My Lords, I am grateful for the opportunity to convince noble Lords of the merits of the dual regulatory regime. In doing so, it is important that we just take a step back for a second and consider the overriding purpose of these clauses and the regime itself. It is to remove barriers to trade between Great Britain and Northern Ireland for goods that will never leave the United Kingdom. It will enable us to address the so-called Irish Sea border, and support trade between Northern Ireland and Great Britain, as has been government policy since the Acts of Union in 1800, while respecting the integrity of the EU single market.
Northern Irish businesses will be able to meet UK rules when supplying the UK market should they wish, benefiting from future regulatory reform. That in turn will help to create the conditions that in our view can lead to the restoration of a fully functioning devolved Government in Northern Ireland, and therefore the implementation of all three strands of the Belfast agreement. The clauses will enable this to be achieved in the following ways.
Clause 7 makes it clear that businesses will have a choice of which regulatory route to follow when placing goods on the market in Northern Ireland. It introduces, as I have made clear, a dual regulatory regime for regulated classes of goods to which any provision of annexe 2 of the Northern Ireland protocol applies. This will create a new option to meet UK rules compared to the existing protocol arrangements, whereby goods
are required to comply with the relevant EU rules. Where the relevant requirements allow, it will also be possible for the same product simultaneously to comply with both sets of requirements.
Currently, as noble Lords will be aware, traders have no choice under the protocol but to meet EU rules when supplying goods in or to Northern Ireland. This deters some companies, especially those trading exclusively within the United Kingdom, from serving Northern Ireland due to costs and administrative burdens required to meet this EU law: for example, retesting, re-marking and relabelling of goods, as well as the appointment of a representative to undertake administrative duties. All this comes at a cost, which I submit is completely unnecessary for goods that are to remain on the UK market.
The dual regulatory regime provides businesses across the UK with choice. If a Northern Ireland-based business trades north-south on the island of Ireland, they can continue, as now, to follow EU rules and sell their products into the EU and across the UK because of the Government’s commitment to unfettered access between Northern Ireland and Great Britain. If their business model is UK-focused, they can choose to follow UK rules and benefit from the opportunities afforded there.
By providing an alternative UK-rules route to market in Northern Ireland, the clause fundamentally protects the integrity of the United Kingdom internal market and addresses concerns over the so-called Irish Sea border for goods that will remain within the United Kingdom. That concern over the Irish Sea border is, as I said in response to an earlier group of amendments, the principal cause of there being no functioning Executive and Assembly in Northern Ireland.
On the comments made by the noble Baroness, Lady Ritchie of Downpatrick, I am very much aware of the concerns raised by Northern Ireland’s agri-food sector, and in particular the dairy sector, as I know from experience and have seen at first hand on a number of visits. Indeed, a short while ago I visited a farm between Newry and Armagh where the same family have been farming the land since the 1740s. The farmers in question are, if I may use the terminology, from a Protestant unionist background. It is a dairy farm, and everything they produce on it is processed in Ireland. Therefore I completely accept that, for businesses like that, the provisions of the protocol that enable EU single market access are not just desirable but absolutely essential. I assure her that we are very much committed to upholding that seamless EU single market access where it is essential for businesses. We are in favour of retaining those elements of the protocol that work while remedying those elements that do not.
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A dual regulatory regime will allow businesses to choose the regulatory regime which best fits their business model. This is about enabling choice for business, not prioritising one route over another. If businesses want to continue to follow EU regulations, they can, but they will also now be free to follow UK rules if they are selling goods within the UK. This is important to relieve undue burdens, processes and paperwork on Great Britain to Northern Ireland trade.
On that note, the noble Lord, Lord Purvis of Tweed, asked me a series of—how should I put it?—quite technical and detailed questions. He did not know the answers to those questions, and I do not think he will be surprised to know that I am not in a position to give him detailed replies to each of them at this stage. However, I will go through Hansard and will endeavour to come back to him with as much information in response to those detailed questions as I am able to do in advance of Report. However, in some cases he will probably have to wait for the statutory instruments which we are currently working through; I appreciate that he will not like that very much.
In that context, the Government are committed to working closely with businesses and other key stakeholders to help inform the details of how the dual regulatory regime should work in practice. As I referred to in my response to an earlier group, Ministers in the Northern Ireland Office are in constant contact with businesses but, across government, I think I am right in saying that since the summer something like 100 bespoke sessions have been held with over 250 businesses, business representative organisations and regulators. We will continue to listen to the views of those stakeholders, including, I assure the noble Baroness, Lady Ritchie of Downpatrick, those from the dairy industry, to develop the details of the underlying regime.
In response to the question raised by the noble Earl, Lord Kinnoull, I say that the TCA will cover red-lane goods in our model. At present it can, to an extent, apply to goods under the protocol judged at risk of onward movement to the EU. This complexity illustrates the challenges for firms and barriers to trade which we are seeking to address. Again, I hope that we will be able to provide more detail to him in due course.
In summary on Clause 7, our proposals are about business choice, and it is important to continue to stress that. If businesses want to continue following EU regulations they can, but they are now free to follow UK rules if they are selling goods within the United Kingdom.
Clause 8 ensures that the protocol no longer prevents a dual regulatory regime, as introduced by Clause 7. It provides clarity in domestic law that the relevant aspects of EU law, as it applies under the protocol, that would prevent goods made to UK rules being placed on the market in Northern Ireland will be disapplied in domestic law and made excluded provision, so far as it would prevent the dual regulatory regime from having effect. This clause means that goods made to UK rules can be supplied in Northern Ireland in accordance with Clause 7 to enable the functioning of the regime.
Clause 9 provides a Minister with the powers to make provisions through secondary legislation to ensure the effective working of the dual regulatory routes. The regime will need to take into account the results of engagement with business and will need to be able to evolve over time, as UK and EU regulatory regimes change. The default dual regulatory regime may also need to be amended to ensure that it works effectively for different types of goods: for example, should it be required to ensure that a specific highly regulated
goods regime can function effectively. The clause is needed to ensure that goods are compliant throughout the supply chain for traders operating under the regime, whichever route is chosen. It will therefore safeguard the interests of consumer safety and biosecurity arrangements, and will maintain appropriate public health standards.
On Amendments 13 and 14 in the name of the noble Baroness, Lady Chapman of Darlington, the arguments might be very similar to those that were deployed in the previous group, so I apologise for repetition. Amendment 14 would restrict the use of the power in Clause 9 to make provision only which “is necessary” rather than provision which the Minister “considers is appropriate”. As my noble friend Lord Ahmad of Wimbledon said in response to the previous group, “necessary” is a higher bar to meet and, while it would not prevent regulations from making provision for one option where alternatives are available, this amendment would in our view unnecessarily reduce the policy discretion for the exercise of this power.
This would provide additional uncertainty to businesses and consumers and, in this clause, could potentially limit the ability to design dual regulatory routes to preserve the unity of the UK internal market. The noble Lord, Lord Ponsonby, referred to negotiating on this issue with the Irish and the EU. He will of course be aware that the EU negotiates for Ireland on these matters; Ireland does not negotiate independently, as was once made very clear to me during a meeting with Michel Barnier in Brussels.
Given that there are 200 pieces of goods regulations applied by the protocol, the power in this clause is needed to ensure that the regime can function effectively in practice for each class of goods. The dual regulatory regime is necessary to remedy disruption, which will only increase over time as EU and UK rules diverge. The amendment may also prevent the Government responding to issues facing Northern Ireland in a flexible way, which in turn could have a negative impact. I therefore respectfully ask the noble Baroness, Lady Chapman, not to move her amendments.
I now turn as quickly as I can to Clause 10, which is intended to provide clarity on the types of regulatory activity covered by the dual regulatory regime established in the Bill by providing a definition of “regulation of goods”. The purpose here is to provide clarity and certainty so that we understand the scope of the dual regulatory regime provided for in Clause 7 and the related powers. Subsection (4) provides:
“A Minister of the Crown may, by regulations, make provision about the meaning of references in this Act to regulation of goods (including provision that changes the effect of any other provision of this section”.
The reason for this is to avoid a situation arising where the sale of goods made to UK rules in Northern Ireland is prohibited due to a particular aspect of the regulation of a good not being considered to fall within the meaning of the “regulation of goods” in Clause 7, with the result that EU rules must be adhered to. In our view, it is important that Ministers have the power to ensure that the meaning of “regulation of goods” in the Bill remains appropriate to ensure that the dual regulatory regime functions effectively and can adapt to changes.
Finally, Clause 11 gives Ministers powers to ensure that the regulatory regime in Northern Ireland operates as intended and meets the relevant needs of a given sector. Again, this is intended to ensure the smooth running of the new regime for all sectors or classes of goods, some of which might be more complicated than others. It provides powers for a Minister to prescribe a single regulatory route for specific sectors—a UK-only route with no application of EU law, for example—and apply this approach to part or all of a category of goods or to some or all of the required regulatory route.
The noble Lord, Lord Purvis, raised some concerns about what I think he described—no doubt he will correct me if I am wrong—as the coercive power in this clause. I will attempt, if I may, to explain a little further how we might see the powers in Clause 11 put into practice through secondary legislation. For the majority of goods, we expect that EU and UK rules will be able to operate largely in parallel. For example, consumer products such as toys carry a product marking to show their compliance with the relevant regulations; we would see these products with both a UKCA and a CE marking. Products with either marking will be able to appear on shelves in Northern Ireland.
However, in some instances, there may be highly regulated goods that will require a different approach and specific modifications. We are working with industry and enforcement bodies to identify and consider these. One possible example is the supply of veterinary medicines from Great Britain to Northern Ireland, which has been operating under a UK-EU grace period since 1 January 2021 because of supply concerns caused by the operation of EU rules under the protocol. In these instances, it might be easier to operate a UK-only regime in Northern Ireland but, as we have said, we are working with businesses to understand the concerns for specific sectors in more detail as we further develop our policy solutions. We will be able to say more about this in due course.
I therefore recommend that these clauses, which are essential to delivering the Government’s objectives and dealing with key issues in the protocol, stand part of the Bill.