Michael Ellis – 2022 Speech on the Northern Ireland Protocol Bill

The speech made by Michael Ellis, the Paymaster General, in the House of Commons on 19 July 2022.

I begin by thanking hon. Members for their participation in the debate so far. I remind them that, while the Northern Ireland protocol was agreed with the best of intentions, it is causing real problems for people and businesses in Northern Ireland, and this legislation will fix the practical problems that the protocol has created.

On the clauses under scrutiny today, clause 7 makes it clear that businesses will have a choice which regulatory route to follow when supplying goods to the market in Northern Ireland. It introduces a dual regulatory regime in Northern Ireland for regulated classes of goods to which any provision of annexe 2 to the protocol applies. That will create a new option to meet UK rules, compared with 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 to simultaneously comply with both UK and EU sets of requirements. Current traders have no choice but to meet EU rules when supplying goods in or to Northern Ireland. This obviously deters some companies, especially those trading exclusively within the United Kingdom. We have seen numerous examples of that already. It deters them from serving Northern Ireland due to the costs and administrative burdens of meeting this EU law such as retesting, re-marking and relabelling of goods, all of which are expensive, as well as the appointment of a representative to undertake administrative duties. All that bureaucracy comes at a cost, which is unnecessary for goods that are to remain on the UK’s market.

The dual regulatory regime provides businesses across the United Kingdom with choice. If a Northern Ireland business trades north-south in the island of Ireland, it can continue to follow EU rules if it wishes and sell its products in the EU and across the UK, because the Government have a commitment to unfettered access. However, if the model of a business is UK-focused, it can choose to follow UK rules and avoid the additional cost and burden currently applied to intra-UK trade.

Theresa Villiers (Chipping Barnet) (Con)

My right hon. and learned Friend is right to highlight the significant frictions on trade within the UK that the protocol has caused. That has led the courts to conclude that there is a partial suspension of the 1801 articles of the Act of Union. Will the Bill fix that problem and ensure that the Act of Union remains fully on our statute book?

Michael Ellis

My right hon. Friend makes a powerful and valid point. The Bill will ameliorate a plethora of problems that have been caused by the protocol.

As my right hon. Friend knows, by providing an alternative UK rules route to market in Northern Ireland, clause 7 protects the integrity of the UK’s internal market. Clause 8 ensures that the protocol no longer prevents a dual regime such as that introduced by clause 7. It makes provision to exclude EU law where it would prevent goods made to UK rules from being placed on the market in Northern Ireland in accordance with clause 7. It means that goods made to UK rules can be supplied in Northern Ireland in accordance with clause 7 to enable the functioning of this dual regulatory 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 in Northern Ireland. The dual regulatory regime will need to take into account the results of engagement with business, which we have already undertaken and will undertake much more of, and it 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 specific highly regulated goods regimes can function effectively. So clause 9 is needed to ensure that goods are compliant throughout the supply chain for traders operating under this dual regulatory regime, whichever route is chosen, and it will therefore safeguard the interests of consumer safety and biosecurity arrangements and maintain appropriate public health standards. The clause is essential to ensure the effective working of the dual regulatory routes and protects the integrity of the UK’s internal markets as well as the EU’s single market.

Nigel Mills (Amber Valley) (Con)

Will my right hon. and learned Friend confirm what the default position will be if a business has not made an election? Will it operate under EU law unless it positively chooses to use UK regulations? What will the process be for making this choice? Will someone have to file a document with an authority to say that they intend to use UK regulations when they make goods in Northern Ireland? Will there be a public register? Will it be an entirely private choice for a business? Will no one know publicly what they are doing?

Michael Ellis

The first thing to state clearly is that no business will be forced to do anything. They will not be obliged to choose one over the other. It will be up to businesses to do that. One power we will give to Ministers in due course, when the Bill has passed, is to make regulations that will fit in most neatly with businesses’ wishes and desires.

Nigel Mills

Will my right hon. and learned Friend give way?

Michael Ellis

If I may, I will make a little more progress.

Clause 9 provides a Minister with the powers to make provisions through secondary legislation to ensure the effective working of the dual regulatory routes in Northern Ireland.

I will move on to clause 10, conscious as I am of the Second Deputy Chairman’s admonition about speed. The clause defines the types of regulatory activity covered by the dual regulatory regime established in the Bill. This provides clarity on interpretation of the Bill’s provisions in relation to the dual regulatory regime and makes the scope of that regime clear.

Clause 10(4) provides that a Minister of the Crown may, by regulations, make provision about the meaning of “regulation of goods” in this Bill, and that includes changing the effect of other provisions of the clause. We want to ensure that the sale of goods made to UK rules in Northern Ireland is not prohibited due to a particular aspect of regulation falling outside the meaning of “regulation of goods” in clause 7. So the power ensures that goods will be able to benefit from the dual regulatory regime.

Ian Paisley

This issue is very important because, before January 2021, goods travelling from GB to Northern Ireland had to fulfil four criteria to be loaded on to a lorry and transported to shops or outlets in Northern Ireland. Since January 2021 there are 15 compliance points, including heavy paperwork responsibilities. Is the point not that those matters will now be removed and we will be back to where we were in 2021—with frictionless trade in the UK?

Michael Ellis

The hon. Gentleman makes a powerful and succinct point.

Clause 11 gives Ministers appropriate powers to ensure that the regulatory regime in Northern Ireland operates for goods in any given sector, ranging from ball bearings and ice cream to lamp posts, gas cookers and children’s toys—myriad different items, but also intermediate goods such as chemicals. All are regulated in different fashions. We want to ensure that they can all operate effectively. So the powers in clause 11, which I know are controversial in the eyes of some hon. Members, allow a Minister to prescribe a single regulatory route for specific sectors, including a UK-only route with no application of EU law, for example. This can also apply to part or all of a category of goods or to some or all of a regulatory route. We consider the clause vital in ensuring that the dual regulatory regime can be tailored to the needs of industry and ensure the smooth running of the new regime for all sectors.

Hilary Benn (Leeds Central) (Lab)

Will the Minister give way?

Michael Ellis

I will give way, but I am just about to come on to the amendments, so the right hon. Gentleman may wish to wait.

Hilary Benn

It is on the point that the Minister just raised. If I heard him correctly, he just said that the Government were taking a power to prescribe which regulatory route should be chosen. Earlier, he said that it would be entirely a matter for businesses to determine which they chose. Just so the House is clear, the Minister is saying that it is a free choice unless the Government decide that it is not a free choice.

Michael Ellis

No. Businesses will not be obliged to follow any particular route. They will not be forced to follow either UK or EU regulations. It is a choice, and I should be able to expand on that later.

Amendments 44 and 45 are in the name of the hon. Member for North Down (Stephen Farry). As I have said before, the Government are engaging broadly on the issues created by the protocol with stakeholder groups across business and civic society in Northern Ireland, in the rest of the UK and internationally. I have been to Belfast in recent weeks to discuss this with some industries. We will give plenty of notice to those affected. The clauses need to provide stakeholders with certainty that the Government will swiftly deliver the solutions that we have outlined to the problems that the protocol is causing.

Our preference remains to reach a negotiated outcome with the EU. I emphasise that our door remains open. We need a lasting solution to these issues to restore stability in Northern Ireland and a working Northern Ireland Assembly based on the consent of the communities. Her Majesty’s Government have made proposals that would address the issues with the protocol. So far, I am sorry to say, the European Union has not been willing to agree to those, but there is no reason why it could not do so. We hope that it changes its mind. We are always open to discussions, and we want a shared solution—I cannot be clearer than that. However, amendments 44 and 45 risk tying the Government’s hands behind their back. On consent, I respectfully point out that the Northern Ireland Assembly is not sitting at the moment. It is exactly because of the breakdown of the institutions in Northern Ireland that this Bill is needed. We need to see the restoration of the institutions as quickly as possible. Further to that, I confirmed previously to the House that we hope the institutions will be restored soon and that it will be possible for the Northern Ireland Executive to bring forward, for example, a legislative consent motion. I therefore ask the hon. Member for North Down to withdraw the amendments.

Claire Hanna (Belfast South) (SDLP)

We have been spun the narrative that this is about the consent and the engagement of Northern Ireland. Although, of course, businesses are up for ways to ease the frictions imposed by Brexit, these provisions are far in excess of anything that anybody has asked for.

On the specific issue of restoring the Assembly, it is very vague as to what it will take for the Democratic Unionist party to go back in. Has the Minister any understanding of what the bottom line is for those people who walk around with scarves around their faces and create the protests that the Northern Ireland Office seems so engaged in? Do we think that they will happily accept green and red lanes, or will that be the next problem?

Michael Ellis

May I put it this way? The Sewel convention applies to this Bill, as it does to all Bills of the UK Parliament which intersect with devolved competence. I respectfully point out that the Northern Ireland Assembly is not sitting at the moment. It is exactly because of the breakdown of the institutions in Northern Ireland that we are where we are right now and this Bill is actually needed. We need to see the restoration of the institutions as soon as possible. I hope that goes some way towards answering the hon. Lady’s question.

Claire Hanna

Will the Minister give way?

Michael Ellis

Forgive me, but I must make some progress. I am sure that there will be another opportunity to intervene.

Let me turn to amendment 36, in the name of the right hon. Member for Tottenham (Mr Lammy). I addressed this point previously, so I shall be brief. It would potentially circumscribe the ability to design dual regulatory routes under clause 9 to preserve the unity of the UK’s internal market. Given that there are more than 200 pieces of goods regulation applied by the protocol, those powers are 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 to GB-NI trade, which will only worsen as the EU and UK rules diverge over the course of time. The arrangements will also need to be updated over time to reflect changes in UK and EU regulations, so Ministers will need appropriate discretion to make policy decisions in doing so. The right hon. Gentleman may well not agree with me, but I ask him to withdraw his amendment.

I turn to amendment 28, also tabled by the right hon. Member for Tottenham, who I do not think is in his place. The Government have engaged broadly on the issues created by the protocol with stakeholder groups across business and civic society in Northern Ireland, as well in the rest of the UK and internationally. As the House will know, the Bill provides specific powers to establish a new regime in Northern Ireland, which addresses the issues with the current operation of the protocol. We are engaging with stakeholders on the detail of how those powers are to be used and will give plenty of notice to those affected.

The Government have already begun a detailed programme of engagement to inform the specific design of the regime in Northern Ireland that will be created by this Bill. Furthermore, clause 9 is designed to provide stakeholders in Northern Ireland with certainty that the Government will deliver the solutions that we have outlined to the problems the protocol is causing. It is essential that this power can be used quickly if needed. Although in normal cases the Government will engage with stakeholder groups in Northern Ireland, and already are engaging with them, there may be occasions when the urgency of a situation means that the Government need to act swiftly. The amendment risks tying the Government’s hands behind their back.

Sammy Wilson (East Antrim) (DUP)

Does the Minister note that, while the Opposition are now asking for an economic assessment of the protocol Bill, they did not seek any such economic assessment before they voted for the protocol? Even when the economic consequences were evident, they then still pursued the path of supporting the protocol. It does seem a bit hypocritical to ask for an economic assessment of this Bill while ignoring the economic impact of the protocol, which they support.

Michael Ellis

The right hon. Gentleman makes a powerful point, and it is one with which I tend to agree.

The full details of the new regime will be set out in and alongside regulations made under the Bill, and that includes economic impacts where appropriate. The regulations will be the product of engagement with business. We are going to talk to people to ensure that the detail of the new regime is as smooth and as operable as possible. That is what we are getting on with now. The House will have the opportunity to scrutinise these regulations in the usual fashion, under the normal parliamentary procedures. An additional requirement for the Government to lay an assessment and a report each time, which is what this amendment asks for, would clearly not be necessary. That is why I ask the right hon. Member not to press the amendment.

Let me move on to new clause 13 in the name the hon. Member for Foyle (Colum Eastwood). I argue that this new clause is unnecessary. The hon. Gentleman’s new clause would create a statutory obligation for the UK Government to publish, at least quarterly, what steps are being taken by Her Majesty’s Government to promote, uphold, support and facilitate dual access to the British market and European markets. The Government already publish a host of information on trade, and it is not necessary, in my submission, to duplicate existing publications on a quarterly basis and lay them before Parliament. 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, then they can continue, as now, to follow EU rules and sell their products in the EU and across the UK, because of the Government’s commitment to unfettered access. But if their business model is UK-focused, they can choose to follow UK rules and benefit from the opportunities afforded there. I therefore urge the hon. Gentleman not to press his new clause.

Finally, let me turn to new clauses 14 and 15 in the name of the hon. Member for Foyle. These new clauses are, in some aspects, unnecessary, and, in other aspects, inappropriate. As the hon. Gentleman knows, article 14(b) of the protocol already requires the specialised committee to

“examine proposals concerning the implementation and application of this Protocol from the North-South Ministerial Council and North-South Implementation bodies set up under the 1998 Agreement”.

That is an entirely appropriate and valuable role. The hon. Gentleman’s new clauses, by contrast, would create a statutory obligation for the UK Government to “support” proposals relating to the regulation of goods made by the North-South Ministerial Council and other North-South Implementation bodies.

That would cede control over the UK Government’s stance in the Joint Committee to a council on which the Irish Government—the Government of an EU member state—sits. The hon. Member can surely see that this would be wholly inappropriate. In any case, as part of our “New Decade, New Approach” commitments, the Government already ensure that representatives from the Northern Ireland Executive are invited to meetings of the Joint Committee, which discusses Northern Ireland specific matters, and these are also attended by the Irish Government.

Claire Hanna

Does the Minister agree that the North-South Ministerial Council and other architecture of the Good Friday agreement provide solutions to addressing some of the issues around democratic deficit and input of civic society? Does he acknowledge that the North-South Ministerial Council is not currently operating because strand one and strand two of the agreement are being held to ransom by the DUP?

Michael Ellis

I do not accept the characterisation of the hon. Lady’s point.

The aspects of new clauses 14 and 15 obliging the Government to lay reports before Parliament are also unnecessary. The Government have already committed to—and do—lay written ministerial statements in Parliament before and after each meeting of the Joint Committee. We also provide explanatory memorandums on matters to be discussed at Joint Committee meetings. I therefore urge the hon. Member for Foyle not to press new clauses 14 and 15.

My hon. Friend the Member for Amber Valley (Nigel Mills) asked in an intervention about businesses having a choice. Businesses will, of course, have a choice by default. He asked about processes. We are engaging with businesses. We may need to tailor regulatory routes in some cases, but businesses will have a choice by default.

To conclude, the Bill on which this honourable House is spending up to 18 hours in Committee provides a comprehensive and durable solution to the existing problems with the Northern Ireland protocol by giving businesses a choice over which regulatory route to follow when placing goods on the market in Northern Ireland. I therefore recommend that the clauses under consideration stand part of the Bill.