My Lords, the Subsidy Control Bill creates a new, bespoke, UK-wide subsidy control regime that delivers on our national priorities. This Bill demonstrates the Government’s clear determination to seize the benefits arising from Brexit and design a UK-tailored regime that departs from the previous prescriptive and burdensome EU state-aid system. We have designed a regime that works for the whole of the United Kingdom while at the same time maintaining our reputation as a trusted and respected partner on the world stage. This Bill helps us to honour our international obligations under World Trade Organization rules, under the UK-EU Trade and Co-operation Agreement and other free trade agreements.
The regime that the Government have set out in this Bill will help public authorities to deliver subsidies where they are needed, without facing excessive bureaucracy or lengthy pre-approval processes, as seen under the previous EU system. It allows for greater flexibility and autonomy for public authorities to deliver on local priorities. However, the Government are clear that this freedom does not extend to harmful and excessively distortive subsidies. We are not in the business of propping up businesses that are unviable or doomed to fail without government support.
It is also important to set out clearly what this Bill is not. It is not about intruding on spending decisions for local authorities or the devolved Administrations, and it will not dictate the policy decisions that this Government make in supporting our strategic priorities, from levelling up to net zero. Public authorities will maintain their spending decisions in relevant areas and will be supported by clear guidance on how to grant subsidies in line with the new regime. We will continue to make the right strategic decisions, to support the people’s priorities.
For the first time, local authorities, public bodies and the devolved Administrations in Scotland, Wales and Northern Ireland will be empowered to decide for themselves if they can issue taxpayer-funded subsidies, by following a set of UK-wide principles. This will provide them with new freedom and flexibility to design subsidies and subsidy schemes which meet local needs, as well as national policy objectives such as reaching net zero. The seven principles that they will need to follow are clear and proportionate and form the basis of our new regime. They set out that subsidies awarded under the new regime must be justifiable on policy grounds. The subsidy must be appropriate, proportionate, and designed to minimise any distortions to competition and investment in the United Kingdom. These principles, along with additional considerations for energy and the environment, will ensure that public authorities design subsidies that bring out the best in our communities while ensuring consistency. The Government are clear that subsidies are there to support and encourage businesses, not to prop them up.
I know we have had Covid, but I can still ask a question at Second Reading, even though it is unusual. Can my noble friend explain why the guidance and the information that he is describing has not been made available before we got to Second Reading?
My noble friend makes a good point. We will be publishing the guidance as soon as it is available. We are still in discussions with the devolved Administrations and others on the exact design of the regime and the possibility of obtaining legislative consent Motions.
The Bill also establishes the UK subsidy advice unit, hosted by the Competition and Markets Authority. The unit will monitor and oversee how the regime is working, as well as conducting a mandatory, non-binding review on public authorities’ assessments for subsidies of particular interest. Subsidies or schemes of interest may be referred to the subsidy advice unit. A subsidy or scheme of particular interest must be referred to the unit, which will then publish a report detailing its decision within 30 working days. This quick process will allow public authorities to act with far greater agility than before, while upholding the highest standards of accountability or transparency. We are clear that this Bill will allow for agile delivery and proportionate scrutiny at the same time.
Although we can expect that public authorities will take their obligations under this regime seriously, we also recognise the need for a direct route to challenge by interested parties, so there will be a meaningful, time-limited process for enforcement, through the competition appeal tribunal. This will ensure that the subsidy recipients have legal certainty once the window for a challenge has passed. A key part of effective enforcement is ensuring that we are as transparent as possible with information on what subsidies have been awarded. My department listened to the concerns expressed in the other place about the operation of the subsidy database. We are editing the database to improve the quality of information that is available publicly. Of course, the database is still relatively new. Officials are actively developing further enhancements over the coming months, in advance of the new regime coming into force.
My Lords, I start by thanking the Minister for his engagement with our team and the offers of detailed briefings on this important legislation. Such openness is much appreciated. We agree with the need for this legislation and support the introduction of a subsidy control scheme that provides public authorities at all levels and in all parts of the UK with greater flexibility than they enjoyed under the EU state aid rules.
However, while the EU system came with less flexibility than the one that this Bill envisages, action, for example to support key industries, was never impossible. The UK consistently lagged behind comparable EU member states in the amount of subsidy provided, and in most cases the failure to step in and provide support during a firm’s hour of need was a political choice.
When this Bill was in the Commons, we outlined several fundamental concerns with it. It is not, as has been identified, the finished product. Key terms are not properly defined, and a significant amount of the detail will be left to statutory instruments and guidance, with the department acknowledging in its impact assessment that there are “considerable unknowns” attached to the chosen approach. As the Minister has acknowledged, when we come to talk about oversight, although there have been some improvements since the Commons stages to the public subsidy database, we believe still that it fails on the whole area of oversight.
The Government are failing to mandate clear, swift public declarations of subsidies, or proper means for authorities, including the devolved Administrations, to challenge those that may be unfair. This lack of transparency is an area that we will return to at greater length and is, I am sure, an area that my noble friend Lord McNicol will pick up as we debate these matters further. Surely this is a prime area where the Government’s stated intention to make the UK
My Lords, we on these Benches support a legal system of state aid subsidy support, built on the principles of a sound industrial strategy, where there are identified areas of need and deprivation. The system should be transparent and linked with addressing the structural problems of our economy and the regions within it.
Between 2014 and 2020, the UK as a whole was allocated £4.3 billion a year of structural funds, ERDF funds and ESF funds. The Government’s Budget has stated that we will reach only £1.5 billion a year for the UK shared prosperity funds in 2024-25. Can the Minister say how that shortfall will be met? It is not as if we were renowned for having an expansive subsidy approach. The impact assessment had highlighted the fact that the UK was one of the lowest in expenditure on subsidies within the former 28. The impact assessment used the data from the EU scorecard. In the most recent year, the UK spent £8 billion—0.4% of GDP—compared to France, £16 billion or 0.8% of GDP, and Germany, £49 billion or 1.5% of GDP. Clearly, Germany, spending five times as much as we did, did not consider us a major straitjacket, burdensome and prescriptive, so why were we so low if it was not the fact that it was simply a government policy choice to be so low?
Interestingly, the Government’s impact assessment also said that, for the purposes of us scrutinising the Bill and for the purposes of costing impact, historic data on the volume and value of subsidies awarded in the UK has been used. So the Government, even as they present their Bill to us, are saying that there will not be any change of direction from that anyway. So what is their intention as far as the way forward is concerned? After the Internal Market Act, the Professional Qualifications Bill and now this Bill, we are legislating in limbo, with so many decisions deferred for future regulation and guidance and with a lack of clear information on how it will support structural investment. It simply is not good enough.
My Lords, I welcome this Bill, which puts in place a subsidy regime that will deliver for the whole of the UK. The principle of having considerably more flexibility than the old system in what we are able to do opens up a host of opportunities for how subsidies can be used for the benefit of the whole UK.
Building on what the noble Baroness, Lady Blake, said, I will focus my remarks on levelling up. Central to the levelling-up agenda will be investment into disadvantaged regions, for which this Bill will obviously play a key role, so I was somewhat surprised not to find levelling up at the heart of the Bill, or even find anything which really contributes to it.
As an example, I am the co-chair of the Midlands Engine APPG. The Midlands Engine is a pan-regional partnership that focuses on levelling up the Midlands. Home to 11 million people, the Midlands Engine contains some of the most deprived areas in the UK and, unsurprisingly, subsidies will be vital to levelling up the region. This is perhaps best illustrated by some economic indicators.
Within the Midlands Engine, public spending and support lag significantly behind the rest of the UK, contributing to a considerable gross value-added gap, whether in transport spending, economic affairs or R&D. For example, spending on transport is £289 per head for the east Midlands and £492 per head in the West Midlands, compared to £882 in London. Public sector R&D in the east Midlands is the lowest in the UK.
These figures also represent a great opportunity for the UK. Data from the Midlands Engine shows that gross value added per capita in the Midlands is almost £24,000, or 91% of the England minus London average. If this gap were closed, it would add an extra £82 billion each year to the UK economy. The Bill could be a key part of closing this gap in the Midlands and the other regions of the UK. What is needed is a clear signal to businesses as to where are the areas in which additional support will be given, to drive investment into disadvantaged regions and level up.
My Lords, I apologise if I discombobulated my noble friend by asking a question at Second Reading. I appreciate it is unusual to do that, but it is also unusual to have a Second Reading of a Bill so devoid of detail and without the information being provided. I put a marker down: this is becoming a habit for this Government. I voted for leaving the European Union; I thought it would mean that this Parliament would have more power over our affairs. This kind of behaviour just gives power to the bureaucracy, which is then not accountable to Parliament. That is not why we did it.
Again and again, from the Animal Welfare (Sentience) Bill onwards, we have had legislation which has not been properly thought through. It is particularly striking with this Bill; it has been through the House of Commons, yet when it arrives here we still do not have the basic information to enable us to have a Second Reading debate on what it is about and what its principles are. We are told that that will follow shortly. It is becoming a habit, like Billy Bunter’s postal order—it is in the post, and by the time it arrives you have forgotten what was promised.
I start from a slightly ideological position which may not please some Members opposite; I am suspicious of subsidies, because I believe they distort competition by bailing out unsustainable industries and attempting to pick winners. I think my fly-fishing but very distinguished economist friend Sir Dieter Helm coined the phrase that Governments are poor at picking winners but losers are good at picking Governments. That is important to remember. If we are to have a regime of this kind, it is really important that we know what money is being handed out to whom and for what purpose.
Looking at the Bill, it is great that, as advertised, it promotes “autonomy, transparency and accountability”. It is unusual for me to praise the European Union—having dealt with the principles of additionality and the problems of getting through the bureaucracy, I do think this is an advance—but I find it difficult to understand why the threshold for disclosure is higher than it was for the EU. Why should that be? Unless I have misunderstood, it is £500,000 instead of €500,000. That is a significant difference. People might say that it is just a rounding error—my honourable friend John Penrose made these points in the House of Commons—but, while these subsidies must be reported, you have to wait six months to find them. It is hard to understand how having to wait six months to see them increases accountability or transparency.
My Lords, in introducing the Bill, the Minister said that we are getting away from an overburdensome and prescriptive European system. I will comment on that in a minute but, until we get detailed guidance from the Minister, we cannot tell quite how prescriptive and overburdensome this legislation will be. We are being asked to buy this Bill without knowing the form it will take and in particular its impact on the devolved authorities, local authorities and administrative bodies in this country.
When I chaired one of the sub-committees of the European Union Committee, we found that the European Union state aid regime was indeed very centralised and authoritative but, as my noble friend Lady Blake and the noble Lord, Lord Purvis, said, we did not actually put to it many of the propositions that other member states did. Germany and France had more than twice as much state aid as the UK, because the UK system was overcautious and, in many cases, anti-intervention. Ministers in Whitehall were always faced with civil servants telling them, “This will not pass the state aid regime”. In reality, the European system was not disproportionately unfavourable towards British propositions—those propositions were never put, to the detriment of many of the most deprived areas of our country.
The history is not correct, and nor is the future. The devolved Administrations have very serious concerns about this Bill; for example, it is not clear whether they can invent streamlined schemes themselves, whether they can appeal against decisions by the CMA or whether they will have any representation in the whole process. As I understand it, at the moment the Welsh and Scottish Governments are not prepared to put the appropriate legislation through their Parliaments. That is a serious constitutional issue, one which we need to understand a bit more about before finishing the process of the Bill in this House. I leave it to others to demonstrate the serious problems businesses in Northern Ireland may have with double jeopardy in this area. Scotland and Wales have tried to co-operate with the Government on this and other post-Brexit issues, yet they are not prepared to give the amber light to the Government on this. That is a serious constitutional issue, and this House should consider it.
My Lords, the Subsidy Control Bill, following on from our experience of the internal market Act and of the loss of EU funding after leaving the EU, provides those of us from the devolved nations with another battle. Our battle is, of course, to protect and defend the powers of the Ministers of the devolved Administrations, given to us by this Parliament. Our fellow citizens would expect no less of us. So, what are our concerns about the Bill? I will concentrate on two issues: consultation with the devolved Governments and the powers bestowed on the Secretary of State. I also wish to make a short comment on transparency.
The Bill makes provision about the control of subsidies following the UK’s exit from the EU, and it is a new system, replacing the EU state aid rules. It sets out a new domestic subsidy control regime, which binds all the countries of the UK together. In doing so, the UK Government have, almost unilaterally, produced a Bill that impacts on the devolved Administrations, and they have drafted it in what is becoming their customary fashion. There was little or no consultation with Welsh Ministers before the Bill was introduced to the Commons, although the UK Government consider that policy development on the Bill has involved
“frequent consultation with devolved Governments”.
So what does “frequent consultation” mean? The draft copy of the Bill was shared with the Welsh Minister on 29 June last year—the day before the UK Government laid the draft Bill before Parliament, where it passed its First Reading. This unnecessarily tight timescale has resulted in a distinct lack of any meaningful engagement on its detail and little or no opportunity for devolved government Ministers to influence its content. Indeed, the Welsh Finance Minister has commented that meetings with the UK Government on the Bill have been
“little more … than opportunities for the UK Government to outline their position and … their intentions moving forward”.
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The Government are committed to our international obligations and relationships with our valued trading partners. Therefore, the principles also require a public authority to carry out a balancing test and to proceed only if the benefits of the subsidy outweigh any distortions to international trade, in addition to UK competition and investment. These principles will be underpinned by clear guidance, which will be published ahead of implementation of the regime. This guidance will support public authorities to ensure that subsidies deliver strong benefits and good value for money for the UK taxpayer, and ensure that subsidies are being awarded in a timely and effective way, to give businesses the certainty and confidence that they need. The guidance will also ensure that public authorities fully understand their legal obligations, and make clear which subsidies are permitted and which are prohibited.
We want public authorities to be able to deliver subsidies quickly, easily and without undue burdens. The Government want low-risk subsidies to proceed with minimum bureaucracy and maximum certainty, so we will create streamlined subsidy routes for subsidies that are at low risk of causing market distortions, and that promote UK-wide strategic policy objectives. These routes will make demonstrating compliance even simpler than the baseline method of principle-by-principle assessment. I appreciate that streamlined routes are a novel approach to subsidising and that further explication is required. To aid understanding, we will shortly publish a policy statement and two draft illustrative routes. Together, they will describe in detail the Government’s thinking in this area and demonstrate exactly how these routes will work.
A UK-wide subsidy control regime is necessary to ensure that subsidies do not unduly distort competition within the UK’s internal market. I repeat, as we have many times before, that we are wholeheartedly committed to ensuring that the new regime works for the whole United Kingdom. That is why the Government have worked closely with the devolved Administrations, including sharing the consultation response document ahead of publication and carefully considering their representations. We have met with DA officials 45 times and Ministers 13 times to talk about the regime, since July 2020, and we will continue to discuss its development with DA counterparts ahead of implementation. We will work closely with the devolved Administrations, but it is important to reiterate that subsidy control is a matter reserved for this Parliament. Noble Lords will remember the robust debates that we had on this matter during the passage of the UK Internal Market Bill, but I assure them that the devolved Administrations are and will remain responsible for spending decisions on devolved subsidies within any domestic subsidy control system.
As it currently stands, and according to the terms of the Northern Ireland protocol, subsidies for services in Northern Ireland will be within scope of the new domestic regime. It is this Government’s view that it is no longer necessary for Northern Ireland to be subject to the EU state aid regime, which is why we have proposed a change to the Northern Ireland protocol to bring all subsidies within scope of the domestic regime. As noble Lords will be aware, discussions continue at pace with the EU on the Northern Ireland protocol. However, no matter the outcome of these negotiations, the Bill will deliver for the people of Northern Ireland and ensure that there is clarity on which rules to follow.
This new independent subsidy control regime will help ensure that people in all areas of the UK, from Belfast to Bangor, Derby to Dundee, feel the benefits of targeted subsidies in their areas, and that prosperity and opportunity is spread right across the UK. This includes investment in skills, local infrastructure and new technologies, as well as into research and development. We have the opportunity here to facilitate subsidies that support people’s priorities, from tackling regional inequalities, to combating climate change, to increasing R&D and innovation. The common-sense energy and environment principles in Schedule 2 of the Bill support the UK’s net-zero ambitions, as well as contributing to a secure, affordable energy system. Under this regime, public authorities at all levels of government will be empowered to give subsidies to help address regional disadvantages, supporting our levelling-up aims.
Noble Lords will be aware of the delegated powers in the Bill. I assure them that the powers to make regulations are reasonable and necessary. The regime will need to change over time in response to a number of factors, such as exchange rate fluctuations. Where the Bill includes powers to amend primary legislation, these have been drafted to be as narrow as possible. However, we will of course take into account the findings from the Delegated Powers and Regulatory Reform Committee’s report and we will review accordingly.
The illustrative regulations that we will publish before Committee will help to demonstrate to noble Lords how the Government will exercise, with care, the powers contained in the Bill. I am, as usual, very happy to engage and I will very much welcome feedback from all sides of the House on these products in due course.
We are seizing the opportunities of Brexit. The Bill before us today is an important move away from prescriptive state aid rules. Public authorities across all parts of the UK will have the autonomy and flexibility to deliver subsidies that work for their local area. We are returning decision-making to the hands of the decision-makers in local communities up and down the country. This legislation ensures that our new subsidy system will maintain the competitive, free-market economy central to the UK’s economic success and to our national prosperity. I beg to move.
“a world leader in subsidy transparency”
should be enacted.
We believe that the Bill lacks ambition. This is yet another framework Bill, meaning there is no clear underlying strategy beyond that of boosting flexibility. Despite stating a wish to level up deprived areas across the UK, the new scheme does not target support by allowing subsidies to target areas of economic deprivation; nor does it address the issue of putting fairness and need at the heart of decision-making. It fails to tackle the biggest challenges that we face. The Bill says virtually nothing about transitioning to net zero, and, while it does still feature some additional energy and environmental principles, they are limited in scope and would not, for example, encourage subsidies for things such as green transport projects. This misses the opportunity to enhance environmental protection, boost regional growth or incentivise research and development, all of which were at the centre of decision-making under the previous arrangements.
Better outcomes drove our decision-making when I was an LEP member for Leeds City Region. Collective decision-making, based on strict criteria and collaboration between all relevant local authorities, was the key to our investment strategy. Perhaps the Minister could inform us as to how this collaborative approach will be enhanced under the new arrangements.
This legislation is especially contentious in terms of the devolved Administrations, who, in a number of areas, are not being afforded the same powers as the Secretary of State, and will not have representation, for example, on the Competition and Markets Authority body advising on subsidy matters.
I could predict the comments made by the Minister when I say that the Government will point to dozens of meetings, held at both ministerial and official level; but, as with most of the Brexit process, it seems that Westminster’s definition of “engagement” differs from that adopted by everyone else. On some points, such as whether the DAs can establish streamlined subsidy schemes, there are probably new forms of words that can be agreed, but others raise that nagging feeling that this Government are simply not interested in devolution.
While there is a benefit to be derived from implementing a new regime sooner rather than later, it is not clear why the Bill has to be pushed through according to the department’s chosen timescale. Surely there was a clear public interest in getting its contents right from the start, rather than leaving gaps to be filled in later. Are we at risk, as suggested in the Financial Times, of sacrificing scrutiny on the altar of speed?
We will seek to make a variety of sensible changes to this legislation and hope that colleagues across the House will work with us to ensure that the Bill that eventually returns to the Commons is an improvement on the initial offering.
It is interesting that five years after the referendum, the Johnson Government are so uncertain what to do with their new powers that they do not even bring forward any schemes that accompany legislation. The noble Lord, Lord Frost, and I seem to have this confusion in common.
The deficiencies of this Bill were rather cruelly exposed within the first three minutes of the Secretary of State’s introduction at Second Reading in the Commons. A rather plaintive intervention by a Conservative Back-Bencher, on behalf of her constituency, which has a tradition in steel manufacturing, asked whether the coal and steel research fund worth €111 million, and from which the UK would have been able to benefit, would be ring-fenced equivalent for state aid support for research on decarbonisation in the UK. No guarantee was forthcoming. That is the essence of the point. The fact that we now have uncertainty and are reliant on the lack of clarity will be a concern for businesses.
The Minister gave us a number of assertions of the benefits of this new scheme, which are not backed up in the Government’s impact assessment. For example, paragraph 468 on the positive impacts for competition that the Minister mentioned, states:
“It is not possible or appropriate to produce a full competition assessment on such a broad policy change—potentially affecting a large number of subsidies and therefore markets.”
So it is not possible to work out the benefits. The Minister also referenced the Government’s impact assessment on trade, paragraph 474 of which states:
“It is not possible or appropriate to produce a full trade assessment”.
Paragraph 478 states:
“As there is still policy detail—yet to be decided—to follow in secondary legislation and guidance it is not possible or appropriate to provide further analysis on the potential trade impacts”.
On monitoring and evaluation, to get away from the approach that the Minister says is harming us so much, paragraph 481 states:
“As the final details of the policy are yet to be decided, or will follow in secondary legislation and guidance, it is not possible or appropriate to provide specific details on the plan for monitoring and evaluation at this stage”.
At what stage will we get this information? Is it the Government’s intention to bring another impact assessment forward, as they have done on market, competition, trade, monitoring and evaluation? These are fundamental for any new schemes.
Finally, Northern Ireland is an area of considerable concern. The Government have indicated, as the Minister said, that it is their intent that no part of this Bill will apply to Northern Ireland, but that is not in the Command Paper. Paragraph 68 of the Command Paper fully anticipates that European Union law will still apply to Northern Ireland. There will still be a situation where there is double jeopardy, where businesses trading in the UK will still have to comply with British-based schemes and EU schemes, especially when businesses are at risk. The Government’s guidance has told them that they should start having two sets of accounts, one for their business operations in Britain and one for their business operations in Northern Ireland. If they trade in Northern Ireland with a parent company in Britain, they will have to comply with both sets of rules. That is not what the Minister indicated.
Liz Truss, in her article in the Telegraph, said that it would no longer be appropriate to have any schemes where Britain would have to notify the European Union for any support for British businesses in Northern Ireland. That is still going to be the case, even if the Government succeed in getting everything they want in the Command Paper.
There are many other concerns of devolution and the fact that the Minister made no reference to agriculture or fisheries at all, which my noble friends will pick up in this debate. If anything is clear, even so far, it is that there are so many holes in this legislation that need to be filled during this scrutiny that we will have a long task ahead of us, especially for our colleagues in Northern Ireland, who will be faced with a continuing system of confusion, lack of clarity and uncertainty—the very things that the Minister promised we were moving away from.
I heard the Minister say that this is a framework Bill, but it will be used by many public authorities and future Administrations, so there should be more definition on how it will help disadvantaged areas. First, there is nothing on assisted areas, as we had previously. Of course, there are a number of issues when attempting to draw a map for which areas would receive preferential treatment, but there are ways of approaching this which would learn lessons from previous schemes. A map is not necessarily required—a list of agreed economic indicators could be an alternative mechanism.
The way the Bill is currently drafted, if a manufacturer is deciding on whether to locate in Scunthorpe or Surrey, or between Dudley and Notting Hill, there is nothing to advantage these former locations. There is a great opportunity for the Government here, at a time when there is much debate about what levelling up actually means, to show that a clear, evidence-based mechanism will be put in place through the Bill to begin delivering for left-behind communities in the UK. Will the Minister expand on how it is intended that investment in disadvantaged areas will be made more attractive to feed into the levelling-up agenda, and why there is nothing on this in the legislation?
Clause18 appears to prohibit relocation of economic activity. I question why this clause exists, as it could be contrary to the levelling-up agenda by preventing productive relocation projects that would benefit disadvantaged regions in the UK. I can see why it may have been included, to prevent gaming the system and internal competition, but I believe that these factors are already adequately controlled by the existing provisions in Schedule 1. Explicitly ruling out relocation appears to be rather a blunt instrument and contrary to the flexible nature of the Bill. Will the Minister say more on this in his summing up and how he sees Clause 18 align with the levelling-up agenda?
Finally, the Bill represents a great opportunity to embed climate and environment considerations into the decision-making of government and public authorities, given that it will be used by hundreds of public bodies. A key part of the success of net zero will be how far we go in a systems view of the problem, embedding climate considerations across all relevant government policy. Through this Bill, net zero considerations could be applied to all subsidies to help meet the principal strategic goal of the nation and link with levelling up due to the key role that the regions will play in the net zero transition.
The bit I really do not understand, which my noble friend touched on in his introduction and the noble Lord, Lord Purvis, picked up on, is how this works for Northern Ireland. Northern Ireland is part of the United Kingdom, but on my reading of where we are now, any subsidies would be subject to the European Commission’s rules. That is the position and, until such time as the Government have negotiated their way out of the protocol which they agreed to, it will remain so. I am not clear what happens if you are a British manufacturer of car batteries, to take an example a colleague suggested to me today, and your cars go to Northern Ireland—if there is a subsidy from the Government to you in the UK, how does that work? It is not clear to me. I would be grateful if my noble friend could explain what will happen. The noble Lord, Lord Purvis, talked about having two sets of accounts. How will that be possible?
I see that I am about to run out of time. I know my noble friend is not to blame, but something is going wrong with the machinery of government when we continue to get legislation, which is not thought through and has no proper impact assessments or detail, being rushed through the House of Commons and coming here. Everyone complains about the number of amendments tabled in this House and the time it takes to get legislation through. That is because Bills are arriving in a form which is not suitable for consideration.
The Government may well intend to be more flexible, but we do not know yet. I agree with the noble Lord, Lord Forsyth, that, when we have framework Bills of this nature, the Government cannot expect the House simply to nod them through without seeing how they will really be implemented.
I have three other quick questions for the Minister. First, the Government have resisted calls to exclude agriculture, although the CAP used to be excluded from the European regime. There will be very significant differences between the post-CAP regimes in Scotland, Wales, Northern Ireland and England, so will the Government reconsider special rules for agriculture? They have provided some for energy and the environment—they need strengthening but they have provided them—so can they do that for agriculture?
Secondly, how does this operate in relation to local authorities and procurement? Public procurement is one of the areas the old state aid regime used to be concerned about; if my council of Dorset awards a contract to a firm because it is giving special preference to local employment, will it fall foul of this regime? Finally, what does the £500,000 apply to—the value of that contract or the differential between that contract and what could be applied, shall I say, from Wiltshire?
She added:
“when UK Government has provided us with draft documents, the deadlines for our inputs have been too short to provide a reasoned and considered response, or the drafts … have been just so vague and so general as to provide us with minimal insight into the development of the policy.”
It appears that the two Governments have differing definitions of the word “consultation”. The UK Government are missing a trick here. The Welsh Government have vast experience in the distribution of EU subsidies and are calling for a collegiate approach to drafting the new subsidy regime.
The Bill also provides that functions held at EU level are now held by the Secretary of State, the CMA or the CAT. The role of the Secretary of State is far reaching. The Bill empowers them to shape the subsidy regime in future, with little scrutiny from this UK Parliament and with no scrutiny at all available to Welsh Ministers or the Senedd.
A number of regulation powers are bestowed on the Secretary of State that do not require the consent of or consultation with Welsh Ministers, even when the regulations cover devolved issues. The Secretary of State will also have the power to refer subsidy awards or schemes in policy areas of devolved competence to the independent regulator. These new powers alone would undermine the power of Welsh Ministers to act in relation to matters such as economic development, agriculture and fisheries, which are within their devolved competence at present. So, there will be no meaningful consultation and no involvement in the future drafting of subsidy control measures—in essence, this is a complete neutering of Welsh Ministers’ powers.
On transparency, under EU state law, individual subsidies of over €500,000 were published online, as the noble Lord, Lord Forsyth of Drumlean, explained. The Bill increases that threshold to £500,000. This of course means that subsidies of £499,999 will not need to be published. So, because the subsidies are not cumulative, one business can receive repeated subsidies without publishing their details.
The Centre for Public Data recommends that all subsidies over £500 should be published. Why do the Government not agree with this? Perhaps they should seize the benefits of Brexit which the Minister spoke about and provide the UK with a more transparent system than that of the EU.