Hilary in the House of Commons
Hilary in the House of Commons

I have been contacted by many constituents about the United Kingdom Internal Market Bill.

I share the concerns raised by my constituents and that’s why I opposed the Bill at Second Reading in the House of Commons. You can read below what I said in my speech on 21 September.

Hilary Benn:
It is a great pleasure to follow that fine speech by the right hon. Member for Staffordshire Moorlands (Karen Bradley). I want to concentrate on how we get out of this mess without breaching international law and the treaty we signed up to. Four issues have caused all this: the question of exit summary declarations, the definition of “at-risk goods”, state aid and third country listing. The Bill deals with only some of those; further legislation is threatened to deal with the rest, but one has to look at them together.

The first thing I want to say is that it seems the Government are in a state of hopeless confusion on two questions. The first is: is the EU negotiating in good faith or not? I asked the Prime Minister that last week at the Liaison Committee and he told me it is not. Earlier that same day, the Northern Ireland Secretary told the Northern Ireland Affairs Committee that the EU is negotiating in good faith, and indeed the Government’s response to that Committee’s report confirmed that. I do not know whether that makes the Minister, for whom I have a great regard, the adjudicator in this matter, but perhaps he might offer his opinion in his wind-up, because the Government do not appear to be of one mind.

Secondly, I believe the Minister referred in his speech—I tried to write down the phrase as I recall it—to, “Harmful legal defaults that were never intended to be used” or words to that effect. If they are legal defaults that the Government object to, it really does raise the question: why did the Government sign up to those legal defaults when they negotiated the protocol and the withdrawal agreement, and signed that and extolled its virtues to the House of Commons?

On exit summary declarations, there is a place for this and other concerns to be resolved, which is in the Joint Committee, through the article 16 process. The House needs to ask itself why the Government have said so little thus far about their intention to use article 16 if a satisfactory agreement cannot be reached; I did not get an answer from the Prime Minister last week and, with respect, I did not get an answer from the Minister today, but it seems that the Government have so little faith in the mechanism they negotiated that they have decided that they need to take powers to breach the terms of the treaty, even though—I remind the Minister—article 168 of the withdrawal agreement says that, “For any dispute between the EU and the UK arising under this agreement, the EU and the UK shall ‘only’ have recourse to the procedures provided for in this agreement. This Bill drives a coach and horses through that sentence, which the Government agreed. In the statement that Ministers put out last week, the Government said that they would use the provisions of article 16 “in parallel with” the powers they wish to take in this Bill. In parallel? I really do not understand that as an argument, because surely they should use the mechanism they have negotiated first, and then if they are absolutely determined to break international law, they can get to that subsequently.

I come back to the point about the Joint Committee. Why have the Government not shared with the House the proposals they have made to the EU side about how goods at risk can be identified? It is simply not good enough. Part of the reason why the Government have got into such a mess is that they have not shared with us how the negotiations are going and have then suddenly produced a remedy that is contrary to international law to solve a problem the contents of which we are not aware of because Government have not shared with Members how things are going.

This is not an academic issue: many businesses that trade into Northern Ireland have absolutely no idea, with just over three months to go, of what the arrangements are going to be—none. There is a responsibility on both parties—the EU and the UK—to give them some clarity. Have the Government proposed using, for example, tariff lines as the way to define goods at risk? Or products and shipments, or companies as the basis? To those who have looked into the issue in great detail, it seems that those are probably the three broad approaches that might be taken. I ask the Government to please be open with the House of Commons on this matter.

On state aid, I find it impossible to believe that the Government did not realise what the full implications of article 10 might be. Everybody recognised that it brought into the ambit of the state aid rules what happens in Northern Ireland, but had it really not occurred to Ministers that there might be reach-back—I think that is the expression—implications for state aid in the United Kingdom? This is currently a theoretical issue, because there are not any cases. The Minister will be well aware that in the wake of Covid, the EU Commission has significantly relaxed the state aid rules. Other EU members are giving state aid to all sorts of companies. The question is how the matter is going to be resolved by means other than resorting to the breaking of international law.

There is a great puzzle in respect of the Government’s position. When the Chancellor of the Duchy of Lancaster appeared before the Select Committee on the Future Relationship with the European Union on 11 March and we asked him whether businesses that trade out of England into Northern Ireland were going to be subject to the full panoply of state aid regulations, he replied:
“No, we do not believe so.”

That was in March, but apparently the Government do now believe so. What happened between March and now to lead them to that conclusion?

The Chancellor of the Duchy of Lancaster also said:

“The subsidy regime that the UK proposes to put in place after we have left the EU”—
we have now left the EU—

“will be one that the EU will recognise as a robust system.”

Here we are in September, and of a robust system for state aid there is no sight yet. How can that be the case? We read reports in the paper that the reason is because Ministers cannot agree on what kind of state aid policy they want.

The publication of such a policy is urgent for two reasons: not only for the purposes of sorting out the problem of potential reach-back, but for making a breakthrough in the trade negotiations. To be fair to the EU, it has moved from saying at the beginning, “You must follow all our rules on state aid in perpetuity,” to now saying rather plaintively to the Government, “Would you be so kind as to give us just an inkling of what your state aid regime is going to look like?” To announce that we are going to follow the World Trade Organisation rules is hardly a revelation, because as an independent member of the WTO we are obliged to follow the WTO rules. As we know, though, they lack important details and do not cover services.

The sooner the Government publish a state aid regime to answer the EU’s question, the sooner they can help the trade negotiations to move forward. Assuming that an agreement could be reached on that regime as part of the negotiations, the Government could, as the Minister will know, use article 13(8) of the withdrawal agreement to amend article 10, which is the cause of the potential problem—namely, reach-back.

The Bill does not deal with third-country listing, and no Bill could, because it is a regulatory decision of the European Union about the terms on which it lets third-country food and animal product imports into its jurisdiction. I happen to think that if the EU were to deny us such listing, arguably the UK could take the EU to the European Court, on the grounds that it was a perverse decision, or indeed the UK could certainly invoke article 16, on the grounds that denying the UK third-country listing was a breach of the good faith obligation under article 5.

I suspect that this is a fuss about nothing, because I can conceive of no such circumstances. The right hon. Member for Chingford and Woodford Green (Sir Iain Duncan Smith) read out the list of all the other countries that have been given third-country status. Well, he cannot tell me that if those countries have been given it, then the EU, which knows what our rules are today—the Government, to be fair to them, have made it clear what the rules are going to be on 1 January, unless and until they decide to change them—will in the end say, “We have no idea how you are going to operate the rules.” I do not think that will be a problem, because it is not a terribly sensible way for two very large trading entities, with big and important agricultural industries, to behave.

In relation to the offending clauses in the Bill, I heard what the Minister said and what the hon. Member for Bromley and Chislehurst (Sir Robert Neill) had to say about the Government’s proposals. In response to what the right hon. Member for Staffordshire Moorlands (Karen Bradley) said a moment ago, whether the illegality is the passing of the law all the way through to the laying of the regulations is not the point. As my hon. Friend the Member for Sheffield Central (Paul Blomfield) and the former Prime Minister, the right hon. Member for Maidenhead (Mrs May), made clear in their own excellent speeches, the damage has been done. It was done the moment the Secretary of State for Northern Ireland got up in the House of Commons and admitted that it was contrary to international law. Normally in a legal argument, the lawyers in the House—I have great respect for them—would be saying, “It breaches the law,” “No, it doesn’t,” “Yes, it does,” “No, it doesn’t.” Well, that conversation was cut dead when the Secretary of State said that it does. That is really irrelevant, it seems to me. I think it is counter-productive.

I urge the Government, as have other Members, to withdraw the clauses and get back to negotiating “the great deal”—I sometimes feel nostalgic for the words that echo through the mists of time: “One of the easiest trade deals in history”; “A deal with the exact same benefits.” I would like the country to achieve such a deal, and the Government’s responsibility now is to stop messing about with this Bill and to negotiate a deal, because time is short, before we leave without one because they fail to reach an agreement.

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