United Kingdom Internal Market Bill — House of Lords, 2020-11-25
Topic: International Affairs
Michael German (Liberal Democrats, Centre to centre-left): My Lords, I am grateful to the noble and learned Lord, Lord Thomas of Cwmgiedd, for putting forward so much detail behind this amendment, which clearly lays out the course of action that could be dealt with and also talks about the way the Government propose to take these matters forward. I think that my job is to amplify some of his points and perhaps to extend them as well. I refer to the offer from the Welsh Government, which I presume has also been made by the Scottish Government at the same time: that was the indication I received last night, and perhaps the Minister could confirm that this letter from Scotland has been received as well This clause proposes a major recentralisation of power. It is a far cry, for those of us who live in Wales, Scotland or Northern Ireland, from the cry of bringing back our laws, because state aid is currently not a reserved power, despite the Government’s protestation that it is and always has been. Annexe 1 of the Explanatory Notes for the Bill clearly lays out that it is not a reserved matter, but the Bill, of course, makes it say so. I reiterate at the start that we on these Benches want to see a single state aid regime for the whole United Kingdom, but that regime has to be to a design on which all four parts of the United Kingdom have collaborated. If they are not prepared to do this, as this clause lays out, they will not get a legislative consent Motion from either of the devolved Parliaments or from the Northern Ireland Assembly. In fact, in his letter to the Secretary of State for BEIS yesterday, the Counsel General for Wales said: "Even if we resolve all the other issues, this alone"— that is, this clause— "would make it impossible for me to recommend legislative consent to the Bill as it now stands." That is crucial, because it says something about the relationship that this clause makes between the four nations of this United Kingdom. It is not a way to respect our devolution settlement and, importantly, not a way to respect the union we have within the United Kingdom EU state aid policy is established through the Treaty on the Functioning of the European Union, and directly applicable regulations following on from that treaty. That was in place of having directives that would have required us to transpose these matters into UK law. In response to the House of Lords report on state aid, the Government said: "We note that in practice the existing EU rules have always been sufficiently flexible to allow the UK to make innovative aid interventions when necessary." So the Government do not believe that there has been a problem in the way that this operated with the EU, and now they are intent on eating their own words, bringing back the rules, converting them into a straitjacket regime and not providing the flexibility that the countries in our union previously enjoyed. They also add that it would be "harmful" if this were dealt with in any other way A more co-operative and consensual approach is needed. The clause we are seeking to remove assumes that divergence will happen, and decrees that there shall be no divergence. Blunting and reducing the power of the devolved authorities is deemed to be a price worth paying so that the UK Government alone can determine the route they wish to follow in directing the new regime. Yet we do not know what this regime will look like. There is no sign of the detail or the choices the Government propose to take What this clause does, no matter what consultation the Government may eventually engage in, is drive their own agenda—an agenda that primarily has to support England. That, by the way, is no way to provide business with the certainty it is seeking. In fact, the lack of clarity at this stage prolongs the uncertainty; but it need not be like this We need to make progress on a UK framework for subsidy control. Again, this is another framework agreement which needs to be put in place. At the moment, without such a framework, it could easily be said that the Government are making it up as they go along. What is needed is a dialogue, not the "take it or leave it" policy that this clause entails—a policy which may well end up in the courts and will certainly amplify the feeling that the union of the United Kingdom is not respected Yesterday’s letter from the Welsh Government’s Counsel General, which the noble and learned Lord, Lord Thomas of Cwmgiedd, referred to, provides the UK Government with a route to a sensible solution. It recognises the ability in the EU to have variance in subsidies where there is an identified need. I must point out to noble Lords that many of us will remember that this was the case before we became members of the EU. I remember the arguments and debates on UK regional aid and regional assistance, and dividing the areas of the country up where aid could be given in greater amounts. That historical message was that there would be differences and distortions; of course, subsidies provide distortions, but they were provided for very good reasons. They were proposing to make a difference where the needs were greatest—where poverty and economic need were greatest—and so it was provided it in that way I can say, as somebody who had to operate within that framework as an economic development Minister, having to talk about these matters with Brussels simply to identify the boundaries, the flexibility, as the UK Government themselves say, was great indeed to manage that work. I believe we are seeing this clause put the cart before the horse—devising the policy before putting the legislation in place is what we are looking for, and that is what this amendment does All the devolved Governments have made it clear that they are prepared to work at pace with the UK Government to design a new subsidy regime. I would be grateful if the Minister in replying could tell us how the Government will respond to the offer from the devolved Governments. I also note that there must be unease on the Government’s side about this clause, since I have noticed that no other speaker, apart from the Minister, has come forward to support it Removing this clause from the Bill provides the opportunity for dialogue and the drawing up of a new subsidy regime for the UK. As the noble and learned Lord, Lord Thomas of Cwmgiedd, said, we already have a replacement in place temporarily until that is put back and the regime determined. I do hope that the Government will accept the offer from the devolved Governments as the right way forward and, as a gesture of good will, I would be grateful if they would therefore consider withdrawing this clause, supporting this amendment and, in so doing, strengthening the relationships between the various parts of our union.