My Lords, it is a pleasure to follow the noble and learned Lord and to agree with the thrust of his argument, which he made very well. The noble Baroness, Lady Noakes, made the valid point that the purpose of our internal UK economy is to have as few barriers as possible while recognising that we are an entity of four nations with distinct areas that can make their own policies. That is not new. The Agriculture Act 1970 had different applications within the Scottish, English and Welsh agricultural sectors. So many of the areas we are talking about within these groups predate the European Union, so the principle that we have had a different approach in many of the component nations is valid.
The Government, however, have introduced this new concept, which means, for example, that the UK’s biggest food and drink export, whisky, could now be open to a great problem because a decision made by one country, Scotland, could act against the interests
of farmers in England who provide products to serve that. It is the barley question, which the Minister has referred to and on which I have asked questions before. As the noble Lord, Lord True, indicated, in summing up the debate on the previous group on Monday and correcting the noble Lord, Lord Callanan, that is an area that will be covered by a legislative framework.
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The noble and learned Lord, Lord Hope, and, to some extent, the Minister, may be correct that while this framework will put in legislation recognising the powers they have had during membership of the European Union, and will continue to have, exercising some of those powers previously would have been permitted, even though it was acting against market access principles, because of environmental objectives. The Government are saying that that should no longer be the case. Until this point, I accept this thrust of the Minister’s argument, but I have been scratching my head about why the Government have inserted an exemption on fertilisers and pesticides as an amendment in the Commons stages. The Minister told me on Monday that if the Scottish Government wish to use some of the powers they have always had to amend the maximum residue level of the use of pesticides, that would now effectively trigger this Act, and that would be disapplied because it would be against market access principles and mutual recognition. That is the argument that has been put forward. Therefore, that would protect English farmers to be able to supply to Scottish distilleries.
Paul Scully, the Minister’s colleague in BEIS, moved an amendment in the House of Commons on 22 September that exempted the use of fertilisers and pesticides from the market mutual recognition principles. The Minister said this in the Commons, which I thought was necessary and is now in Schedule 1, under “Fertilisers and pesticides”:
“That is necessary to allow each part of the UK to prevent the movement and use of certain fertilisers that may be dangerous, and of pesticides unless they have been assessed as safe and authorised for use in that part of the country, thus allowing for local environments to be considered and protected.”—[Official Report, Commons, 22/9/20; col. 895.]
If the Scottish Government, or the UK Government acting on behalf of England, indicated that they chose to not certify the use of a pesticide on, let us say, barley, then under this Bill, it would be exempted from the mutual recognition principles. The Government have created the very problem that the Minister said this Bill is meant to solve in the amendment they passed on 22 September, to allow local environments to be considered and protected. How does the authorisation of the use of fertilisers and pesticides—if they are used, they will be in the product—being exempted from the mutual recognition principles, and creating the problem he outlined to me as potentially existing, fit with what he is saying about the minimum residue levels of that pesticide on that barley? He will be able to answer that question in responding to this, because I think it is wholly inconsistent.
The second thing I wanted to ask for was just a point of clarification from the Minister—this is something I get confused about—on links with the importation of goods. For goods coming into the UK, the Isle of Man is not considered part of the UK by Clause 15,
but it does not mention services. I wondered why that would be the case. If goods coming from the Isle of Man are not considered to be within the UK internal market, but services are, I am not sure why that would be the case.
Thirdly, I am grateful to the noble Baroness, Lady McIntosh, for raising, in detail, the question I asked the Minister on Monday. If measures are already in place in another part of the United Kingdom, the mutual recognition principles would not apply. Why is that better than the framework route, which is, by definition, common across the different nations within the UK?
On the point about the definition in Amendment 45 of “substantive”, it would be useful if the Government clarified this. I asked elsewhere where other references to “substantive” are defined and was told that it is in Clause 24 of the Finance (No. 2) Act 2017, with the definition of “equivalent”. It states:
“For the purposes of this Part of this Schedule, arrangements are ‘equivalent’ to one another if they are substantially the same as one another having regard to—(a)their substantive results or intended substantive results”.
Is this the Government’s intended definition of “substantive” in this legislation? The reason why it is important is because we would need to know what is a substantive change to a measure that is in place already.
We know that the Government do not intend to apply the principles for measures that are already in place unless there is something equivalent in another part of the UK, but if there are changes that the Government consider substantive, it would come within the scope of this legislation. One reason this is of concern would be, for example, the minimum unit price in Scotland. That legislation has a sunset clause and must be reviewed before May 2024, so there has to be a successor piece of legislation to this. If the Scottish Government, as a result of the review, indicated that they wished to change the figures—the pricing level—is that a substantive change?
On one reading, it could be fully within a breach of the market regulation principles because it is potentially a dramatic increase or decrease in the minimum unit price. Or is the substantive change to the policy objectives? If there is no substantive change to the policy objectives, how that measure is changed could be quite dramatic but the policy objectives would remain the same. The Bill does not state what the substantive nature of the change would be. Would it be on the impact? I think that the Government’s intention was that it would be a substantive change that had an impact on the single market, because if it were not, the CMA would not be empowered to review and challenge it. Can the Minister clarify that point? Is the substantive change on the policy objectives or on the impact of the single market?
The same will apply for university fees. The Minister said, I believe, that in Scotland, free tuition for Scottish students would not be impacted by this legislation because it is in place at the moment. If the fee level changed, would that be considered a substantive change for Scottish-domiciled students, for example? At the moment, the market access principle of mutual recognition is not for citizens’ rights; it is for the goods or services they either buy or receive. As far as education is
concerned, under this legislation, would a university education be considered a good that is purchased or a service that is supplied? Universities are not considered as public authorities under this legislation, at the moment, so any change to that legislation could be challenged.
The point I want to close on is that moving away from the frameworks agreement to the lack of clarity in this legislation fosters vulnerability. Even if the Government do not think at this stage that some of these will fall into foul, it is not just the Government, or any Government, that would have a dispute; it is individual complainants or companies who will be able to go to the courts on this basis. That is why we are trying to ask so many questions. Without a proper framework mechanism for the courts to interpret, at the moment I fear that, with this Bill, there are far too many grey areas that need to be clarified.