Subsidy Control Bill — House of Lords, 2022-01-19
Topic: Macroeconomics
Daniel Mosley (Crossbench, Unknown): 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 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.