My Lords, I begin by thanking all noble Lords who have contributed to today’s debate, and everyone on the two committees, the European Union Committee and the Sub-Committee on the Protocol on Ireland/Northern Ireland, who prepared the two reports that we have discussed today.
It has been an incredibly rich debate and very many interesting points have been raised. It is fair to say that quite a lot of them have been discussed extensively already, one way or another, over the last five years, but I will do my very best to deal with the points made in the limited time I have available. Much has of course changed since the European Union Committee’s report from last year. Nevertheless, as has been noted, the report correctly anticipated many of the difficulties we are now facing, in particular, as many noble Lords referred to, the complexity of balancing the commitments in Articles 4 and 6 of the protocol with those in Article 5.
The introductory report from the Sub-Committee on the Protocol on Ireland/Northern Ireland, chaired by the noble Lord, Lord Jay, identifies many of the
issues that we must confront if we are to deliver a sustainable solution for Northern Ireland. Of course, as has been said, the date of its finalisation coincided with the publication of the Command Paper, which means that the very latest evolution of the position could not be fully taken into account. The report is no less powerful and useful for that in its scrutiny of the operation of the protocol and I am grateful to the committee for it. The Government will respond later this month; lots is happening but, in doing so, we will of course provide the most up-to-date response possible, with an eye on the situation in Northern Ireland and on talks with the EU, which both continue to evolve rapidly. That timing will also us time to comment on the planned joint consultative working group which—to the point from the noble Earl, Lord Kinnoull—will take place tomorrow and on a potential specialised committee, which may take place during this month. If that is the case, we will reflect those in our response.
I also thank the noble Lord, Lord Jay, for his comments on scrutiny. It is of course our intention—I repeat it again—to ensure that the committee has what it needs to do its job in these very unusual circumstances.
As I was listening to the debate, I was reminded of the very well-known opening line from Anna Karenina:
“All happy families are alike; each unhappy family is unhappy in its own way.”
What I have heard is nobody being particularly happy about the protocol, but everybody having a different set of problems with it. Unfortunately, it is the responsibility of the Government not just to analyse but to act, and that is what we intend to do. That is what we have set out in the Command Paper and that is how we intend to take things forward.
Against the background of the comments on the two reports that we have been debating, the Government of course agree with the analysis that there has been significant economic disruption in Northern Ireland. As the noble Lord, Lord Dodds, noted, this affects everybody in Northern Ireland, not just a part of it. Much of the problems that we face can be attributed to the EU’s rigid focus on protecting the single market over and above other elements of the protocol. This has forced businesses to engage in these burdensome and disproportionate customs and agri-food requirements and has caused significant trade diversion as companies reorganise their supply chains. I agree with the noble Earl, Lord Kinnoull, that companies could consider—indeed, they arguably are, in the worst case—the viability of operating in Northern Ireland at all.
We have also seen a degree of political instability and community unrest, exacerbated by concerns—about which we have heard today—that there is a democratic deficit with large volumes of EU law applying without any say for the people of Northern Ireland. I agree that significant constitutional and democratic issues are raised by the protocol. My noble friend Lord Moylan put them very clearly. They are also touched on in the court case, the judicial review, which several noble Lords referred to. I will not go further on that as it is under appeal, but it is obviously a significant case.
I will pick up a couple of points made by a number of noble Lords. The issue of why the Government agreed the protocol in the first place was, not surprisingly,
touched on by many—the noble Baroness, Lady Suttie, the noble Lords, Lord Thomas, Lord Kerr and Lord Empey, and, perhaps most strongly, the noble Lord, Lord Hannay. Many noted that the protocol was agreed by this Government and wondered why we agreed a deal the difficulties of which are so evident. In answer, I refer to my noble friend Lord Caine’s description of the circumstances that led to the unsatisfactory joint report at the end of 2017. As he rightly said, that shaped everything that followed.
In paragraphs 13 and 14 of the Command Paper, we set out our analysis of the situation. We point out the consequence of the then Parliament’s decision to undermine the Government’s negotiating hand at a critical moment in these talks. As we say in the Command Paper, in those circumstances, it was right to agree the best compromise we could, which allowed the UK as a whole to leave the EU in a genuine and meaningful way, without being locked into the backstop and enabling a free trade agreement such as that which we subsequently agreed. We feared that some of the elements of the protocol that were forced upon us in those final days and insisted upon by the EU would turn out to cause problems, and we were right in that analysis. Nevertheless, as many noble Lords said, that is how we have got to where we are now.
The noble Lord, Lord Purvis, and the noble Baroness, Lady Suttie, asked whether this is the best of both worlds, having agreed the protocol. Is the right to access the single market important? I am with the noble Lord, Lord Dodds, on this: he pointed out, as is correct, that Northern Ireland’s economic links are overwhelmingly with Great Britain. Access to the single market does not, in our view, compensate for disruption of those links. The important thing is the economic unity of the UK; the protocol purports to protect the UK single market, but it does not, at the moment.
If there is relative calm in Northern Ireland at the moment, it is because the proposals in our Command Paper are recognised as serious and enjoy a lot of support, and because there is an expectation that the EU will take them seriously. We therefore agree with the assessment of the committees’ reports that the UK and EU must collectively take urgent action to address the situation as it now is. If our proposals in the Command Paper were agreed, they would satisfactorily address many of the reports’ conclusions, including those on at-risk goods, supplementary declarations, parcels, medicines, livestock, pets, VAT, quotas—the list goes on.
As we know, the problem is that the protocol is not delivering in its current form. It is not delivering on its core objectives: to minimise disruption to everyday lives, to respect Northern Ireland’s integral place in the UK’s internal market and, above all, to preserve the delicate balance in the Belfast/Good Friday agreement, in all its dimensions. Once again, I very much agree with the noble Earl, Lord Kinnoull, that the protocol must ultimately be viewed through the lens of the peace process.
This situation needs to be fixed. We would prefer to do so by negotiation and have set out proposals to that effect. We believe they are extremely reasonable. As
the noble Lord, Lord Thomas, noted, they work with the grain of the protocol. They do not scrap it or sweep it away. We agree with the noble Lord, Lord Wood, that simply scrapping the protocol is not a solution. There will always need to be a treaty relationship between the UK and EU covering Northern Ireland. The question is: what? Our proposals would put that on to a different and more sustainable footing.
Substantively, they would differentiate goods moving from Great Britain to Northern Ireland according to destination and we, as the UK Government, would take on the responsibility of managing those processes ourselves. They would enable goods of both standards, UK and EU, to circulate within Northern Ireland, thus eliminating one of the major impediments in practice to maintaining the UK’s single market.
In this context, the noble Baronesses, Lady Chapman and Lady Suttie, and the noble Lord, Lord Hannay, again raised the question of an SPS agreement. Our proposals as set out in the Command Paper would deal with the issue of agri-food and food standards by this dual-standard proposal for Northern Ireland. As we say in the Command Paper, a tailored SPS agreement could certainly help support those arrangements, but they are not essential to them. We have put forward such a proposal. It has not been discussed as much as we would like, but perhaps it will be in the future.
The noble Baroness, Lady Chapman, also raised Article 10, which, as she rightly noted, is touched on in the Command Paper. It is correct to say that Article 10 is to a large extent superseded. We will soon have a clear, legally binding framework for state aid and subsidy policy within the UK. It makes sense to fit arrangements in Northern Ireland into that context rather than the other way round.
To make all this work, we are ready to put in place exceptional arrangements for data sharing to reassure the EU, and, as has been noted, we are ready to penalise those looking to export to the EU goods which do not meet EU standards. These would be significant changes to the protocol, but they are still highly unusual by international standards. They would represent a huge compromise by the Government: to enforce others’ rules within this country.
If these arrangements under the protocol are to be sustainable, they must be underpinned by an amended governance framework. I am afraid I do not share with the noble Lord, Lord Thomas, the benign view of the European Court of Justice and the way it has worked. Our view is that, in the sensitive situation of Northern Ireland, the best way forward is to remove the role of the EU institutions and the jurisdiction of the court by negotiation if we can. I have met many in Northern Ireland. I know that the pre-eminence of these institutions has fostered a sense that Northern Ireland is being treated like an EU member, to be held in compliance in relation to rules over which there is no say and without any of the checks and balances that apply if you are a normal member state.
The noble Lord, Lord Kerr, raised north-south bodies and went a little further by suggesting that a sensible way forward would be for Northern Ireland to have some representation within the EU institutions while these arrangements applied in Northern Ireland.
It probably will not surprise the noble Lord to hear that I am not a fan of that solution. The UK is not a member state of the European Union; it is not represented in the EU institutions. It could not make sense for a part of the UK to be so represented. More to the point, I do not think it would help reassure those concerned about their identity and the status of Northern Ireland within the UK if we went down that road. It is not a useful way forward. As my noble friend Lord Hannan noted, it would pull Northern Ireland further into the EU’s orbit in a way that would exacerbate some of the difficulties rather than help resolve them.
The reality is that disputes in Northern Ireland are best resolved not through imposing the EU’s legal order but by finding compromises through arbitration that can balance all the objectives of the protocol and win the support of everybody in Northern Ireland. We believe that is the right way to proceed.
As I have said, we would prefer to proceed by negotiation. I agree with the noble Lord, Lord Jay, and the conclusions of the committee that this is the most constructive way forward. I welcome the comment of the noble Baroness, Lady Chapman, that she has noted a change of tone in the way that we have pursued things in recent weeks.
We now need the space to conduct the necessary discussions with the European Union as part of a meaningful political process. That is why, straight after publishing the Command Paper, we proposed a standstill in operating the protocol to create room for exactly those negotiations. That is also why, as I have noted, last week we announced that the protocol will continue to operate on its current basis for now. The current processes for moving goods between Great Britain and Northern Ireland are maintained, and the grace periods and easements remain in place.
The Commission has noted this decision and has said that the current legal actions are on hold. We too welcome this change in tone from it, which I think allows room for discussion. It will also ensure that businesses can have confidence that there are no cliff edges in operating the protocol and that consumers in Northern Ireland can continue to be supplied. However, the extension of grace periods is not and cannot be a permanent solution to this problem and something more durable needs to be found. I can certainly reassure the noble Baroness, Lady Hoey, that our aim is not to continue this situation indefinitely. The current situation is designed to create space for discussions; that is its purpose.