My Lords, I first thank all noble Lords with whom—together with my noble friend Lord Caine and my noble and learned friend Lord Stewart—I have been engaging on this Bill. While there may be different perspectives and views, I am as ever grateful for the courtesy extended to myself and my colleagues and for the engagement that we have had through our conversations.
This Government remain very much committed to upholding the Belfast/Good Friday agreement, which has, as we all acknowledge, for almost 25 years brought peace and political stability in Northern Ireland. Irrespective of the speeches that will follow, I believe that all noble Lords without exception share strongly in this key principle. The Northern Ireland protocol was also agreed with the objective of protecting the Belfast/Good Friday agreement in all its dimensions and, indeed, in avoiding a hard border on the island of Ireland. That was key. Furthermore, it was also agreed by both sides that it would not undermine the wish of the United Kingdom and the interests of all parties in Northern Ireland.
In practice, however, the Northern Ireland protocol is undermining the delicate balance of the Belfast/Good Friday agreement and, as we all know, the functioning of the power-sharing institutions in Northern Ireland. Indeed, the Executive are not functioning at all. The protocol has diverted east-west trade between Northern Ireland and Great Britain and it is creating fractures within the UK internal market. Again, I am sure all noble Lords would agree that this cannot be right and cannot continue. It is also impacting negatively on the everyday lives of people in Northern Ireland. It has
weakened their economic rights and contributed to the sense of a democratic deficit in Northern Ireland—a point to which I will return shortly.
This Bill gives the Government powers to address these urgent political challenges by seeking to fix the practical problems created by the protocol. It allows the Government to restore the balance of the original objectives of the protocol, thereby avoiding a hard border on the island of Ireland and—as I know to be important to all—protecting the integrity of the United Kingdom internal market while also protecting the EU single market.
The Government remain clear—a point that, again, I have shared with colleagues through engagement—that our preference would be to reach a negotiated solution to the protocol with our partners in the European Union. We have always said that we remained open to constructive dialogue and discussions with the European Union on the Northern Ireland protocol. I assure all noble Lords that this remains the case today.
Within the past fortnight, my right honourable friend the Foreign Secretary and EU vice-president Maroš Šefčovič have spoken to reiterate their shared commitment to exploring potential solutions on this very issue. I am pleased to take this opportunity to report to the House in response to a question that I received from noble Lords in advance of Second Reading, including from my noble friend Lady Altmann: I can confirm that officials from the UK and the European Union are now conducting further technical discussions on the protocol.
As my right honourable friend the Foreign Secretary agreed with Vice-President Šefčovič when they spoke recently, both sides—the UK and the EU—want to look for solutions to protect the Belfast/Good Friday agreement. That is another sentiment that I know has been echoed in contacts with the Irish Government, including between my right honourable friend the Foreign Secretary and the Irish Foreign Minister, Simon Coveney, most recently last week and over the weekend.
However, the situation on the ground in Northern Ireland remains urgent, and the Government cannot allow that to continue. We must ensure that the Government retain the ability to act in all scenarios that prevail. It is a fact, as we all know, that Northern Ireland has been without a fully functioning power-sharing Executive since February this year. The political settlement in Northern Ireland is based on respect between all communities and the consent of those communities. I know we all recognise the huge insight of a number of noble Lords and colleagues who were there when that agreement was set up and initiated. However, the protocol in its current form is undermining that delicate balance, as I said earlier, and is contributing to ongoing political instability.
The Government remain committed to the restoration of the power-sharing devolved institutions, including the Northern Ireland Assembly, the Northern Ireland Executive and the North/South Ministerial Council. We remain equally committed to preserving Northern Ireland’s place within the UK and removing barriers to east-west trade. This is particularly critical during the challenging economic period that has been fuelled by President Putin’s illegal invasion of Ukraine. I assure
all noble Lords that the Government will continue to engage, as the Bill proceeds through your Lordships’ House, with the remaining parliamentary stages of the Northern Ireland Protocol Bill, while, I also assure noble Lords, continuing to conduct technical talks and explore shared solutions with our EU friends and counterparts.
I turn to some of the substantive provisions within the Bill. The Bill allows the Government to fix specific problems with the protocol by granting powers to make changes in four main areas: first, to provide and improve the customs and sanitary and phytosanitary regime; secondly, to create a new dual regulatory model; thirdly, to ensure that Northern Ireland can benefit from UK policies on subsidy control and VAT; and, fourthly, to legislate for new governance arrangements that address the democratic deficit created by the protocol in its current form.
On customs and SPS, the Bill allows the Government to introduce a green-lane and red-lane system to remove barriers to internal UK trade. There will be no unnecessary paperwork, checks or bureaucracy on goods staying in Northern Ireland as they will move via the green lane. Businesses will be able to use this green lane as part of a trusted-trader scheme. Goods destined for Ireland or the rest of the EU will go through full EU checks, controls and customs procedures via the red lane.
The UK is committed—a point that again several noble Lords raised with me during discussions—to a comprehensive approach to data sharing with the EU under our new model, a key ask that the EU has made of the UK. We would continue to share comprehensive data on the operation of the trusted trader scheme and on goods movements between Great Britain and Northern Ireland. This would of course enable the UK and the EU to jointly monitor the risk of abuse and allow for risk-led intelligence sharing and co-operation. Data-sharing arrangements would be delivered through a purpose-built IT system, with information available to the EU in real time. This would include standard commercial data for green-lane movements and more than 110 fields of data collected through customs declarations for red-lane movements. Any trader found abusing the green lane would incur penalties and face ejection from the trusted trader scheme. We fully understand and respect the legitimate concerns of our EU counterparts and friends that the single market should be protected. These provisions in the Bill will achieve that.
The Bill will also establish a dual regulatory regime so that businesses can choose between meeting UK or EU standards, or both, should they wish to do so. This will remove the barriers to goods made to UK standards being sold in Northern Ireland and cut the processes that drive up costs for business, particularly at this time. It will help address divergence between the two parts of the UK internal market. Anyone who trades into the EU single market will still have to do so according to EU standards. This will also protect the EU single market and we are committed to ensuring that firms in Northern Ireland that benefit from access to the EU single market retain that access.
The Bill will also ensure that the Government can set UK-wide policies on subsidy control, VAT and excise, so that people in Northern Ireland can benefit from the same policies as the rest of the United
Kingdom. For example, at present, people in Northern Ireland are not able to benefit from VAT reliefs on energy-saving materials for homes. These reliefs help fight the cost of living and climate crises and pose no risk to the EU single market but cannot be implemented in Northern Ireland because of the protocol. At a time when a warm home and clean and secure energy are more important than ever, is it right that a typical family in Northern Ireland needs to find nearly £300 more to install solar panels? Surely that cannot be right.
Tax and spend are essential sovereign functions, especially in Northern Ireland where the UK Government play a significant role in the local economy. We will also maintain the VAT arrangements in the protocol, which support trade on the island of Ireland while ensuring Northern Ireland can still benefit from the freedoms and flexibilities available in the rest of the United Kingdom.
I turn now to the governance provisions in the Bill. Rules applying under the protocol are currently made without any say for Northern Ireland representatives and with no means to adapt them for the Northern Ireland context. In some cases, this has uniquely disadvantaged Northern Ireland, yet the rules have not been subject to any dialogue beforehand. This has been cited as symptomatic of the significant democratic deficit that I referred to. The proposals in the Bill will give businesses and consumers new flexibilities and freedoms to ensure that they are not bound to follow rules over which they have no say. Furthermore, prominent members of the unionist community in Northern Ireland have also expressed serious reservations about the role of the European court in overseeing the operation of the protocol. Unlike ordinary international treaties, disputes under the protocol can be taken to, and settled by, the Court of Justice, the court of one of the parties. The Bill will remove the domestic effect of the role of the European court where it is not appropriate. Disputes between the European Union and the United Kingdom would be settled by independent arbitration, in line with normal international dispute resolution provisions, including those in the trade and co-operation agreement.
However, the Bill would also enable the Government to implement a mechanism that allowed courts to seek an opinion from the European court on legitimate questions of interpretation of EU law, ensuring that it can still be applied where necessary, such as for the purposes of north-south trade. To be absolutely clear, the Bill seeks to change only those parts of the protocol that are causing problems and undermining the three strands of the Belfast/Good Friday agreement; it keeps the rest. We have, for example, explicitly protected the articles of the protocol that cover north-south co-operation, the common travel area and the rights of individuals, and we will maintain the functioning of the single electricity market, which benefits both Ireland and Northern Ireland.
The Northern Ireland protocol in its current from has created real problems and challenges for ordinary citizens and businesses in Northern Ireland and contributed to political instability in the region.