United Kingdom Internal Market Bill — House of Lords, 2020-10-28
Topic: Domestic Commerce
Martin Callanan (Conservative, Centre-right): It may be helpful to the noble Lord, Lord Purvis, who I know is interested, if I return to a question he asked on the previous group—the vexed question of coal and the English-Welsh border. Let me build on the answer given by my noble friend Lady Bloomfield. Under mutual recognition, the use of coal could be banned regardless of where it is bought. The sale cannot be stopped simply because the use is not permitted. The use would still not be permitted in England, even if the coal is bought in Wales, or if it is legal to use it there. It is the distinction between sale and use that my noble friend referred to. I thought the noble Lord would like early clarification of that. Amendments 68, 69, 70, 71, 78, 81, 84, 89, 92, 96 and 102 seek to alter the application and scope of both the exclusions and non-discrimination rules for the internal market in services. Several of these amendments centre on the application of the services rules and the non-discrimination principle. This non-discrimination rule is a fundamental safeguard for businesses, ensuring that there is equal opportunity for companies trading in the UK, regardless of where in the UK the business is based. I will address the amendments in related groups, and I am happy to explain how the services rules work, and the list of exclusions, in greater detail I thank the noble Baroness, Lady Hayter, for tabling Amendments 68 and 96 on consumer protection. I hope to be able to persuade her that they are unnecessary. As I set out on Monday, the Government are committed to maintaining and protecting the highest consumer standards across the UK. This legislation will be to the benefit and protection of the country’s consumers. Without an updated, coherent market structure, UK services trade could be significantly and detrimentally affected. Future complexities could arise, and costs could then be passed on to consumers through an increase in prices or a decrease in choice Amendments 69, 71 and 78 would provide that Part 2 applies only to services specified in regulations. We believe that these amendments are contrary to the aims of the Bill, because this is the opposite to the current approach, which is that mutual recognition and non-discrimination applies to all services except those specified in the schedule. Further, the amendments set restrictive consultation and reporting conditions on a Secretary of State wishing to make those regulations, and a requirement for devolved Administration consent to regulations extending the list of exclusions in Schedule 2. My noble friend Lord True spoke about this issue earlier today in the group on the involvement of the devolved Administrations Clause 17 currently aligns with the wider aims of the Bill—to allow businesses and people to trade as they do now, without facing additional barriers based on which nation they are in. These amendments run contrary to those aims. They would make the raising of barriers to service provision the default position, by not applying mutual recognition and non-discrimination principles in the Bill to any services unless specified. The reporting and consultation requirements the amendments place on specifying regulations also mean that bringing services into scope of the rules of Part 2 of the Bill, including all those to which the principles of mutual recognition and non-discrimination apply under retained EU law, would be both difficult and time-consuming. This would, in turn, cause disruption to businesses seeking to provide their services across the whole United Kingdom Overall, these amendments could raise barriers to service provision across the UK where even the current system does not, and would seriously hinder any attempts to develop a co-ordinated and focused response to the evolution of services in the future. Therefore, while I recognise the spirit in which these amendments were tabled, I am unable to accept them. However, to answer the questions asked by the noble Baroness, Lady Hayter, and my noble friend Lady Neville-Rolfe, on financial and legal services, and to allay their specific concerns, I can reassure them that legal services are excluded from the mutual recognition principles, and financial services are excluded from Part 2 entirely As my noble friend Lady McIntosh makes clear in her explanatory statements accompanying Amendments 70, 81, 84 and 92, their primary purpose is to probe the drafting of the Bill. On Amendment 70, the intention of Clause 16(5)(c) is to restrict the application of Part 2 only to new requirements that take effect after Part 2 itself does. This is because the Bill is intended to prevent future obstacles to trade within the single market, not retrospectively review all existing requirements Clause 16(5)(c)(i) provides that requirements already in force are not subject to the principles in Part 2. Clause16(5)(c)(ii) recognises that there will inevitably be new iterations of rules, which will in fact simply restate the previous rules that were in place. This provision sets out a threshold, beyond which the new requirement will be brought within scope, and that is where the requirement has changed in substance My noble friend in particular asks the meaning of "substantive change", which her amendment would replace with the phrase "significant amendment". This wording is simply intended to distinguish between those rules which are genuinely new and different from those which may have been in place beforehand, and those which are in fact substantively the same rules. My noble friend’s suggested change uses the term "significant", which is less easy to quantify and suggests to me a higher threshold before which a change would bring the provision within scope of the principles in the Bill. "Change" and "amendment" are of course covering fairly similar ground, but I suggest that "amendment" would more commonly be used when talking about changes to text. Since Part 2 is operating on requirements imposed by or under legislation rather than the text of the legislation itself, we think, in these circumstances, that "change" is the most fitting word— but there will probably be lots of work for the noble and learned Lord, Lord Falconer, and his friends in interpreting this I turn now to Amendments 81 and 84. In Clause 21, a legislative requirement is one imposed "by, or by virtue of, legislation" This extends beyond legislation to rules produced by bodies with powers delegated to them in respect of a particular field of regulation, and it may include licences or requirements contained therein. My noble friend’s Amendments 81 and 84 would appear to have the same effect. However, in my view, the term "of no effect" is the more appropriate to apply in respect of a licence or a non-legislative rule Turning now to Amendment 92, the purpose of the words "less attractive" in Clause 20(3) is to encompass requirements which are not outright prohibitive but which otherwise make it harder to offer a service in a particular market. Without these words, the clause could be read as referring only to actively punitive measures, when in fact it is intended to cover a broader range of harms under the definition of direct discrimination. My noble friend will no doubt also be aware of the amendment in my name to Clause 20, which seeks to clarify the meaning of the test for indirect discrimination in that clause—although the language that she highlights remains unaltered by it Amendments 89 and 102 from the noble Baroness, Lady Hayter, seek to remove the reference to the legitimate aims in Clause 20. These amendments should be read alongside the other amendments in the noble Baroness’s name. The wider purpose of all these amendments is to alter the legitimate aims in Clause 20. The amendments would have the effect of making the principle of non-discrimination almost absolute, not allowing any requirement which had an indirectly discriminatory effect, no matter how valid or urgent the justification. I suspect that this was not what the noble Baroness intended with this suite of amendments Clause 20(2)(d) provides that a requirement will be discriminatory only if it cannot be justified by a legitimate aim. Amendment 89 suggests removing that. Clause 20(9) provides that, to determine whether a regulatory requirement can be considered as a necessary means to achieve a legitimate aim, particular consideration must be given to the effects of the requirement in all circumstances and to the availability of alternative means to achieve that aim. This subsection is key to determining whether a legitimate aim may be relied upon. It is designed to assist the reader and its removal would hinder the effective application and operation of the test. The subsections are both key to the effective operation of the non-discrimination principle provided for by Part 2 of the Bill. I therefore cannot accept these amendments Amendment 103 relates to Part 3 of the Bill, concerning professional qualifications. As used in the clause, "mainly" has been used in this context to ensure that the majority of the experience that a professional is relying on is obtained in the United Kingdom. This is so that relevant authorities can reliably assess the professional’s experience. The decision to use "mainly" rather than "substantially", or other similar words, is so that professionals can rely on their experience for this part of the Bill without it being interpreted as the whole of their experience needing to have been obtained in the UK. I hope, therefore, that this explanation satisfies the House and that the noble Baroness feels able not to press her amendment.