been clamouring in Wales for the UK Government to invest in projects that they have responsibility for—in our railways and the development of tidal energy, for example. I suggest that that would be a good starting point.
Wales has been eligible for £375 million a year from EU funds for almost 20 years. The management of these schemes has always been shared between the EU and the Welsh Government. The guidelines and parameters have always been clear, and the principles of co-operation and consensus have always been evident.
Now that EU funding is coming to an end, we need clarity on its replacement. The time has come for this Minister to give this House details of the proposed replacement through the shared prosperity fund. Up until now, the UK Government have failed to explain how that fund would operate and what role the devolved Governments would have in spending decisions made under it. Will the Minister do that today?
Many speakers, from all four nations of the UK, have spoken against this Bill’s attempts to undermine our devolution settlements. At Second Reading and in debates on this and other amendments, we have heard the same calls. I hope that the Minister and, through her, the Government, are beginning to understand that, after 20 years, the devolution genie cannot be put back in the bottle. I know that to this Prime Minister and his Government a bullish determination to win at all costs is important, but we have to find ways of working with and not against each other and to find solutions to our problems together. Clause 48 is a perfect example of the Government attempting to grab the devolution genie and force it, feet first, back into the bottle. Sadly, such an attitude does nothing but provide further ammunition to those who would favour the break-up of the United Kingdom.
My Lords, it is a pleasure to follow the noble Baroness, Lady Humphreys, and to participate in the debate on Clause 48 and the financial assistance power in the Bill. I want to offer a further Scottish perspective.
I welcome the intent of Clause 48. The UK Government should be able to invest in all parts of the UK on initiatives that support and strengthen the union. I also recognise the anxiety that, if such an ability did not exist, the danger is that the UK dimension in devolved nations would become squeezed out or diminished as a relevant part of the lives of people for whom Scotland is home. So, as ever, the question with the Bill is, for me, not about its aims but about the best way in which to achieve them.
Let us not forget that, as the noble and learned Lord, Lord Thomas, and the noble Lord, Lord Bruce, pointed out, the UK Government already invest in areas which, strictly speaking, fall within areas of devolved competence. For example, in government I was a very active proponent of the UK Government investing in both a comprehensive network of city and growth deals across Scotland and Scottish cultural assets important to our shared British heritage. The then Chancellor, George Osborne, was persuaded to open the Treasury’s cheque book and the Scottish Government were persuaded to come on board and invest alongside.
Today, the UK Government are investing £1.5 billion in UK city and growth deals in Scotland, with the Scottish Government co-investing a similar amount. The wide range of Scottish cultural institutions supported by UK Government cash includes the Glasgow School of Art, the Burrell Collection, V&A Dundee and a new Edinburgh concert hall. Of course, the UK Government do not get the credit they deserve for these investments, but in my view that is because there has been a tendency to “fund and forget”, just as successive Governments have over the years slipped into a habit of “devolve and forget”.
Clause 48 is a widely drawn power. It has caught many, including the devolved Administrations, by surprise. The internal market White Paper said that the Government would
“consider which spending powers it needs to enhance the UK internal market”.
However, the power in the Bill permits a potentially broader incursion into areas of devolved competence, including, as we have heard, health, housing, education, prisons and sport, and certainly beyond what is strictly necessary to support the internal market. The Government have provided very little detail on how they intend the power to be used. Like others, I hope that my noble friend, when she responds, will fill in some of the missing detail.
It may be that what the Government have in mind is, as the noble Lord, Lord Stevenson, and others have surmised, to replicate, through the UK shared prosperity fund and other initiatives, the range of EU funds that will disappear at the end of the transition period—funds in which the devolved Administrations are of course involved now in deciding how resources are allocated in their areas. The lack of clarity is problematic because the scope for misunderstandings becomes greater. Uncertainty creates a breeding ground for suspicions and scare stories, with predictable but no less unhelpful, consequences.
A month ago, the UK Government announced the union connectivity review to be chaired by Sir Peter Hendy, the chair of Network Rail. In my view, this is an excellent initiative to bring communities across the UK closer together and to support the levelling-up agenda. It is just the sort of initiative the UK Government should be promoting and leading. In response, the Scottish Government have refused to co-operate and taken away their ball. Their response is profoundly unhelpful and not, I would suggest, an example of how to look after the best interests of people in Scotland, so I very much hope the Scottish Government will reconsider their stance. However, while I do not condone in any way the behaviour of the Scottish Government, I cannot help but wonder if their unco-operative approach to the Hendy review might have been avoided if the Government had adopted a more consultative and collaborative approach to the financial assistance power in this Bill.
In fleshing out how the power will be exercised in practice, I hope that Ministers will be guided by three important considerations, which, if addressed properly, will help to ensure that this financial assistance power does not inadvertently destabilise devolution itself. First, on additionality—and here I apologise for getting a bit technical—the block grant allocations for the devolved nations are worked out by reference to a population share of any change to Whitehall departments’ expenditure limits adjusted by a comparability factor, depending on the extent to which a policy area is or is not devolved. So, for example, the comparability factor for education and justice is 100%, for health it is 99.4% and for transport it is 91%. If the power in the Bill is not to undermine the existing funding arrangements, the financial assistance provided by it should be additional to the normal block grant allocations. Can my noble friend explain what effect directly spending more at a UK level in areas of devolved competence will have on the block grant comparability factors, and thus for the devolved Administrations’ budgets?
Secondly, on financial accountability, a core purpose of the Scotland Act 2016, and the fiscal framework that accompanied it, was to make the Scottish Government more financially accountable by making them responsible for raising a significant proportion of the money they spend. The Scottish Government should rightly be held accountable by people in Scotland for the policy choices they make—good and bad. Therefore, the wide scope of the Clause 48 power really does matter and should matter to the Government, too. It should most certainly matter to the Treasury, which will have to fund it. If democratic accountability in Scotland is to flourish in the years ahead, it is important that the allocation of responsibilities between the UK and Scottish Governments is clear and better understood. I suggest to Ministers that, in exercising the financial assistance power in the Bill, they will need to take care not to blur the lines of accountability in a way that lets the Scottish Government off the hook.
Thirdly, on co-operation, if the power in the Bill is to be fully effective, it will be important for the UK Government to work in partnership, not conflict, with the devolved Administrations and representatives of local communities throughout the devolved nations. It would be a retrograde step indeed if Ministers sought to substitute local priorities with the priorities of the centre, uninformed by local views. In my experience, the maxim “The man in Whitehall knows best” is never a popular one, and certainly will not cut much ice in Scotland.
There is one very good practical reason for involving the devolved Administrations in how the power is exercised: many of the delivery mechanisms are ultimately in their hands, from the planning system through to the agencies that have the responsibility for managing and improving, for example, local transport networks. Therefore, I would commend to your Lordships the Constitution Committee’s report on the Bill, which concluded that:
“to ensure practical cooperation around the use of the power, the Bill should be amended to include a requirement that ministers, in exercising their power to spend directly in devolved areas, consult with the relevant devolved administration.”
I want to make a broader point. In a week’s time, we will complete Committee Stage. I sense that the mood of the House is to make changes to the internal market aspects of the Bill, not in order to frustrate it, but in a genuinely constructive bid to advance its aims in a way sensitive to devolution. I suspect the votes will be there at Report to make those changes. Ideally, I hope that, prior to Report, the Government Front Bench will play an active and willing role in working with all parts of the House to improve the Bill. But if Ministers in this House do not have the latitude to respond substantively to suggested improvements, I would ask the Government to consider when the Bill returns to the Commons this simple point: the health of our union is, and always should be, a constitutional issue to be carried forward on a cross-party basis.
As we heard earlier from my noble friend Lord Cormack, in 2021 the union may face some very choppy waters. It will be important that, as we navigate those choppy waters, the Unionist parties in Parliament are able, on this issue at least, to present a united front. For that reason, I hope the Government will think long and hard before overturning in the Commons, on the back of Conservative votes alone, any sensible changes to bring about a better reconciliation within the Bill of the twin aims of UK free trade and respect for devolution. After all, just because you can do something does not mean you should.
It is a pleasure to follow the noble Lord, Lord Dunlop, and to echo many of the points he has just made, caution being one of them and care for the union another. I want to illustrate some of his points in what I have to say. I must declare my interest: I am Welsh and I live in a recipient area of huge amounts of European funding.
This part of the Bill is definitely a bolt-on: it has nothing to do with the operation of the internal market or with the four countries being able to trade freely together. This is about the replacement money for the EU funds—how it will be spent and by whom. Fortunately, I asked a question of the Minister in this very Chamber a few months ago about the European money that came to Wales. I was given a guarantee, which I am hopeful the Minister will repeat today, that the people of Wales will get, pound for pound, what the European funds gave them. That was the guarantee given in this Chamber by the Minister. If he wants to check, I can refer him to the relevant Hansard. The point I am making is this. It was not a question of the receipt of the money: I am pleased to bank the £2.2 billion that the European funds have given to the people of Mid and West Wales—that is two million people—over the last six years, but I am worried about how that money will be spent and what effects it will have. Effectively, this part of the Bill puts the cart before the horse. We have to agree a whole set of rules which cross devolved boundaries in ways we can only guess at, and nowhere are we given clear answers to fundamental questions about upholding and respecting the devolution settlements in the UK.
The implication in this part of the Bill is that it will have no impact on the functioning of the Barnett formula or on additionality, referred to by the noble Lord, Lord Dunlop. However, that is only an implication. Will the Minister give us today the answer to that fundamental question: will it have no impact on the normal functioning of the Barnett formula?
There has been no problem thus far with the UK Government seeking to spend money in Wales, in collaboration with the Welsh Government. Long may it continue, and I will encourage the Government. However, the key word is collaboration. Now, we are being asked to approve a law so broadly drawn that it will have a coach-and-horses effect on the powers of devolved Governments. I have to say to the Government that if it is not done collaboratively, spend does not necessarily mean approval. Approval will not automatically be given when the legal framework is in the hands of the devolved Governments. Factors such as planning approval, environmental impact assessments and curriculum development legislation all have a bearing here.
The Explanatory Memorandum implies that the UK Government will determine what moneys are available and how they are spent. The Welsh Government have had major control over the design and implementation of EU structural funds spent in Wales. For a few years, I had that responsibility in the Welsh Government. It is different, of course, for the smaller cross-EU programmes such as Erasmus and Lifelong Learning, which includes Comenius for school exchanges. These programmes were centrally designed but nevertheless locally administered.
The Government have said that they will at least match pound for pound the EU funds previously spent in Wales. As the largest recipient per head of EU funding, this has significance both in the amount to be spent and the economic impact it can have. How these funds will be managed is not at all clear. This Bill gives a strong indication of the direction of travel the UK Government wish to take. The Explanatory Memorandum on the powers in this part of the Bill says that this power will allow one-off items of expenditure or the creation of funding pots.
The clear implication I draw from this replacement funding statement is that the UK Government will spend the money they want and create biddable pots for the rest. Can the Minister confirm whether that is indeed the intention and that no block allocation of funds will be made automatically to devolved Governments, whether with or without guidelines? That is the matter of control I am referring to. If so, as I suspect, then Wales will lose financial powers and the UK Government will use these replacement funds in a way that could confound its policy objectives—objectives contained under the powers devolved to it.
Can the Government explain how they see the spending of these moneys being carried out? Will there be allocations for each of the four nations? Who will administer those funds? Will the Governments of the three nations be required to bid for funds against the UK Government’s criteria? How do the Government intend to get approval for projects that bisect the legal responsibilities of those Governments? I understand the distinction between EU funds that were universally provided across the UK and much larger structural funds which provided a financial and economic incentive to the poorest parts of the UK, most notably in Wales. While a distinction could be drawn between the structural funds and funding for such things as educational exchanges, it still makes absolute sense for them to be administered by the Government who have control of the school curriculum, for example.
There is much good work that the UK Government could do. They could become a world leader in tidal lagoon energy generation; they could electrify the railway between Cardiff and Swansea; they could provide alternative approaches to the broadband provision for the hardest-to-reach communities in Wales—all without having to meddle in the domestic matters over which Wales has control. I wonder, however, having heard the noble Lord, Lord Dunlop, whether this is the rationale behind it.
The impact assessment refers to investing in culture, sport and education. When you look at the impact assessment and try to find out why the Government want to invest in those matters, it says, because of our “shared values”. I would be grateful if the Minister explained what those shared values are; it would help me to understand precisely what the intention is. The check on the unfettered use of previous EU structural funds has been that of match funding. Do the Government intend that their own projects will require financial support from the Welsh block grant or from other forms of Welsh money?
There are so many unanswered questions in this part of the Bill that I am drawn to the conclusion that what we have before us is based on political rather than economic reasons. This part of the Bill wants us to take on trust the way the Government will behave towards the other Governments in the UK. It has failed to answer the big questions that need to be answered before we can agree to enshrining so many important matters for the four countries that make up our union and, most importantly, how Wales is going to get its £2.2 billion, promised in this very Chamber.
My Lords, it is a pleasure to follow the noble Lord, Lord German. I would like to build on some of his questions, particularly the question of who administers the funds, especially in relation to regions and local authorities in England.
I am grateful to the noble Lord, Lord Stevenson, for his Amendment 132 and for the chance to debate Clause 48 stand part. The noble Lords, Lord German and Lord Stevenson, and a number of others, asked about the situation going forward in respect of the Barnett formula. Is it the Government’s intention that that will remain in place, or is it the implication of this part of the Bill that the formula will be replaced by a new shared prosperity fund on the criteria that we are currently debating here?
My main concern as someone living in England, albeit of Scottish descent, is about the shared prosperity fund. Who will administer it and to whom will applications be made? How will a balance be reached between rural and urban areas? I declare an interest as a former MP in North Yorkshire for 18 years. I was delighted by the announcement in February this year that £6 million of funding has been allocated for a rural connectivity project in North Yorkshire with the specific task of helping to unlock the rural economy’s potential. It will be to the benefit of farmers and rural communities to support superfast mobile connectivity and rural broadband generally.
Looking at Clause 48(2) as it currently stands, however, rural broadband or broadband and mobile connectivity simply do not appear. Does that mean that, whichever nation or local authority or region you live in, once this shared prosperity fund comes into effect, these funds will disappear? Funds that have only just been allocated this year, presumably, under the existing European Regional Development Fund, will run their course. Is my understanding correct that the omission in the Bill of connectivity—either rural or urban, in whichever nation or region we happen to live in—means that it has been dropped from the shared prosperity fund? I will be interested to know and understand why, in particular, infrastructure has been limited in Clause 48(2) to,
“water, electricity, gas, telecommunications, sewerage or other services (for example, the provision of heat) … railway facilities (including rolling stock), roads or other transport facilities”.
It goes on over the page. I am severely disappointed—I am sure that others living in rural areas will feel the same way—that rural connectivity is being overlooked. It is not acceptable in this day and age that special provision is not being made for rural areas. The 5% who are the hardest to reach are being overlooked. I understand that the Scottish Government have given very generously to rural businesses in this regard, to their benefit and that of English customers who are buying from them.
I want to repeat a question posed by a number of other noble Lords: what is happening with regard to match funding? Will it continue to be required as it was under the ERDF and the European structural funds? How will economic development be administered? Is it going to be the case that local authorities such as North Yorkshire, Ryedale District Council, Hambleton District Council, Harrogate District Council or York City Council will have to go cap in hand to the Government? At this stage, it will be interesting to have more flesh on the bones of Clause 48. Who will determine what the balance is to be in applications from rural and from urban areas?
On the much-vaunted policy of the levelling-up agenda set out so effectively in the Government’s manifesto and to which they promised to commit themselves during the life of this Parliament, and which I entirely support, what role will the shared prosperity fund have in levelling up the regions and local authorities?
I want to end on this note. The noble Lord, Lord Stevenson, referred to the ERDF and structural funds having regard to levels of deprivation. It is not generally understood that rural areas have pockets of deprivation that are every bit as bad as those which are generally better known and recognised in urban areas. With these few remarks, I look forward to the answers from my noble friend.
My Lords, this is a very important group of amendments because they deal with another recentralising measure in this Bill; that is, powers for the UK Government to spend money on wholly devolved areas of competence. Let us remember that power without spending power is hollow. At the least, this is a petty pot-shot at the devolved Administrations, while at the worst, it will lead to a direct conflict of policies and a huge waste of taxpayers’ money.
Let me give a hypothetical example on environmental spending. You could have the Welsh Government subsidising wind farms and the UK Government paying to close them down. Before anyone scoffs at that idea, in relatively recent years the Conservatives in Wales have campaigned against wind farms. In the best case scenario, it will lead to disjointed rather than joined-up policymaking.
The list of specified policy areas goes well beyond the usual devolved areas, so this is clearly a naked power grab. However, all of this is unnecessary because the UK Government can and do spend money on the devolved areas, but they do so in partnership with the devolved Administrations. City deals are a prime example of this successful approach. In these deals, the UK Government will set out pretty stiff conditions for additional funding. They do not simply hand over the cash. If we take the example of higher education, universities in Wales and Scotland receive funding from UK research funds, and here I declare an interest as chancellor of the University of Cardiff.
If the Government feel that they are not getting full recognition for their funding, they should take a leaf out of the EU’s book and put a badge on it. As the noble Lord, Lord Dunlop, said in his truly excellent speech, they should not just fund and forget. In 2012 in the Wales Office, we recognised that the Welsh Government did not have enough capital funding for the significant infrastructure improvements that were needed if Wales was to compete economically. We gave the devolved Administration additional borrowing powers and we worked with the Welsh Government to agree a shared programme of funding for, for instance, the South Wales Metro. We worked with the grain of their views, but we still set the framework. Now I hear that the UK Government are threatening to build the M4 relief road, which the Welsh Government and local people have rejected.
Looking back to the days prior to devolution in Wales, there used to be huge rows about the smallest details of how social and economic support from the EU should be spent. Often, rather foolish decisions would be made by central Government, which were basically too remote from the areas concerned. The proposals in this Bill threaten a return to that centralised, counterproductive approach.
The Government have been far from clear about how their shared prosperity fund will be distributed, as several noble Lords have said. In Wales, we are of course concerned; as the poorest part of the UK, we benefited greatly from EU funding. We have the most to lose. I have listened closely to Tory rhetoric on this and have concluded that all the pointers are in the direction of a bigger share of that funding for more prosperous England and, hence, less for Wales. That comes from the repeated pointing out that richer parts of England subsidise the rest of the UK. That has to be being done for a purpose.
Anyone doubting the self-interest of the UK Government in terms of England should look at the decision on furlough. When the Welsh Government called for furlough in Wales almost two weeks ahead of England, they were refused additional funding, but it was granted when the Prime Minister announced lockdown again in England. I would therefore be grateful if the Minister could explain further the principles on which this shared prosperity funding will be based. How will decisions be made? As my noble friend Lord German and the noble Baroness, Lady McIntosh of Pickering, asked, will it be on the basis of competition or of need? If it is competition, in my experience, the money inevitably goes to those organisations well enough resourced to fill in the forms well. Forgive me for being cynical; this Government are hardly known for spending money wisely, as both test and trace and the PPE scandals have illustrated.
For all its flaws, the Barnett formula is all that we have to ensure some transparency in how and why the devolved Administrations are given their block allocation and any specific in-year additions. The proposed additional power that the Government have placed in the Bill would undermine that and make it much less possible to ensure fair funding. That is a recipe for endless wrangling. I echo the warning from the noble Lord, Lord Dunlop, about the dangers to the union. Five years ago, support for independence in Wales was at 12%; one-third of people in Wales now support it. We have to take that seriously and to listen to Douglas Ross, the Conservative leader in Scotland, who warned that the Government’s mishandling of Brexit was driving Scotland to independence.
My Lords, I shall not now speak to the group starting with Amendment 134, in the name of the noble Baroness, Lady McIntosh of Pickering. As this debate went forward, I came to realise that I can perfectly adequately cover what I want to say in that context in this group.
At several points in this evening’s debate, I have been struck by the measured and telling way in which the noble and learned Lord, Lord Thomas, has said that he believes that the Bill is undemocratic. It is certainly undemocratic in the arrangements for the even distribution of resources. I do not want to become a Jeremiah; I would rather leave that role to the noble Lord, Lord Cormack. However, as someone who is half-Scottish and half-Welsh and closely identifies with both families, who has northern Irish blood, and whose wife has Welsh blood, I see disturbing trouble ahead unless we get the spirit of what we are doing right.
The key to that is to recognise that what happens in the future must belong to the people of Northern Ireland, Wales, Scotland and England. Even in the context of this debate, in an excellent speech, the noble Lord, Lord Dunlop, referred to partnership. I am not sure that partnership is an adequate description; it must be a completely common approach, in which all parties are on an equal footing.
We are rather good in this House—no less than anywhere else—at talking with utter conviction about the priorities that must be faced in political and social policy, and then failing to make consensus on the detailed policy before us. My noble friend Lady Hayman of Ullock made that point about the environment very well indeed.
If the Bill is basically undemocratic, Amendment 167 in the name of my noble friend Lord Stevenson, is highly relevant. I am very glad that he has brought into it one of the big preoccupations of this House and the other place: poverty and child poverty. He has made it central to what we are doing.
I also commend the noble Baroness, Lady Boycott, for bringing up the environment and climate change so seriously. Climate change is going to dwarf everything else that we are dealing with as it moves forward. We must not only speak about it and make dealing with it an aspiration; we have to make it central to everything that we do in mainstream policy and legislation. If this is not mainstream legislation, then I do not know what is. Therefore, it is crucial that climate change comes on board as well.
I was very glad to see the amendment in the name of the noble Baroness, Lady Bennett of Manor Castle, because obviously we want policies in the interests of the people in all four parts of the United Kingdom: Scotland, Wales, Northern Ireland and England. We want long-term policies which are sustainable and tackle climate change and the nature emergency. We have a major nature emergency at the moment, not least in the sphere of biodiversity. We need all those things, and I am glad to see that amendment there to keep our eye on the ball and our feet on the ground as we move forward, not just with a constitutional arrangement but with an arrangement that will be viable because it really belongs to all the people of the United Kingdom and deals with crucial issues that will make all our tactical politics seem pretty trifling by comparison.
My Lords, I thank those who assisted me in getting the chance to speak after the accidental omission of my name from the original list. It is a pleasure to follow the noble Lord, Lord Judd, and welcome his front and centring of the climate emergency and nature crisis. I thank the noble Lord for his expression of support for Amendment 169 in my name. I also thank the noble Lord, Lord Whitty, for his expression of support.
Before I get to that, I wish to briefly speak in support of Amendments 132, 167 and 168 in the name of the noble Lord, Lord Stevenson of Balmacara. It is notable that in the EU there are rules about the funds allocated for the alleviation of poverty and inequality—something that has been entirely lacking from UK practice and procedure, under which the Government have been able to direct money for electoral advantage without rules or oversight. The Americans have a word for that, “pork-barrelling”, and the practice is as unattractive as the metaphor.
I share the concerns expressed by other noble Lords speaking in this group about devolution issues, which other amendments seek to address, but as I have addressed those in other speeches I now speak chiefly to Amendment 169. It seeks to ensure that those who receive financial assistance, provided under the provisions of the internal market, can receive it only if a climate and nature emergency impact statement is undertaken first. This would ensure public money is granted only to development consistent with net climate, nature and environmental targets.
Amendment 169, and my argument for it, build on the comments of my noble friend Lady Jones of Moulsecoomb on the previous group, who reflected on the damage done by massive and continuing fossil fuel subsidies. As others have noted, my amendment has much in common with Amendment 166 in the name of the noble Baroness, Lady Boycott, to which my noble friend has already spoken, but my amendment extends further, calling for a detailed mechanism for each project, rather than the overview included in Amendment 166.
I must remind the Committee, as the noble Baroness, Lady Boycott, did, that the UK is the chair of the COP 26 climate talks. We have a responsibility to be the world leader the Government often proclaim they want to be. Green finance is an issue of great interest to a wide range of international bodies and commercial organisations. All new and continuing financial schemes, whatever their sources, have to be green, given the urgency of our climate emergency and nature crisis.
I note that on 25 June, the Committee on Climate Change made a progress report to Parliament, although we are yet to hear the Government’s response. The report showed how far our current policies are from meeting our existing commitments and the future, larger commitments we must surely make to live up to our enhanced ambition, beyond that of Paris 2015—something we have recently seen China taking a clear global leadership role in.
I refer to an Answer I received today from the noble Lord, Lord Callanan, to a Written Question on the green homes fund. I asked whether the programme would be extended and the funding enhanced. In his Answer, the noble Lord helpfully told me that £65 billion of investment will be needed for housing retrofit across the 2020s—£65 billion in nine years versus £2 billion of current funding. We clearly need to see some of the funding covered by this Bill directed towards this area, not nature-destroying, planet-trashing options.
Since the Government are very keen to look at league tables for education, we might look at two published in the last fortnight on the environment. One showed per capita contribution to plastic waste production. In this, we are, unfortunately, world-leading. We are second behind the United States on this plastic-choked planet—a huge and terrible responsibility. We have to use regulatory tools and funding to promote ways of cutting back on this. Secondly, the European Environment Agency reported that the UK has the third-greatest proportion of marine and land areas in bad conservation status; we are close behind Belgium and Denmark. More than 70% of our habitats
“exhibit overwhelmingly bad conservation status.”
Again, we must not only make sure we do not fund further damage but, as a matter of extreme urgency, direct funding in ways that start to repair the centuries of damage that has been turbocharged by our economic structure in recent decades.
These are not abstract, environmental, “nice to have” issues. They are about human survival. I ask your Lordships to think about the people of Nicaragua and Honduras seeking shelter and safety. To quote an NBC headline:
“Eta forecast to make landfall as a Category 4 hurricane, a rare occurrence in November.”
If noble Lords think that is an odd name for a hurricane, we are using the Greek alphabet now, because the normal alphabet has been exhausted this year.
The Committee might think about the people living now in low-lying areas around the world, including in the UK—we had a reference to flooding earlier. There have been reports from the Arctic of the failure of sea ice to form by the end of last month. That month broke the record for the lowest extent of sea ice in October. Its extent was more than 1.5 million square miles less than the 1980s average. That is an area larger than India, if noble Lords can envisage that.
The proposal in Amendment 169 is modest. Anyone asking for financial assistance needs to prove how their requests measure up to the climate, nature and environmental goals and targets, and the Government need to check to ensure that they are not boosting future hurricanes or ice melt, further treating our planet as a dumping ground or killing our wildlife. If those individual requests are put together it will enable Governments across the UK better to understand the aggregate impacts of the financial assistance—the state aid, as others have called it—and to measure them against the goals and targets to which they are already committed. Impact statements would be not an additional burden, but a necessity to reach shared goals. I conclude by noting that the Conservative Party manifesto last year promised
“the most ambitious environmental programme of any country on earth.”
How could any Government elected on that platform decline to include this amendment in the Bill?
My Lords, I will focus on whether Clause 48 should stand part, as my noble friends have done on this group. In so doing, I shall comment on the contributions. I agree with my noble friend Lady Randerson, who said that the contribution of the noble Lord, Lord Dunlop, was very important. I hope that the Government Front Bench was listening very carefully to that contribution. I see the Minister nodding, and that is very positive.
I looked again at the Explanatory Notes for Clause 48. It is quite telling that the Government are seeking financial assistance powers. I wondered for whom. The Explanatory Notes state that the power to provide financial assistance enables
“the UK Government to provide funding to local authorities, sectoral organisations, community groups, educational institutions and other bodies and persons in order to support and promote these policy areas across the UK.”
It is very telling that there is no mention of the devolved Administrations. It is fairly obvious that the Government’s intention is to have powers which effectively go over the devolved competencies of the nations, because in many respects the areas that had European structural funds are within the devolved competences. As the noble Lord, Lord Dunlop, and others indicated, there is no mention in the Bill of concurrent or shared expenditure, or of supporting joint policy initiatives. This is against the thrust of what we have had over the past 20 years with devolution.
This is not purely about devolution, because this affects developments within England too, such as growth deals and city partnerships. This expenditure will go beyond the structures that have already been agreed, and in many respects all those aspects have been included in the multiannual financial frameworks of the European structural funds. So it right to ask: what is the purpose of this? If this is the mechanism through which the shared prosperity fund will be delivered, why is there no reference to the shared prosperity fund? Why is the scope of the legislation far beyond what the Government said in their 2019 manifesto about a national skills fund? Why is there no reference to the delivery mechanisms that the Government have indicated should be in place for the shared prosperity fund? Or does the legislation seek to go beyond the shared prosperity fund? There is no statement in the Explanatory Note and there is no framework in the legislation for how that expenditure will be committed.
The sums are huge, as was mentioned by the noble Lord, Lord Stevenson, who I am glad introduced this group. I rely on the House of Commons briefing paper from September this year to give the figures. In 2018, public and private sector organisations in the UK received £5.9 billion from the EU, through various channels. On top of that, we received £4.4 billion for UK projects on infrastructure, some supporting the growth of employment, from the European Investment Bank. That is included within this clause of the legislation, but we know that UK support from the European Investment Bank will no longer be available, so what is the source of this expenditure to support infrastructure investment? How will infrastructure investment from loans or grants be delivered?
As the noble Lord, Lord Dunlop, and other noble Lords have said, to date, most expenditure has been allocated to member states and then managed through our devolved Administrations, regional partnerships or local authorities. Until this point, 76% of all European investment has been allocated, first, to the member state to manage—and then it has gone through our existing frameworks. If there is to be a new system to deliver that level of expenditure, separate from our existing delivery and accountability mechanisms, the Government need to say so.
Until now, in the multiannual financial framework 2014-20, the UK partnership agreement gave granular detail—it is a 373-page document—for all projects and where they are, with a chapter for UK-wide expenditure, and chapters for England, Wales, Scotland, Northern Ireland and Gibraltar. Interestingly, Gibraltar is included in this, but there is no reference in the scope of the legislation to providing financial assistance to Gibraltar, so the poor Gibraltarians have been completely dropped off the ability to support.
In their manifesto, the Government said about the shared prosperity fund:
“We will consult widely on the design of the fund, including with the devolved administrations, local authorities, businesses and public bodies.”
It was to be finalised after the comprehensive spending review. That has been delayed, for understandable reasons, but can the Minister state when the conclusion of the design of the fund will be published? If the shared prosperity fund is to be in place from April 2021, as the Government said in their 2019 manifesto, it leaves little time for our public bodies, which will be managing it, to operate. If it is not the intention of the Government for our public bodies to administer it, what central government structures will be in place to administer this fund? Why does this legislation have some areas that go beyond what the Conservative manifesto said, which was that it would be spent on skills?
Secondly, as was referenced by the noble Lord, Lord Dunlop, how do the intended powers of this legislation impact on the statement of funding policy? The statement of funding policy is the core document on financial relationships. It has population proportions expenditure and comparability factors, and it is applied to all spending and spending rounds. How does this power interact with the statement of funding policy? Will it be over the top of regional strategies? How will it be accounted for in the recipient public bodies? If it is to go to local authorities, how will it impact their accounting? If it goes directly to local authorities, how will it go to those areas?
I close with a tangible example. We heard references from colleagues from Wales and across England. I live in the Scottish Borders which, using the NUTS2 areas, has the lowest GVA per head in the United Kingdom, at 59.3% of the UK average. Outer London has 67.9% of the UK average. Under the Government’s current proposals, an area such as the Scottish Borders will not be eligible for this kind of support. Will the Government ensure that this funding is aligned to not only devolved but local authority strategies? Will it be aligned with the state aid maps? This separate approach will be beneficial for our country only if it is consistent with and supports our existing policies and strategies, at a local, regional and national level.
My Lords, this Government are determined to deliver on the commitments upon which they were elected: levelling up the whole United Kingdom, delivering prosperity for all citizens and strengthening the ties that bind our union together. Part 6 of the Bill helps to achieve this. This power to provide financial assistance will enable spending in the areas of infrastructure, economic development, culture and sport. It will also support educational and training activities, and exchanges within the UK and internationally. Previously, as noble Lords have noted, much of this was done at the EU level.
I reassure the noble Lord, Lord Bruce, the noble and learned Lord, Lord Thomas, and the noble Baroness, Lady Finlay, among others, that over the course of discussion and debate on this Bill, throughout Parliament and beyond, the Government have repeated our intention to work with the devolved Administrations. This power, in addition to existing powers, will allow the UK Government to complement and strengthen the support given to citizens in Scotland, Northern Ireland and Wales, without taking away devolved Administrations’ responsibilities.
As noble Lords have noted, the response to Covid has shown how the UK Government, alongside important co-operation with the devolved Administrations, can save jobs and support communities. This could only have been delivered strategically and at that scale by the UK Government. This power will ensure that we can invest UK taxpayers’ money nationwide on UK priorities as we leave the transition period, as well as supporting people and businesses across the UK to recover from Covid.
The UK Government are uniquely positioned to level up across every part of the UK, ensuring that the entire country can feel the benefit of increased trade, improved business conditions and a truly global economy. The power to provide financial assistance will facilitate this. Noble Lords will know that these aims support the Government’s manifesto commitments to strengthen the union, level up the country and match the current levels of EU structural funding in each nation through a UK-wide replacement programme—the UK shared prosperity fund. That is why I commend this clause to stand part of the Bill.
I will now discuss Amendments 167, 168 and 132. Collectively, they seek to remove the power to provide financial assistance in Part 6 of the Bill and replace it with provisions for the operation of a UK shared prosperity commission, detailed in a proposed new schedule. Let me begin by emphasising that the power to provide financial assistance in Part 6 would operate UK-wide to support a variety of purposes. This includes economic development but is not limited to it. It is therefore wider than any single fund or organisation. I say this in response to the question of the noble Lord, Lord Purvis, about the purposes of the power.
The effect of these amendments would be that the Bill would not confer on the UK Government the power to provide financial assistance UK-wide for infrastructure, economic development, culture or sport, or to support educational and training activities and exchanges within the UK and internationally. Although the UK Government have some existing powers to spend across the whole UK, the power we are taking now creates a unified power that operates consistently UK-wide, to deliver investment more flexibly, dynamically and in partnership with the devolved Administrations and other partners. Part 6 will make sure that the UK Government are well positioned to deliver investments following the end of the transition period, and to meet their commitment to replace EU structural funds.
I understand that the noble Lord, Lord Stevenson, tabled his amendment to probe the Government’s plans on this and I hope to be able to provide some answers. On the level of funding, the Government committed in their manifesto to maintaining, as I already said, at a minimum the existing levels of investment across all four nations from the EU structural funds. The noble Lord is correct that this was based not on Barnett but on an EU formula. In future, the UK can ensure that funding reflects the needs of the UK, not the 27 other member states, as this work is taken forwards. He is also correct that there are a number of ways in which this funding could be done but, if I may reassure noble Lords about the purpose of the funding, the Government have been clear on their aim: to tackle inequality and deprivation, and level up across the United Kingdom.
On timing, the noble Lord, Lord Stevenson, is right that to prioritise the response to Covid-19 and focus on supporting jobs, the multi-year spending review has been postponed. But he is also correct that we have some time, as EU funds are still being provided. Our aim is to ensure a smooth transition from current EU structural funds to the UK shared prosperity fund.
My noble friend Lord Dunlop is correct to say that the UK Government already spend in devolved nations, and the examples the noble Lord gave of city/growth deals and cultural investments were good examples of that kind of work. We would continue to work collaboratively with devolved Governments to deliver such initiatives, and this power would enable us to do so with greater efficiency and simplicity. Indeed, there is no consistent unified power to support projects that span the boundaries within the UK.
The noble Baroness, Lady Finlay, and others asked about the Barnett formula. The Barnett formula will continue to apply as set out in the Statement of Funding Policy.
In relation to how UK Government funds could be spent and which regulations, standards and laws would apply on housing, for example, I say to the noble Baroness, Lady Humphreys, and others that the investments made through this route would need to comply with standards and requirements that exist in, and are determined by, each part of the UK.
I hope that that has answered some of the questions that noble Lords have asked on the operation of the UK shared prosperity fund. There will be more detail in the future, but I hope this is sufficient for the noble Lord to withdraw his amendment, while recognising and supporting his broader principles behind it.
I will now discuss Amendments 166 and 169. Amendment 166 would require, by law, all financial assistance given under this power to be
“consistent with the … climate and environmental goals and targets applicable in the relevant part or parts of the United Kingdom.”
Amendment 169 would require that any financial assistance provided be accompanied by the Minister’s assessment of the recipient’s climate and nature emergency impact assessment. I commend both noble Baronesses for their commitment to this agenda. It is shared by the Government, who have already committed to ambitious climate targets and will lead the world’s discussion at COP 26 next year. The Climate Change Act 2008 already requires the Government to set five-yearly carbon targets, covering the whole of the UK, to move toward meeting our net-zero greenhouse gas emissions by 2050.
This framework sets the overall level of ambition, with the Government determining how best to balance emissions reductions across the economy. As policies and proposals are developed and implemented, their contributions to emissions increases or reductions are quantified and published regularly. This enables the Government to monitor progress towards meeting the UK’s carbon budgets and inform policy decisions. Therefore, any net emissions increase from a particular policy or project is managed within the Government’s overall strategy for meeting carbon budgets and the net-zero target for 2050, as part of an economy-wide transition.
Through the Environment Bill, as introduced into the other place in January, the UK Government will have a power to set long-term legally binding environmental targets across the breadth of the natural environment. The Environment Bill will also protect the environment from future damage by embedding environmental principles at the heart of policy development across government. The environmental principles will be used by Ministers and policymakers to ensure that policy and legal frameworks help to minimise the impacts of human activity on the environment.
The Fisheries Bill also includes a climate change objective, requiring fisheries administrations to introduce legally binding policies to minimise adverse effects of the fishing and aquaculture sectors on climate change and adapt their activities.
The noble Baroness, Lady Jones, asked about the net-zero review, and I confirm that this will be published in spring 2021.
Given the Government’s strong commitment, already, to meet their ambitious climate targets and the frameworks established under the Climate Change Act and proposed under the Environment Bill and Fisheries Bill, I do not think it is necessary to add such a legislative requirement to this power.
This power—and the United Kingdom Internal Market Bill overall—presents a critical opportunity to level up our country, strengthen our union and drive investment throughout the UK, which was previously determined by Brussels. Part 6 of this Bill will make sure that the UK Government meet their responsibility to support people, businesses and communities across the whole of our United Kingdom. This power will enable the UK Government to invest in our communities across the UK in a variety of ways, meaning that we can meet our manifesto commitments to deliver a UK shared prosperity fund that matches the value of EU structural funds. Above all, the Bill will deliver a thriving internal market, underpinned by the strength of the UK Government, which will provide opportunity and prosperity to citizens across the country.
My Lords, I have received one request to speak after the Minister, so I now call the noble Lord, Lord Bruce of Bennachie.
Does the Minister not agree that shared prosperity requires an attitude of sharing—in other words, for the Government to talk with, not at, the devolved Administrations? Are they listening to Douglas Ross, the Conservative leader in Scotland, who says that the Government are completely failing to promote the benefits of the union to the people of Scotland and, indeed, that their attitude is alienating people? Will the Government recognise that, whatever the commitment behind what they are trying to do, the approach is counterproductive and deeply damaging?
My Lords, all I can say to the noble Lord is that the attitude and approach of this Government is one where we intend to work in partnership both with the devolved Administrations and with local communities to ensure that these new powers are used to the best effect and that the UK’s shared prosperity fund supports citizens across the United Kingdom.
My Lords, I thank all those who have contributed to this wide-ranging debate, which was conducted throughout at a very high level indeed with respect to the very important issues that we had in front of us. I am grateful to the Minister for her quick-fire response. She covered a lot of ground; I will have to read Hansard carefully to be sure that I picked up all her points.
I have three responses to make. First, I do not think she was convincing in her defence of why the new powers contained in Clause 48 are required. The noble and learned Lords, Lord Thomas and Lord Hope, among others, were incredulous about the reasons for them and put their case very well. I do not think she was able to be as convincing on that as perhaps she hoped to be.
However, the Minister was very positive in response to the questions that a number of us asked about the replacement for the current level of EU funds, saying that the level of funding will be a minimum to match, it will be based on need and will tackle inequality and level up spending for these issues around the UK, and there will be time for a smooth transition. She stressed the collaborative approach that will be taken, but I will want to come back to that. She also left a few serious concerns about how exactly the process would go.
I think she will want to look again at the words of the noble Lord, Lord Dunlop, who spoke with great power; he made a number of points about additionality, accountability and co-operation as the necessary building blocks for any process which involves the insertion of UK Government-led funding in areas which have previously been done on a co-operative basis—bottom up rather than top down. Part of that was also raised by the noble Lord, Lord Bruce of Bennachie, who asked the Minister to recognise the differences that have arisen over time.
I shall leave with her two points. At this stage in the process when it is not certain how things will develop—even if the total amount of money and other things being said around funding are convincing—lack of information and engagement will breed distrust and suspicion. The Government need to think very hard about what approach they will take on a consultative and other basis, or else they will bring instability with them as they move forward.
Secondly, the case made by a number of people who spoke—not just those concerned about the direct impact on devolution but those concerned about other matters to do with climate change—has not been properly answered. There will not be any real return for the Government on this if they think that devolution will be assisted by what looks like a power grab without collateral arrangements being put in place. These funds need to be administered locally and planned co-operatively. At the end of the day, as one person said in the debate, the levers that are used to fund the people who are going to see the money will be local. If the Government do not get that right at the beginning, the rest will not work. However, we will read carefully in Hansard what was said. It has been a good debate on all sides. I beg leave to withdraw the amendment.
Amendment 132 withdrawn.
Amendment 133 not moved.
My Lords, we come to the group beginning with Amendment 134. I remind noble Lords that anyone wishing to speak after the Minister should email the clerk during the debate, and that anyone wishing to press this or anything else in this group to a Division should make that clear during debate.
Clause 31: Monitoring and reporting on the operation of the UK internal market
134: Clause 31, page 23, line 18, leave out “from time to time”
Member’s explanatory statement
This amendment deletes the phrase “from time to time” from Clause 31(1).
My Lords, it gives me great pleasure to move this amendment and speak to the others in my name. I thank the noble Baroness, Lady Bowles, for her support; I think she is going to speak at some stage on the clause stand part debate. I take this opportunity to thank once again the Law Society of Scotland for its briefing and its assistance in drafting these amendments.
Amendment 134 would delete the phrase “from time to time” from Clause 31(1). The reason for this is simply to state that reviews should take place on a more structured and regular basis than simply from time to time. I would like to press the Minister on what the intended timeframe for a review is within the terms of Clause 31.
Amendment 135 is on a similar theme. It looks to set out the significance of a matter that the CMA would review under the terms of Clause 31, and to press the Minister to say that surely it must be intended that the CMA conducts reviews into important and significant matters only. Is that the Government’s intention? Currently Clause 31(1) provides the CMA with an extensive power to conduct reviews. In my view that should be used only in accordance with clear rules that will ensure that only important issues are reviewed. The purpose of the amendment is to press my noble friend and the Government on what would instigate such a review and be deemed a sufficiently important and significant matter for this purpose.
Amendment 137 looks at the purpose of a proposal that should be made only, as I state here, by the Secretary of State or others that I have set out. The purpose is to ensure that only the Government and the devolved Administrations can make a proposal to the CMA to conduct a review. The reason for that is that the Bill currently provides that the CMA can receive and consider any proposals for undertaking a review, so in fact anyone can refer a matter to the CMA. Surely it must be intended that there is some qualification relating to this to exclude vexatious or frivolous referrals that might be deemed to be wasting the time of the CMA or others involved. The purpose of this probing amendment is to restrict the capacity to make referrals to the Government and the devolved Administrations, and to ask my noble friend if that is indeed the Government’s intention.
Amendment 144 looks at Clause 32, taking out “part” and replacing it with “or the entirety of”, thereby ensuring that the Secretary of State can request advice on a report for the whole UK, not simply a part of the UK. That is simply to note that the Secretary of State may request the CMA to provide a report for any part of the UK under Clause 32(11)(d), but not apparently for the whole of the UK. It is my intention to resolve that anomaly and clarify whether my understanding is correct.
Amendment 146 would delete Clause 35(4), which states:
“A duty of the Secretary of State to make a statement to Parliament is to be discharged by laying a copy of the statement before each House of Parliament.”
Is it not the case that such duties should be discharged in person directly to Parliament by making an Oral Statement rather than by laying a copy of the Statement before each House? Or do the Government intend to use that procedure and this is just the phrase that they have used? My amendment seeks to probe this.
Amendment 147 would insert, at the end of said clause:
“Before preparing advice and information under subsection (1) the CMA must consult such persons as it considers appropriate.”
This would ensure that the CMA consults those interested parties before preparing advice and information under this clause. The provision of advice and guidance about how the CMA will exercise its functions under Clauses 31 to 34 will be of considerable interest to those parties affected by that exercise. The consultation would allow an opportunity for those potentially affected to express views on the prospective content of the advice and guidance. Will the Government look favourably at this proposal?
Lastly, Amendment 148 would insert:
“Before revising or withdrawing any advice or guidance under subsection (1) the CMA must consult such persons as it considers appropriate”.
This a consequential amendment that flows from the above.
I am grateful for the opportunity to speak to these probing amendments, particularly in the context of the relevant clauses, especially Clause 31, relating to monitoring and reporting on the operation of the UK internal market, to make sure that it can function as smoothly as can be anticipated.
My Lords, I am pleased to speak in this group on my own amendments. I recognise that the noble Baroness, Lady McIntosh, has picked out some relevant points, including probing what I call the business aspect in Clause 31.
I have already rehearsed many of the arguments relating to my stand part notices, so I shall only speak briefly. The question of whether the OIM is set up to provide independent technical advice regarding business disputes with one another or with national authorities, becoming a first-round settlement process—or not, as it chooses—is all left too vague. Some not entirely technical criteria are intimately involved. I cite again my concern as to whether the OIM is the right body or structure and whether the powers exercisable over people and businesses in Clauses 38 to 40 are justified and proportionate to the reporting requirements in Clauses 31 to 34, which largely relate to the activities of Administrations.
My Amendment 145 would delete Clause 33(2), which states:
“A relevant national authority may not request a report from the CMA ... unless the authority has considered whether any other person or body is qualified to provide an independent report on the matter.”
What is meant by “qualified”? I could not find a definition in the Bill other than that in respect of professional qualifications in Part 3, which I do not think applies here. I understand and accept the subsection if the reference is to another statutory body, but the present wording seems to relate, for example, to advisory firms. I might have all kinds of views about that and how the Government seem to use advisory firms too much already, but I am concerned that such private reports would be less transparent.
However, perhaps there is a case for saying that it is more appropriate for an Administration to pay for that research and advice than foist the cost on to businesses, which is what this provision does. Can the Minister advise me of the intention of Clause 33(2)? Does it mean statutory bodies or private bodies?
Finally, Clause 37 requires the CMA to prepare and publish general advice and information about how it expects to approach the exercise of its functions. At present, how the CMA will use its powers is left solely to its own discretion, without guidance or safeguards in the Bill, but I think it is necessary to have guidance about when enforcement and fines are appropriate. For example, they are not appropriate when there is no reasonable suspicion of wrongdoing or contravention of market principles by the person or body from whom information is sought.
The noble Baroness, Lady Neville-Rolfe, has withdrawn, so I now call the noble and learned Lord, Lord Thomas of Cwmgiedd.
I can be very brief in speaking to Amendments 151 and 152, which stand in my name. They relate to matters that were discussed earlier. The first deals with the need to insert into the Bill provisions to ensure that the Competition and Markets Authority—if indeed it is to be the body that plays a central role in the Bill—consults the devolved Administrations in relation to its policy for enforcement.
The second amendment deals with penalties. The Minister has a regulating power and the amendment proposes that the penalties are made with the consent of the devolved Governments. That is obviously in line with what I hope will be the approach of the Government —that is, to work with the devolved Administrations. The reasons were set out earlier and I need not repeat them.
My Lords, like the noble and learned Lord, Lord Thomas, I will be very brief. I have added my name to his amendments, which simply reiterate the need for the CMA to consult the devolved Administrations, as well as the Secretary of State, and to obtain consent. They emphasise the importance of respecting devolution. I say to the Government that small things count. They guarantee good and fair government. It is important that the Government take note of the tone of the debates this evening and pay that respect to devolution in the terms in which the CMA operates in the future.
My Lords, these amendments are part and parcel of the approach that my noble and learned friend Lord Thomas and I, and indeed the Welsh Government, have advocated. It seems essential to ensure that the office for the internal market is genuinely independent and accountable, on a basis of equality, to institutions in all four parts of the UK.
I want to take this opportunity to seek clarification on some of the powers that the Government propose to give the office. I understand that it would be able to compel persons to provide information and impose financial penalties on those who do not. I can see why these powers are necessary for the Competition and Markets Authority when it investigates matters of anti-competitive practices which possibly violate the criminal law. However, can the Minister please explain why the powers are necessary in the very different circumstances of providing independent advice on the potential internal market implications of measures proposed by a Government?
More specifically, one point in particular needs clarification. It is my understanding that devolved Ministers could not be compelled to provide such information, as, like UK Ministers, they are covered by Crown immunity. However, I am informed that such immunity does not extend to the devolved legislatures, meaning that the Senedd Commission could be compelled to provide information and fined if it did not. This seems wholly unacceptable, and I seek clarification.
My Lords, I am pleased to be able to contribute to this stage of the debate, and to offer my support to my noble friend Lady McIntosh of Pickering, and particularly to her Amendment 134. Just recently we have heard much discussion, even by the noble Baroness, Lady Bowles, about the suitability of the CMA for this role. But there is no doubt that we need a body, and what we are discussing are the functions it would need to perform. I have sight of the briefing provided by the Law Society of Scotland, which supported some of these amendments, and it has been pretty forensic in striving to ensure, in particular, that this Bill contains enough representation and consultation.
I also support Amendment 135; it seems to me very appropriate that the CMA should have powers to decide what is a matter of importance, because the general idea that anybody could ask it to produce a report is a recipe for overenthusiastic demand from all sorts of people.
Moving on to Amendment 146, Clause 35 deals with who gets to receive the reports that the CMA produces, before, during or after measures that are being introduced, and who will present that report. Subsection (4) excuses the Secretary of State from being the one who gives the report in person. Surely most of the reports will actually be initiated by the devolved Administrations, and reports on the initiative of Secretary of State will be far fewer, so why should the Secretary of State be excused from speaking to the report that he has asked for?
The noble Lord, Lord Naseby, has withdrawn, so I now call the noble Lord, Lord Razzall.
My Lords, I will be brief, unlike many earlier speakers in this Committee, who clearly were revelling in being freed from the tyranny of two, three and four-minute speeches. As the evening goes on, I think we come back to the discipline of being brief.
As to whether Clauses 31 to 37 should not stand part of the Bill, the arguments have been well rehearsed earlier and at Second Reading, but I shall reiterate why they seem appropriate here. Why are we rushing to legislate at this stage in this area? Why are we not working with all four Governments to arrive at agreements and to legislate when necessary? As noble Lords who followed this will be aware, the process of managing the United Kingdom internal market through common frameworks has not yet been exhausted. I do not accept the argument of the noble Lord, Lord True, at Second Reading, that the list that has been dealt with by the common frameworks is not exhaustive. Those discussions can continue to take place.
Why are we not continuing to work with the four Governments and to legislate when needed? Why do we not establish a properly independent body representing all four nations in due course, and then legislate? I support the deletion of all those clauses; they should not stand part of the Bill.
The noble Lord, Lord Judd, has withdrawn, so I now call the noble Baroness, Lady Hayter of Kentish Town.
My Lords, we have said it before, so I will repeat only briefly: these amendments would never have been needed had the legislation been drafted in consultation and agreement with the devolved authorities. Instead, the legislation, as we have heard, reads like a complete desire to run everything from the centre, as if devolution never happened, and that the UK Government would simply decide and tell the others what they are to do. For example, as we have heard, it gives the CMA a cross-UK role with regard to the internal market but leaves the CMA, which currently has no devolved accountability, with the power to set penalties above the IM without any devolved authority consent.
I keep asking the same question: do the Government just forget about the other three Governments? As I have already said to the Minister tonight, we need the Government to respond to the thrust of these amendments positively and make it clear that they respect and want a proper role for the devolved authorities. The noble Baroness, Lady Randerson, said that little things matter. These are quite little requests, but they certainly matter.
I thank noble Lords who have taken part. They have asked for a lot of information on the various clauses and whether they should stand part, and I will provide it.
I start with Clauses 31 to 37 and why they should stand part. As we have discussed previously, Part 4 of the Bill creates the office for the internal market within the CMA, charged with carrying out a set of independent advisory, monitoring and reporting functions to support the effective operation of the UK internal market. Clause 31 defines a regulatory provision for the purposes of the CMA’s UK internal market reporting, advisory and monitoring functions, as well as stating which of these provisions are within scope. The purpose is to establish that the CMA may undertake monitoring reviews on an ad hoc basis, either of its own volition or at the request of other parties, including the UK Government and the devolved Administrations and legislatures. This monitoring will focus on cross-border competition, investment and trade, as well as access to goods and services.
There are two categories of monitoring and reporting that the CMA must undertake. The first is an annual health of the market assessment that will set out trends and developments in the internal market, including levels of integration across different sectors and nations. The second is a review of the impact of the measures in Parts 1 to 3 of the Bill, dealing with the internal market system itself, to be published at least every five years. Both types of report will be published and laid before both Houses and all the devolved legislatures.
Clause 32 sets out the provision for the CMA to advise on a regulatory proposal prior to it being passed or made in law. If an Administration in one part of the UK wishes to do so, it may request non-binding advice from the CMA on an approach to regulation it or any other person proposes to make in the relevant part of the UK. This is on a voluntary basis but will help support effective policy development. The advice, or report, from the CMA will examine the potential economic impact of the proposal on areas such as competition and trade distortions, the impact on prices and the choice and quality of goods and services for consumers. To ensure transparency, all advice will be published and shared with all four Administrations.
Clause 33 details the CMA’s reporting procedure on regulatory provisions already been passed or made in law. The request may be made by one or more Administrations and must concern a regulatory provision applying to its part of the UK and within its legislative competence. Similarly, to ensure transparency, the CMA will publish the report soon after it is provided to the requesting Administration. The noble Baroness, Lady Bowles, asked about this clause. The clause sets out that it is for the national authority seeking the report from the OIM to consider and determine whether another body could provide advice. This is not a technical term and is simply intended to make it clear that the OIM is not intended to displace other bodies that might in theory provide more relevant advice on the same matter and, in doing so, make the best possible use of public funds.
Clause 34 sets out the reporting procedure that the CMA will undertake for regulatory provisions that are already enacted in any part of the United Kingdom and are considered to have actual or anticipated detrimental impacts on the internal market. The CMA may produce reports upon the request of a Minister in the UK Government or a Minister in any devolved Administration. The CMA must provide copies to all other Administrations in other parts of the United Kingdom, laying the report before each House of Parliament and all devolved legislatures, as well as making it public.
Clause 35 sets out the process that the CMA, the UK Government and the devolved Administrations must follow once a report has been produced by the CMA and laid before the legislatures under Clause 32. The process requires the Minister in the Administration responsible for implementing the regulatory provision that was the subject of the report, and the Minister in the Administration who requested the report, to make a Written Statement in their relevant legislature. This supports effective parliamentary oversight, as well as prompting legislatures to determine the most appropriate subsequent course of action.
Clause 36 allows the CMA the discretion to exclude particular categories of information from its reporting on impacts on the internal market. The discretion to exclude some categories is not novel or contentious, and is used by public and private organisations to protect commercial and private information about an organisation or a person. This discretion is necessary in specific circumstances to provide assurances for business and individuals’ interests.
Clause 37 requires the CMA to publish general advice, information and guidance about how it expects to approach the exercise of its monitoring, advisory and reporting functions under Clauses 31 to 34. This mirrors existing requirements in the Enterprise Act 2002 to publish documents, as the UK’s competition authority, on how it works to promote competition for the benefit of consumers, both within and outside the UK.
I turn to Amendment 134, which seeks to delete the phrase “from time to time” from Clause 31(1), which deals with the CMA’s ability to produce ad hoc reports on matters it considers relevant to the effective operation of the UK’s internal market. The Government agree that it is essential for the CMA to undertake reviews and report on matters it considers relevant to the effective operation of the internal market. However, the Government believe that it is also important that, as an independent body, the CMA should not be under pressure to frequently produce ad hoc reports, which is what removing this phrase “from time to time” would imply. As Clause 31(5) and (6) make clear, the office for the internal market will produce regular reports on the health of the internal market; it will therefore be well placed to make the right judgment on the need for the production of other reports.
Amendments 135 and 137 would require the CMA to conduct reviews only into what are called “important” matters, and that only the UK Government and devolved Administrations may request a review from the CMA. The Government appreciate the intention of these amendments, which is to ensure that the CMA is not overburdened by expectations in relation to reviews. However, the CMA is experienced in the matter of reviews and should not have its work impeded due to debates as to what constitutes a “matter of importance”. Furthermore, it is important that all stakeholders with an interest in the internal market should be able to request that the CMA undertake a review. This in turn will help to maintain stakeholder confidence in the independence of the OIM from the UK Government and the devolved Administrations.
Amendment 144 seeks to amend Clause 32 by inserting the word “entirety” to ensure that the Secretary of State can request advice and a report from the CMA on matters relating to the whole of the UK, not just a part of it. The current wording of Clause 32 aims to capture that reporting made possible by the clause is limited only to devolved regulatory competence. In the case of the Secretary of State, this would mean England-only legislation by the UK Government would be in scope of Clause 32. The effect of the amendment would be to extend the scope of Clause 32 to capture powers being exercised for the whole of the UK by the UK Government. To support the effective operation of the internal market, the office will need to focus its reporting and monitoring on areas of regulatory divergence across the UK. If regulatory measures apply UK-wide, the same risks to the functioning of the internal market will not feature. It is therefore vital to narrow the focus of the reporting in question to regulation that covers only a proportion of the UK and could pose an issue to the functioning of the market.
I turn to Amendment 145. The purpose of Clause 33 is to enable the CMA to produce reports on the impact of regulatory provisions which have already been passed or made into law. This procedure is voluntary and can be requested by an Administration, solely or jointly, in all parts of the United Kingdom, in relation to a regulatory provision applying to the relevant part of the UK and within its legislative competence. The Government understand the concerns around transparency, but the aim of subsection (2) is to ensure that the requesting Administration consider whether any other person or body is also qualified to provide an independent report on the matter before a request to the CMA is made. It is important to consider whether any work done by another person or organisation would put the CMA in a better position to provide advice to an Administration and for this to be taken into account and considered before a request to the CMA. This is a pragmatic and wholly sensible approach and ensures that the CMA’s resources are best directed at requests for advice, monitoring and reporting where it has the relevant expertise.
Amendment 146 advocates for the removal of subsection (4) within Clause 35. This clause requires the national authority responsible for implementing the regulatory measure that was the subject of the CMA’s report to then make a written statement in the relevant legislature. This amendment would remove the obligation of laying a copy of a written statement before each House of the UK Parliament. This would clearly result in inconsistency between the UK Government and devolved Administrations in accountability to their respective legislatures. We believe that this change would result in a democratic deficit and the loss of accountability towards both Houses of this Parliament.
Amendments 147 and 148 would require the CMA to consult stakeholders before preparing advice and information about how it expects to approach the exercise of its functions and revising or withdrawing any advice or guidance. Clause 37 mirrors existing requirements in the Enterprise Act 2002 to publish documents, as the UK’s competition authority, on how it works to promote competition for the benefit of consumers, both within and outside the UK. As a matter of good practice and maintaining effective working relationships with a range of stakeholders, the CMA already undertakes extensive consultations with stakeholders in respect of its existing statutory duties before publishing advice and information. The CMA will be maintaining this approach in respect of the advice, information and guidance it publishes under Clause 37. In light of this reassurance, and to safeguard the independence of the CMA, the Government do not think it is necessary to compel the CMA to do this, as proposed by the amendment.
Amendment 151 seeks to amend Clause 39 to explicitly require the CMA to consult the UK Government, the devolved Administrations and other relevant persons in preparing or revising its statement of policy in relation to the enforcement of its information-gathering powers. Clause 39 allows the Competition and Markets Authority to take actions in response to non-compliance with the information requests described in Clause 38. To ensure that its penalties regime is fully considered and proportionate, the CMA will be required, as it already is now under its existing statutory functions in relation to the Enterprise and Regulatory Reform Act 2013, to consult other parties as it sees fit when developing or revising its approach. I can assure noble Lords that, in practice, the UK Government and the devolved Administrations would always be consulted as a duty on the CMA as it stands in the Bill. The noble Baroness, Lady Finlay, asked about compelling devolved Administration Ministers to give information. We can give DAs information notices, but they cannot, of course, receive any penalties for non-compliance.
I turn to Amendment 152, which seeks to amend Clause 40. It would require the Secretary of State to obtain the agreement of the devolved Administrations before specifying in regulations the maximum level of financial penalty in cases of non-compliance with an information-gathering notice from the CMA. Clause 40 as it stands sets out the penalty regime for non-compliance with the aforementioned information-gathering powers. It is vital that the CMA, acting as the OIM, has access to credible, accurate and comprehensive information sources to fulfil effectively its internal market functions.
Clause 40 directly mirrors Section 174D of the Enterprise Act 2002 ensuring consistency of approach in respect of financial penalties across the CMA’s existing functions. The Secretary of State will therefore make regulations specifying the maximum amounts in practice for these penalties in consultation with the CMA and other interested parties. Again, I can give noble Lords, first, the reassurance that the Government are committed to not taking any steps to bring the financial penalties into effect by commencing the clause until there is clear evidence that there is a need to do so. Secondly, the clause requires the Secretary of State to consult with other relevant persons before making the necessary regulations. I want to confirm that the devolved Administrations would of course be fully consulted as part of that duty.
In the light of the various reasons and reassurances that I have given, along with my explanations in some detail of the purpose and reasoning behind the clauses, I hope that my noble friend will feel able to withdraw her amendment.
My Lords, I am grateful to all those noble Lords who have contributed to the debate. I did rather enjoy my noble friend’s description of not wishing to overburden the CMA with expectations; I do not think that that is quite the case as yet. As the noble Baronesses, Lady Hayter, Lady Randerson and Lady Finlay, and the noble and learned Lord, Lord, Lord Thomas of Cwmgiedd, have said, we are seeking to ensure that the devolved Administrations are consulted, that consent is sought and that they are respected. That was the main thrust of the argument.
I am disappointed that my noble friend does not find common cause with my amendments. I am very grateful in particular to my noble friend the Duke of Montrose for highlighting the fact that, as he recognised, which is most pertinent, most of the reports will in fact emerge from the devolved Administrations. That is why it is bizarre that the Secretary of State can be excused from speaking to these reports from them so that Parliament itself, along with the devolved Administrations, would be made aware of his arguments and reasons for either accepting or rejecting the reports.
My noble friend’s response begs a question which it will be interesting to explore at subsequent stages. If the Government are not prepared to accept a de minimis rule on what the status of referrals and the reports to be made by the CMA would be, that begs a question about how we define the distortion of the market. I spent six happy months in the European Commission looking at how competition was being distorted in the context of the single market, which we have just left, and what defined a distortion of the market. I shall seek to develop that argument at a later opportunity. For the moment, I beg leave to withdraw the amendment.
Amendment 134 withdrawn.
Amendment 135 not moved.