United Kingdom Internal Market Bill — House of Lords, 2020-11-02
Topic: Foreign Trade
Peter Hain (Labour, Centre-left): 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.