United Kingdom Internal Market Bill — House of Lords, 2020-11-25
Topic: International Affairs
Roger Thomas (Crossbench, Unknown): My Lords, in a way this issue is much simpler because Clause 44 has been put in with one purpose only: to alter the devolution scheme. I intend to move that it be removed from the Bill and, if necessary, I will press this to a Division I ought to say from the outset that the regime of state aid is plainly necessary, and it is necessary to have one for the whole of the UK, as I will explain in a moment. It is necessary first to say a little about the background. Until relatively recently, the British Government’s stated position had been to retain the EU regime and put in place an independent body, such as the CMA, that would police it. Whether it was like the Commission or whether it was advisory was something to be worked out. Obviously, that would not have required any change to the devolution scheme because we would have been proceeding as we had during our membership of the EU However, the present Government decided to change that, and they intend to use Henry VIII powers to do so by statutory instrument. That instrument has been drafted and is no doubt to be debated soon. It has been considered by the Secondary Legislation Scrutiny Committee, which has concluded, and I think it important that noble Lords hear its conclusion: "The House will be aware of the Committee’s concern, raised on several previous occasions, that secondary legislation is being used to introduce policy changes about important issues which should more properly be the subject of primary legislation, thus affording a higher degree of parliamentary scrutiny. This is another such occasion and one on a subject that appears central to the UK’s negotiation position with the EU. We take the view that it is neither a welcome nor indeed acceptable use of secondary legislation" That is a clear intimation that we should look at this in a proper debate on state aid Obviously, that is for another occasion, but if that instrument is passed and the EU regime is revoked, the Government’s position is very simple, and we will live under this regime for the next several months—that is, the World Trade Organization rules will apply. We, as the United Kingdom, are bound by them as a matter of treaty obligations and the devolved Governments are bound to follow World Trade Organization rules in relation to subsidies. Of course, it will be without any direct policing authority, but that is the course that has been decided on, so there is no urgency about this issue and I will return to that in a moment. Of course, the position could change I very much hope that there will be a deal with the EU, and no doubt there is a prospect that a deal may deal with the subsidy regime, but at the moment we have to proceed on the assumption that, first, the current regime will be withdrawn, and that we will move to the WTO regime. That is the background. Secondly, I emphasise again that this is not an amendment suggesting that the UK does not needed a regime. It is perfectly obvious that any internal market has to have a state aid regime, just as world trade has to have a set of state aid rules, weak though the WTO rules are on this issue. One cannot see a stronger argument for a properly thought through regime of state aid than in the recently published paper of the Institute for Government Beyond State Aid. It explains why it is necessary, how it should be done, what should be done before it is established and that it should be widely consulted on. Of course, there has been a lot of time to do this, but nothing has been done I think it must be accepted that the Government desire to proceed. Why they want to do so now is unclear, but they believe that they have hit a snag, which is the fact that for the time of our membership of the European Union we lived with the devolved Governments dealing with all these issues and, as I outlined in the previous debate, this competence is not reserved. Therefore, unashamedly, the Government want to use this legislation to alter the devolution settlements. Whereas in other parts of the Bill I have been critical of the fact that the Government are trying to do something by stealth, here what they are trying to do is much clearer. What they are trying to do is, if I may say so, not open dealing or being straightforward. They are trying to make state aid a reserved matter by the device of expanding or extending the competition policy reservation. If they wanted to do this properly, one would have expected it to be dealt with in a much more straightforward manner The real issue is how should we now proceed, and there are three alternatives. The first, obviously, is to leave this clause in the Bill. I will come back to that in a moment. The second is to work out a policy and enact it by primary legislation. The third is to use the common frameworks. I shall deal with the second of those suggestions first If there is to be a state aid policy, it cannot be denied that it would need widespread consultation. If we were to go down this route, the Government would need to carefully craft legislation and bring it before Parliament. If, in such legislation, there is a need to change the devolution settlements, that can be in the Bill so that we know what is required and how it can be dealt with. That is one solution. There is absolutely no reason why we cannot do that, because we will be living under a World Trade Organization regime in the interim and the devolved Governments will be bound by that Secondly, to my mind a much more attractive way forward is to use a common framework. I regret that this matter came up in Committee very late on a night when, as the Minister will remember, we were all fairly exhausted at the end of the debate on Part 5. I hope he will recall that I then suggested that maybe one way forward was a common framework Having the privilege of being a member of the Common Frameworks Scrutiny Committee, I raised the question of a common framework with the Counsel General for Wales, Mr Jeremy Miles, and the Cabinet Secretary for the Constitution, Europe and External Affairs in the Scottish Government, Mr Michael Russell. They expressed a view that this was a way forward. Last night the Counsel General wrote in very clear terms, and I hope that the letter has safely reached the Minister and many others. He made it clear that state aid had always featured on the list of common frameworks but there had been no progression. He continued: "The Welsh Government has been clear that it would wish there to be a single state aid subsidy control regime for the whole of the United Kingdom, or at least for Great Britain if the Northern Irish protocol makes this impossible, provided it is co-designed by all the Governments which have to implement it. I therefore wish to make a clear and unequivocal offer on behalf of the Welsh Government. If the Government will remove Clause 44 and agree without prejudice to its legal position to participate in discussions on a legislative framework on state subsidy control, we will commit in good faith to work intensively on such a framework on a tight timetable to reach agreement within three months of the Government tabling a proposal, or in any event by 31 March next year. In the meantime, we will commit to not put forward any primary or secondary legislation to the Senedd which in any way touches on the regulation of state aid subsidies until these discussions have concluded." So there is a plain offer of a way forward on the table. That is the second alternative The third alternative is to proceed with this clause. I urge noble Lords to take the view that it would be quite wrong to do so. At this stage there is no clear knowledge of what the policy will be. It is not clear what changes, if any, need making to the devolution settlements. The appropriate time to make such a change would be with the policy properly devised and the powers that are needed I urge noble Lords to take the view that tackling all this now, with this proposal to change the devolution settlements without a policy by this back-door device of altering the competition reservation, is wrong. It would be better by far to work out what is needed and, if possible, to proceed by a common framework, because that will produce a legal regime with no doubt proper enforcement powers across the UK. We should not put this in at the tail end of a Bill without proper thought as to the context. There is time to do this: the WTO regime will tide matters over until a common framework is agreed or until there is legislation. I therefore move the amendment and I will be prepared to test the opinion of the House on this matter.