Relevant documents: 14th Report from the EU Select Committee, 24th and 26th Reports from the Delegated Powers Committee, 17th Report from the Constitution Committee
We come to the group beginning with Amendment 7. I remind noble Lords that anyone wishing to speak after the Minister should email the clerk during the debate. Anyone wishing to press this or anything else in the group to a Division should make that clear in the debate.
Clause 2: The mutual recognition principle for goods
My Lords, my purpose in moving Amendment 7, which would exclude imported goods, is to emphasise, in rather stark terms perhaps, that the Bill goes considerably further than simply saying that goods made in one part of the UK must be able to be sold in any other part.
As written, it allows any good that one part chooses to import to be sold throughout the UK, with absolutely no say by the Governments or legislatures of the other three countries. So, if Northern Ireland, for any reason, permitted chlorinated chicken to be imported—although I am absolutely confident that it would not—those delightful carcases would automatically have the right to be sold elsewhere in the UK. Similarly, if Scotland accepted a very high salt content in crisps or we in Wales had too much sugar in our chocolate, or anything else like that, we would be able to import those things in any one country and they would automatically have the right to be sold elsewhere.
It could be something that we do not want for all sorts of reasons. For example, England might import something that perhaps does not damage particular producers, consumers or the environment within England but could affect farming, consumers or households elsewhere. With agriculture, we would well understand the problem with sheep farming—hill sheep farming in Wales being more affected. Certain things imported into England could have a more devastating effect somewhere else; nevertheless, once imported into one country, there would be an automatic right for a good to be sold across the kingdom.
When we were in the EU, of course, we had similar rules on what are called “goods on the market”, whereby goods guaranteed as safe, desirable or acceptable in one country could appear in the other 27 markets. However, the difference is that the EU has a system of mutual recognition of checks, standards, assurance and monitoring, as well as the safety alert system, which applies to all member states, so that each nation has confidence that, when something is imported and on the market in one country, it is equally acceptable in any of the other member countries.
My Lords, at this stage of the Bill, Amendment 8, like Amendment 7, is a probing amendment, but I should just like to comment as an aside on the reference in the amendment to the definition of “food”. Most of our discussion on food safety centres on the Food Standards Act 1999 and the Food Standards Agency, but the bedrock of food safety in the country is the Food Safety Act 1990. Thirty years on, that Act, introduced by a Conservative Government, has really stood the test of time. The change made in 1999 was to separate policy for protecting consumers from the department at the time—MAFF, the producer department.
I do not want to disappoint my noble friend but I shall deal only with animal feed issues. I took the view that there will be plenty of opportunities to raise food issues—of course, I reserve the right to come back to those—but I want to deal with some animal feed issues. There is no lobby and no brief on this; I am simply using my own experience on some aspects and have made a modest internet search for some numbers. It is a multi-billion pound business, and it is crucial for human and animal safety that it is regulated effectively. There are some matters relating to animals—we are talking about food animals—which are all-island matters and which I am not at all clear about, and the Bill does not make them clear.
Animal disease control is currently an all-island matter on the island of Ireland. I say that for obvious reasons, but does that remain the case under the Bill? That is a point that really needs bringing home. If you looked at the other aspect, particularly in Schedule 1, you would think that we in the UK were isolated. We are not. Northern Ireland is on the island of Ireland, and there are some issues—I will give some other examples—where all-island matters take priority.
Animal feed is an area worth looking at because, to be honest, it is not considered to be as important as food, although of course it is. I recall that when I was at the Food Standards Agency—this was under the then chief executive, Tim Smith, who of course is currently distinguishedly chairing the agriculture trade commission and others—discussions with Thompsons in Belfast, the largest feed mill in Europe, centred on a scheme for controlling animal feed imports into the island of Ireland. This was industry-led and was to be through very few ports indeed. Today Thompsons operates an animal feed joint venture with R&H Hall in the Republic via Origin Enterprises to provide grain and non-grain ingredients to animal feed manufacturers and the flour milling industry across the island of Ireland. I want to know how that is affected by Clause 2.
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If Wales or Scotland—I do not know much about the transfer of feed from England to Scotland so I will not go into detail—wanted to give a wide berth to feed checked by some English local authorities that are failing, which would seem sensible, how could they do that under Clause 2? That is a fundamental question. There is evidence from the independent regulator that the system is failing but feed is a tradeable commodity that travels around the country, a bit like animals, so how can it be covered by Clause 2?
My final point relating to animal feed, because I want to be brief, concerns food waste. In some quarters there are calls for the return of pigswill as a means of using food waste. Given that one-third of what we grow is for food production animals and that too much of the other two-thirds is wasted, that is a very seductive argument for those who, like the Greens, think they are trying to save the planet. Pigswill was banned by the UK in 2001 and then in the EU in 2003 but it is still used in some other parts of the world; I know it is used in Japan in particular. Can the Minister confirm in due course that there are no plans to return to its use in the UK? There were rumours, when Michael —we will call him “Green”—Gove was at Defra, in his green mode, that he was giving the idea some thought. What is the WTO view on imports from nations that use pigswill to lower the cost of production?
It is self-evident why it was banned, although I will not go into the detail. We were feeding animal protein back to animals, and we discovered that that is not a very good thing to do. In terms of giving to animals what we might call food waste that humans have wasted, we have to be particularly careful, because it cost this country billions of pounds in 2001 to deal with the foot-and-mouth outbreak that was traced back to pigswill manufacturing. This is a fundamental issue and I want to know how it is going to be prevented from reoccurring if the operation of Clause 2 is left as it is. I will leave it there.
My Lords, I am delighted to follow the noble Baroness, Lady Hayter, and the noble Lord, Lord Rooker. I shall speak to my own amendments but I have a question following on from what they have both said which relates to an earlier debate, particularly when in summing up the noble and learned Lord, Lord Hope of Craighead, linked Clause 39 of the Agriculture Bill to the clause relating to the movement and mutual recognition of goods.
Clause 39 of the Agriculture Bill relates to marketing standards, and I have a specific question to put to my noble friend the Minister that I hope he will address head on in view of the remarks made by both the previous speakers. If, in the course of events in the new internal market arrangements under this Bill, the Food Standards Agency with responsibility for England came out with different provisions to Food Standards Scotland, and in the event that the latter adopted different rules for, especially, animal products, food and animal feed, how would that impact on the free movement of goods? Could it eventually mean that there was no longer any mutual recognition, and Scottish goods could not pass into England or other parts of the United Kingdom in those circumstances? Would the same apply if the Food Standards Agency in England produced different rules to other parts of the United Kingdom? It is extremely important that we understand those impacts.
I will now speak briefly to my Amendments 20, 22, 26 and 45. I am extremely grateful for the extensive briefing I have obtained from the Law Society of Scotland and for its drafting of these amendments, which are probing in nature but address some key issues. Amendment 20 is a probing amendment to seek the Government’s interpretation of Clause 4(2)(b). Clause 4 purports to mean that certain regulatory divergences that currently exist will continue to be able to be enforced against goods produced in or imported into other parts of the United Kingdom and would not be able to be so enforced were they introduced after the mutual recognition principle comes into force. However, the Law Society of Scotland has noticed that, in order for a statutory requirement in a part of the United Kingdom not to be a relevant requirement for the purposes of mutual recognition, the conditions in subsection (2) must be met.
My Lords, Amendment 21 in my name is effectively consequential on the changes I have already proposed to ensure that the market access principles are applied only once regulations have been brought forward, relating to a specific type of goods, when it has proved impossible to reach agreement through the common frameworks process.
The Bill proposes that legislation already in place at the time Part 1 comes into force cannot be caught by the market access principles—at least where the restrictions imposed by that legislation are not ones that exist across the United Kingdom. This amendment would simply apply that same principle in the context of a process whereby the market access principles could only be switched on by regulations approved by both Houses, meaning that restrictions to the exercise of devolved powers would only be switched on in specific areas where the Government have made regulations to that effect. In other words, the rules on non-discrimination would apply only where a devolved legislature sought to introduce new statutory requirements in the particular area covered by the regulations. This seems to be both logical and respectful of devolved competencies.
I also record my support for other amendments in this group, notably Amendments 7 and 8, which seek to limit the mutual recognition principle in ways that seem thoroughly appropriate, and Amendment 20 in the name of the noble Baroness, Lady McIntosh. This last amendment touches on an important point and would, on its own, if adopted, broaden the scope of the exemption for prior legislation. It seems to me—and please correct me if my understanding is wrong—that this would address one of my major concerns, which is that the legislation seeks to prevent regulation that increases standards but does not impede regulation that lowers them.
The Bill as currently constructed would mean that, if this Parliament decided to legislate in England for the current ban on the use of hormones in beef cattle to be removed, for example, then the fact that a ban had previously existed in Wales and Scotland could not be invoked to prevent the sale of such beef in those nations. This is because the condition in Clause 4(2)(b) would require the Welsh and Scottish Governments to demonstrate that a “corresponding requirement” had not previously existed in England.
My Lords, I have added my name to Amendment 21 to which the noble Baroness, Lady Finlay, has spoken. It seems to me that the clarification that the amendment is seeking is to understand whether, where a statutory regulation, rule or law is passed in a devolved Administration, that would exist until such time as the UK Government decided something different. Whether or not that is the intention of the Government, I do not understand.
The difficulty that I face in trying to work out the logical progression and the sequencing of what is happening in this Bill is correlated with the issue that we had on the common frameworks. It seems to me that the Government are moving down a dual carriageway in which one road is the internal market Bill and the other is the common frameworks progression, and between them is a brick wall. I do not understand how you can cross over between one and the other. That is the understanding that I got from the discussion we had in the earlier days in Committee.
The problem is that by the end of this year—I will use this as an example, which I would like the Minister to respond to at the end, if he would—the framework on emissions trading, which is a legislative framework, will be completed. I understand that it is with Ministers for final sign-off, but it has been agreed. If that emissions trading legislative framework is agreed, presumably there will then be legislation. I would like to understand where that legislation fits within the context of this Bill. Clearly, that has been reached by agreement—it has been agreed by all parts, including the United Kingdom Government, that there will be a legislative approach to this particular area of work. Then, of course, there will be a piece of legislation that sits either within this Bill or without it. I would like to know where that legislation will occur: will it be stand-alone legislation or will it be an amendment to the Bill we are discussing today?
My Lords, I would like to remind the Committee of two things about this Bill. First, the Bill is to facilitate trade between all parts of the United Kingdom, not make it harder. Secondly, businesses favour barrier-free trade. That was the very clear message that came from the consultation on the White Paper during the summer. We should be trying to minimise the possibility of barriers being put up to trade within the United Kingdom.
If we allow exclusions of goods from mutual recognition, that will inevitably lead to higher costs. This is analysed in quite considerable detail in the internal market White Paper. Costs generally end up being borne by consumers. Excluding goods can also result in businesses deciding to withdraw from certain markets, which can in turn restrict consumer choice. I know the noble Baroness, Lady Hayter, is keen on consumer protection; she reminded us of that on the first day of Committee. Restricting trade tends to operate against consumer interests, so we should be very careful in trying to put amendments to the Bill that make trade more difficult. I also remind noble Lords that restricting trade is more likely to hit the devolved Administrations’ economies because of their greater dependence on exporting to the rest of the United Kingdom.
I want to comment on a couple of the amendments in this group, Amendments 7 and 8. The noble Baroness, Lady Hayter, said that Amendment 7 was a probing amendment, but by seeking to exclude imports into any part of the United Kingdom we are reducing the internal market rules to a very parochial interpretation. It seems to ignore the plain fact of commercial life, which is that there are complex supply chains and complex distribution logistics. It is of course the way we have been living in the EU; at the moment, we are quite accustomed to importing in one place and those imports being accepted throughout the rest of the community.
My Lords, I support Amendment 7 in the name of the noble Baroness, Lady Hayter, and Amendment 21 in the name of the noble Baroness, Lady Finlay.
I shall start with Amendment 7. First of all, I entirely agree with the noble Baroness, Lady Noakes, that importing and exporting goods is part of the commercial life of this country. That applies across all parts of the United Kingdom, and one can well understand the point that she makes about the importance for the devolved Administrations of maintaining that system with as little interference as possible. However, the point to which Amendment 7 draws attention is a matter of real concern to the devolved Administrations. As she explained, its effect appears to be to deny them any involvement in decisions on the importation of goods from overseas, to which they might wish to take objection. Various horror stories are of course passed around as one discusses this issue, but I am not concentrating on them so much as I am on the simple lack of ability to contribute to a discussion as to whether or not these goods should be imported.
If one was talking about legislation, I suppose one would say the Sewel principle would apply and consultation would take place, but there appears to be nothing that allows for that. The effect of the way the provision is worded is that something that comes in can take the benefit of the principles and pass without any kind of control to the devolved Administrations, without their having any say. That is of real concern. This is a probing amendment, but it requires some explanation of what place, if any, the devolved Administrations have in trying to resist the importation into, and transmission across borders within, the UK of goods to which, for one reason or another, they might wish to take exception.
That covers Amendment 7. As for Amendment 21, I was attracted by what the noble Lord, Lord German, said about the dual carriageway—the parallel lines—for a particular reason, which I have not mentioned before but must be emphasised. The common frameworks are living arrangements. There is no point at which one can strictly say that a framework has come to an end, although I confess that my own amendment suggests that it could happen. These frameworks are open to subsequent discussion and revisiting as things change. For example, much of the UK emissions trading system is based on EU law and treaty arrangements that could change. If that happened, the framework would be revisited, and, no doubt, different policy decisions may need to be taken. The same is true of the hazardous substances framework.
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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It is not that we distrust any of the fellow Governments in the UK—even Mr Johnson’s—but the worry is the denial of the involvement of the other three nations in decisions on what to import by the fourth. Of course, that then impacts on what can be sold on that market, and that is the problem—the lack of that involvement. The noble Lord will understand that this is more of a probing amendment but I think that it needs justifying and some explanation of the risks in relation to imported goods.
Amendment 8, in the name of my noble friend Lord Rooker, who is of course something of an expert on the subject, is more targeted and would exclude food or animal feeding stuffs from the mutual recognition principle. Obviously, I will let him make the case, rather more effectively than I ever could, for himself, but I should say to the Minister that my noble friend’s amendment is absolutely on the button with regard to consumer worries, so he will need some rather robust arguments for that amendment not to be considered on Report. I beg to move.
To give a sense of the importance and scale of livestock, it is much more important to the economies of Northern Ireland and Ireland than it is to the rest of the UK. I will give just one example. If we compare human populations with those of the four-legged food production animals, cattle, sheep and pigs—I have excluded horses, which people can get uncertain about; we slaughter horses for feed but we export them—in the UK the ratio is approximately 0.7 of an animal per person, but in Ireland it is 2.6 animals per person and in Northern Ireland the figure may even be 2.7. So one can see that livestock is much more important to the economies of the island of Ireland than it is to the rest of the UK.
Animal genetics are just as important on an all-island basis. For example, Elite Sires has been Ireland’s leading provider of high-quality pig semen for 30 years. It is the sole provider of DanBred cutting-edge swine genetics on the island of Ireland, based of course on Denmark’s remarkable success in pig production. It delivers what it says—because I could not argue between one sample of swine semen and another—is the best swine semen in the land all over Ireland at the time when the animals are ready. How is that affected by Clause 2?
I mentioned that the safety of feed is important. The Food Standards Agency and Food Standards Scotland are responsible for, and carry out, the function of official controls, to use the technical term, via local authorities. That is the case with most food safety issues as well. However, local authorities, particularly in England, have not in the main taken feed issues as seriously as food. The Food Standards Agency, being aware of that—I am speaking now specifically about England—has taken many steps to try to improve the situation, but the picture in its latest assessment is not a good one. I will give some short quotes from the executive summary of the latest audit for England of the way that local authorities look at animal feed, published as long ago as October 2016. Local authority service plans
“had not adequately taken into account the Agency’s National Enforcement Priorities … There had been only limited implementation of the scheme for earned recognition.”
There was “little evidence” that local authorities
“had reviewed the impact of earned recognition on the delivery of official controls”.
Local authorities were
“using an out of date version of the Association of Chief Trading Standards Officers … risk scoring system”.
Half the local authorities audited
“had incomplete feed registers and databases”,
which are absolutely fundamental to traceability. It said:
“Auditors were unable to assess the effectiveness of formal feed law enforcement actions as none had been carried out in the previous two years”.
Lastly, none of the English local authorities audited had
“any specific documented procedures for assessing the accuracy of official feed reports to the Agency”.
I have to say that if the Government want to check on this situation and there has been no significant improvement in the last few years, that function should probably be removed from English local authorities because they are not up to the job. It is fundamental to human and animal safety.
There are two conditions in subsection (2), and my comments will relate specifically to subsection (2)(b), which provides:
“The conditions are that, on the relevant day … there was no corresponding requirement in force in each of the other three parts of the United Kingdom.”
What provisions do the Government imagine will be captured by the current terms of Clause 4? For example, food and feed law is mainly derived from EU law, and, in terms of the European Union (Withdrawal) Act 2018, this body of law is retained EU law, implemented throughout the UK. Are Scottish food and feed regulations, and, by implication, all retained EU law, excluded from the application of the mutual recognition principle because there are corresponding requirements implementing the same EU obligation, albeit in slightly different terms, to fit into the relevant law in each of the other parts of the United Kingdom? How does the mutual recognition principle relate to common frameworks? My Amendment 22 simply has a consequential effect, following on from the deletion of Clause 4(2)(b), making the necessary changes there.
Amendment 26 probes the meaning of Clause 5(3), regarding the effect of a statutory requirement under Clause 6. It appears that Clause 5(3) would render a statutory provision in devolved legislation “of no effect”. This lacks clarity. Am I right in thinking that the statutory requirement is valid? Is it valid but cannot be enforced? Is it voidable? It is also not clear regarding the application, if any, of Clause 5(3) if the statutory provision is in an Act of Parliament that applies to England only. I would be grateful if the Minister would take this opportunity to clarify this.
The amendment applies the statutory language that exists in Section 29 of the Scotland Act 1998 to Clause 5(3) in an effort to bring clarity to the point. Section 29(1) provides:
“An Act of the Scottish Parliament is not law so far as any provision of the Act is outside the legislative competence of the Parliament.”
It is not the intention of this amendment to amend the Scotland Act 1998 but rather to say that that Act provides, in my view, much clearer language than the Bill. These statutory provisions could be challenged by private parties and will presumably also be a basis for challenging devolved legislation. Assuming the inability to modify the Bill under Clause 51, it will in all cases prohibit legislation that is contrary to its principles. Presumably that is the intention, but it is not the clearest way that that outcome could have been achieved, so I am grateful for this opportunity to seek clarification.
Finally, Amendment 45 is a probing amendment, looking to understand a phrase the Government have used: “substantive change”. What do they interpret as substantive change in connection with changes to statutory requirements? I am grateful for this opportunity to speak to these probing amendments.
In a letter from the Minister that I received just as we started this debate, he stresses, if I have understood it correctly, that a potential for harmful regulatory divergence did not exist during our membership of the EU, but, at the end of the transition period, that will change and create a significant risk of harmful divergence between the four nations. He goes on to write that the Government have consulted widely on the proposals and have had overwhelming support from businesses and industry organisations on the steps they have outlined to protect our internal market from discriminatory behaviours.
I would be most grateful if the Minister could kindly tell us, either today or in a letter following today’s debate, details of the results of that consultation because I think it is important that those of us speaking to amendments really understand the background of the results that came in. I will be most interested in the Minister’s reply to all the amendments in this group, particularly Amendment 20.
There are two other frameworks—one on nutrition and one on hazardous substances—that are also virtually complete. They are non-legislative, and I understand that they will be agreed by Christmas. Take those three areas: on one side we have a legislative proposal and on the other we have a non-legislative proposal that the Government have agreed will be a non-legislative proposal and will therefore not require other legislation. And it will not require this legislation, because that is what the Government have agreed. Perhaps the Government could explain how the two are interconnected.
I understand that the reason for turning down a frameworks-only approach is because there are gaps, but we are yet to find out what the Government have established is a gap. We have asked for a current example that we can use, and I hope that, over the past few days, the Minister has found a current example that he can give us.
It seems to me that the fundamental principle that Amendment 21 is trying to establish absolutely is that, where there has been a legislative agreement or legislation that has been passed by either Wales, Scotland or Northern Ireland, when the Government introduce new legislation or regulations on the back of this legislation, such legislation will look only at the future and not the past and will have no retrospective effect.
It also seems to me that the noble Baroness’s amendment would, in effect, impact exports between different parts of the United Kingdom. For example, if something was exported to Wales and imported to England, it would stop it then being imported into Scotland with the protection of the internal market Bill. That does not seem to make any kind of sense. It is pretty clear from the impact assessment that Wales and Scotland in particular are reliant on intermediate goods coming from other parts of the United Kingdom.
The noble Lord, Lord Rooker, spoke to Amendment 8. I did not follow what he said about pig semen because I do not think that, by any definition, pig semen is an animal feedstuff. I did have a chance to check the definition of “animal feedstuff” while he was speaking, and it is not. Perhaps we can put that to one side. We have to understand that if we try to exclude food and animal feedstuffs from the UK internal market mutual recognition rules, this will again potentially impact the devolved Administrations the most, given their import and export profiles. For example, if you look at Wales’s agri-food chain, you will see that 48% of agricultural inputs to Welsh food manufacturers come from the rest of the UK and 31% of food and drink sold in Wales comes from the rest of the UK. We should be thinking really hard about who we are likely to hurt when we put amendments such as this in the Bill, which restrict barrier-free trade.
One has to bear in mind these are two living instruments working side by side: the UK internal market and the common frameworks system. The fact that, as the Bill has it at the moment, there is no means by which they can communicate with each other, is a matter of real concern, because it affects the whole structure of how these things co-operate and will co-operate in the future, in ways we cannot yet predict. That underlines the importance of trying to find a solution to the point I drew attention to on Monday of making some arrangement whereby the decisions taken, based on common framework decisions, to legislate in the devolved Administrations are protected against the effect of the market principles, particularly the non-discrimination principle, which has very broad reach indeed.
The great value of the amendment of the noble Baroness, Lady Finlay, is that it has drawn attention once again to that very real problem. It requires some response from the Minister so that we can have some idea of how he thinks these two parallel carriageways, stretching out into the future, will ever meet and co-operate with one another.