My Lords, I wish to speak to Amendments 5, 11 and 53 in this group, which are in my name and, in the case of Amendment 5, that of the noble Lord, Lord Wigley. They are directed to an issue that, as we have heard, lies at the heart of the way the internal market is to operate in the best interests of all parts of the United Kingdom. The problem to which they and all the other amendments in this group are directed is this: how can the common frameworks programme fit in with the centrally driven market principles laid out in the Bill?
I must declare an interest in the common frameworks programme, as I am a member of the Common Frameworks Scrutiny Committee, chaired by the noble Baroness, Lady Andrews. For us, scrutiny of a number of these frameworks is already work in progress. So we are looking for an answer to that question, too, quite apart from the need to address it for the purposes of the Bill.
I shall introduce this subject as succinctly as I can, but the issue is one of fundamental importance to the devolved Administrations and to the future progress of the Bill, so I hope I shall be forgiven if I take some time to say what common frameworks are and why they matter. The common frameworks are a means by which the UK and the devolved Governments can agree on a measure of consistency across the United Kingdom for those policy areas returned to us from the EU that are within devolved competence. The process has been going on since the European Union (Withdrawal) Act 2018, which mandated it, was enacted. It is founded on the principles that were agreed by the JMC at its meeting in 2017, to which the noble Lord, Lord Dunlop, referred in the previous group.
To begin with, the UK Government identified 142 distinct areas that might need to be addressed. While we were within the EU, legal and regulatory consistency was maintained across the UK in these areas by EU law—but EU law does not insist on complete regulatory uniformity. The degree to which this has to be so depends on the nature of EU law in each given area. In some cases, minimum standards are set by EU law, leaving a measure of discretion to member states. In other areas, EU law is more prescriptive, leaving little room for variation. The devolved settlements were arrived at against that background. The key to their success is that they allowed for policy divergence within the UK in areas that were not reserved to Westminster.
6.15 pm
The basic argument for the development of common frameworks after we left the EU was that, if they were not created, the potential for policy divergence within the UK would increase significantly once we left; but it was never the intention that they should eliminate policy variation within devolved competence. What they do is provide a means by which the parties to this arrangement can identify the potential negative effects of any proposed policy variation and then determine whether they are serious enough to require agreed constraints on devolved policy autonomy.
This system respects the devolution settlements and allows for different solutions across the nations, but controls them where necessary to make the internal market work. I can give an example: the section on
divergence in the Nutrition Related Labelling, Composition and Standards Provisional Common Framework, which the committee chaired by the noble Baroness, Lady Andrews, was looking at last week, states:
“All four administrations have the ability to diverge from generally harmonised rules within their territory, where risk assessment shows this is both necessary and proportionate, to protect consumers … Where one nation wishes to diverge … they should first consult”
a policy group to
“identify whether a common approach can be achieved that meets the desired outcomes, but which ensures the functioning of the UK Internal Market, while acknowledging policy divergence.”
It is worth repeating the phrase
“which ensures the functioning the UK Internal Market, while acknowledging policy divergence.”
As in the case of others, there is a dispute resolution mechanism that can be invoked by any of the four nations if they cannot arrive at a common approach, although I have to say that I am not aware of any case where it has had to be invoked so far.
Common frameworks fall into two categories: legislative frameworks and non-legislative frameworks. Legislative frameworks are in areas where new primary legislation may be required, in whole or in part, to implement the common rules and ways of working alongside a non-legislative agreement. Non-legislative frameworks may include secondary legislation—for example, where changes are needed to retained EU law in order to implement the new framework.
However, both kinds have this feature in common: they are based around a framework agreement and concordat, neither of which are based on legislative arrangements; the process is voluntary. Of the 142 areas that were originally identified, 115 are thought not to require any framework and 22 are thought to require a non-legislative framework, leaving just 18 that would require a legislative framework to bring them into force. There is one other point to note. There are four policy areas that the UK Government believe are reserved, but this is disputed by the devolved Administrations. State aid is one of them. As these areas are disputed, it is very unlikely that common frameworks will be agreed in these areas.
That brings me to this Bill. No one doubts that there is a need for a measure that addresses the UK internal market as a whole. As the noble Lord, Lord True, said in his letter to all Peers of 21 October, common frameworks play an important role in the collaborative policy-making process. But, as in the case of the nutrition labelling example which I mentioned earlier, they tend for the most part to be policy specific. They cannot alone guarantee the integrity of the entire UK internal market. He said that they cannot be a substitute for this Bill. He made the same point when he was winding up the Second Reading debate. He said that the Bill
“ensures that areas without a common frame-work will still benefit from the regulatory underpinning and, crucially, market coherence will be provided for issues that fall around, or between, individual sector-focused frameworks.”
So far I entirely follow what he was saying, and I do not for a moment disagree with the need for legislation of some kind, at some stage, to address these problems.
But it is the sentence that followed in his speech that reveals the crucial area of difference between us. He said that the Bill
“complements common frameworks by providing a broad safety net and additional protections to maintain the status quo of seamless intra-UK trade across all sectors of the economy.”—[Official Report, 20/10/20; col. 1427.]
He referred in an earlier passage to the need for a coherent market structure without economic barriers that could block or inhibit trade in goods across the United Kingdom. Those sentences beg the question: how can any future common frameworks fit in with the overriding market principles described in this Bill? I stress the word “future” because, as has been referred to already in these debates, the Bill preserves existing arrangements—it does not seek to override them—but it is the future that matters to the devolved Administrations, and it is the future that is at stake.
The Bill does not provide a direct answer to these questions. There is no reference to the common frameworks anywhere. In short, it simply ignores them. But the effect on any policy differences that may be agreed to in the future, other than in the case of serious threats to human, animal or plant health of the kinds that are excluded by Schedule 1, is plain to see. They must give way to the mutual recognition principle. That is what seamless intra-UK trade across all sectors of the economy, without economic barriers, will amount to. The language speaks for itself. The Bill does not seek, as I have said, to repeal any of the relevant provisions in the legislation that defines devolved competence. But that, with that one exception, is its effect. The devolved Administrations simply cannot accept that. Their ability to diverge from generally harmonised rules within their territory in the carefully regulated way that the common frameworks provide for where risk assessment shows that this is both necessary and proportionate to protect consumers, is rendered worthless. I do not speak for any of the devolved Administrations, although I live in Scotland, but I have been involved in the devolution legislation from the very beginning. I therefore understand and sympathise with their concerns as to what this means and where it will lead to.
My amendments seek to protect the way that common frameworks respect and give effect to the devolution settlement. Amendment 5, read with the proposed new schedule in Amendment 53, does two things. It seeks to provide a definition of what the common frameworks process is, and it seeks to exclude the common frameworks process in the relevant policy areas from the operation of the mutual recognition principle. Amendment 11 proposes a different form of words to achieve the same result. It seeks to exclude a manner of sale requirement from the scope of the mutual recognition principle if it gives effect to an agreement which has been the subject of a common framework. I have kept these amendments deliberately very short so as not to disturb the architecture of the Bill, and I have introduced them into Part 1 so as to focus this key issue as early in our debates as possible. But I do not claim a monopoly of wisdom in the matter of how these amendments should be phrased. The noble Lords, Lord Hain and Lord Foulkes, and the noble and learned Lord, Lord Mackay of Clashfern, are proposing alternative ways of addressing the same problem which they will be speaking to later in this group. I am sure that if the Minister was able to accept
the principle that lies behind all these amendments, an acceptable drafting solution that does not disturb the overall architecture of the Bill would be found.
I have had the advantage of attending three meetings which the noble Lord, Lord Callanan, with his usual courtesy, has been kind enough to host so that we could discuss this issue. I did not detect any inclination on his part to move in my direction, but it did seem to me that some of the arguments in favour of his were untenable. It was said that, as the common frameworks process was not created by legislation, they should not be handled in a legislative way. This meant that they should be kept outside the Bill. But my amendments would not alter the way that the common frameworks are handled in any way. All my amendments seek to do is to provide them with the protection that they need as simply as possible. Merely to provide a definition—and an amendment seeks to do that—does not undermine the process and the handling of it in a non-legislative way. Then it was said that the mutual recognition principle will still allow for flexibility and divergence—and the following phrase is important—so long as no new barriers to trade are introduced. A great deal hangs on that word “new”, to which I hope the Minister will direct his close attention. The argument fails to meet the point that a devolved Administration would be unable to enforce its policy choices, as regards the use of new kinds of non-biodegradable plastic packaging for example, if traders coming from other parts of the UK could simply ignore them, relying on the mutual recognition principle. I detected also a fear that barriers to trade across borders would be erected as regards high-volume goods such as barley, whisky, seed potatoes and lamb. I suggest that fears of that kind are exaggerated and unfounded. Erecting barriers of that kind would be in nobody’s interest. In any event, the frameworks system is carefully crafted. It depends on the agreement of all four nations, and there is a disputes resolution system should anyone feel that what is being proposed is unreasonable.
The outstanding virtue of the common frameworks process is the carefully nuanced way in which it addresses each issue while respecting the devolution settlements. The solutions that it can produce by agreement between all the nations should not be inhibited or neutralised by this Bill. My amendments are designed to do no more than is necessary to achieve that important aim. I beg to move.