Subsidy Control (Information-Gathering Powers) (Modification) Regulations 2022

Secondly, there is the opaque way in which this legislation is drafted. Although these regulations flow from the Subsidy Control Act, they implement an implied amendment to the internal market Act. Noble Lords will recollect that that Act was controversial from a devolution perspective: the DAs did not grant legislative consent, and attempts were made to amend the Bill to take greater account of the economic development responsibilities of devolved Administrations. These regulations mean that the internal market Act remains drafted as is from the textual standpoint but with an implied textual amendment which will have the effect of removing the requirement to consult with devolved Administrations. It will give the Secretary of State more discretion on penalties and give the CMA more discretion on policy relating to subsidy control. The CMA Subsidy Advice Unit already has no obligation to give due regard to DA opinions, and this is another blow to the possibility of positive relationships between devolved Administrations and the UK Government. This is a pity, as I am told that relationships between the SAU and officials in devolved bodies have been very positive, so there is no good reason to change the balance of powers. As well as removing the obligation to consult, this also removes any possibility of challenge if devolved opinions are ignored. I suspect that this is the Government’s intention here: governing always seems easier if you shut yourself away and do not listen.

These regulations will bring the duties placed upon the SAU out of line with the duties placed on the CMA’s Office for the Internal Market, suggesting that a similar retrenchment of devolved powers may be likely for the latter. Do the Government have such plans?

Further aggravating features were brought to our attention by the diligent work of the Secondary Legislation Scrutiny Committee. It expressed concern that the Government’s explanation or defence of the removal of this obligation to consult is that the CMA and the Secretary of State will still have to consult the devolved Administrations if their interests are “sufficiently affected”. The SLSC stated that, in the absence of any definition of this term, it is worried about how it will be interpreted. I hope the Minister can be very explicit on how the new rules will be interpreted.

The SLSC also drew our attention to a serious error in the Explanatory Memorandum, which said that the DAs had not objected, when in fact they had done so unequivocally. The EM has now been corrected, but this is a serious error—much worse than the usual omissions. If the views of the DAs on the regulations governing consultations are misrepresented, it is hard for us to have confidence in the good faith of the consultations that flow from them.

In summary, these regulations will impact adversely on economic development opportunities in the devolved nations and hinder the ability of the DAs to shape the subsidy regime of the future. They reinforce the view that this centralising Government are determined to take every opportunity, however small, to undermine devolution. I realise that the Government want to hold all the reins of power, not least because, in this case, carefully placed subsidies are an easy way to bolster support in chosen parts of the country. The same principle underpinned the Government’s decision to centralise the shared prosperity fund and to cut the Welsh and Scottish Governments out of decision-making. The outcome of the first round of that funding makes my point for me.

I urge the Minister to think long term. Every time the Government chip away at devolution, they persuade a few more voters living in the devolved nations to give up on devolution and move to support independence. The Government should instead be bolstering good relations with the devolved Administrations, and that means respecting their powers and opinions. The Government are in danger of making enemies out of friends. The Welsh Government are not the Scottish Government; they are not predisposed to object to everything. I am sure the Minister will seek to reassure me that consultation with the devolved Administrations will in fact continue, but unfortunately the evidence is already there that it is pretty sketchy and corners are cut on existing obligations. I thank the Minister for his prior interest in my concerns on this, and I assure him that I will listen carefully to his response.

My noble friend illustrated the non-political system that was practised between the EU and the devolved Administrations. There were strict legalistic rules which set up how the money was distributed. But now, all the evidence suggests that His Majesty’s Government are departing from what I would call a legalistic framework and working to political grace and favour. Political allocation of subsidies is clearly what is happening. We only have to look at what has happened to date. Under the cover of bidding processes, money is being allocated where it suits this Government best for their electoral prospects. This is a big departure from the legalistic approach the European Union established. We could set that aside and say that this is clumsy, which it is. We could perhaps understand if the Government rushed into this in haste without proper consultation with the devolved Administrations. I would like to think that was true. It would be easier to illustrate that if the Minister could tell us whether the CMA requested these powers, why it requested them and when.

It is clear that this has again upset the relationship with the Welsh Government and, I am sure, with the other devolved Administrations, as we heard from the noble Lord, Lord Dodds. Why are the Government being so clumsy on this? What, in the long run, are they seeking by cutting themselves off from the information supply? The noble Baroness, Lady Blake, said that the Government are cutting themselves off from valuable information which should be available. I can only take the gloomy view of this. This instrument makes the process of what I will call “subsidy gerrymandering” easier. For that reason, we find it unacceptable.

The measures contained in this and various other pieces of legislation relating to it actually give devolved nations more flexibility—as has been said by the noble Baroness—to design their subsidies so that they can rightly ensure that all such support is directed to local priorities, better serving their citizens and enabling, frankly, a far better series of targeted outcomes. This is, if noble Lords will allow me a reference, what we talk about when we use the phrase “Brexit dividend”.