Subsidy Control Bill — House of Lords, 2022-01-19
Topic: Government Operations
Iain McNicol (Labour, Centre-left): My Lords, I thank all noble Baronesses and Lords who have participated in this Second Reading. Across the House there is a wealth of knowledge that can only bode well for the Bill itself—if not for the Minister. As the noble Lord, Lord Fox, has said, time will be required in Grand Committee and at other stages to make sure that we can move forward with it. It is a pleasure to be back on Labour’s Front Bench, especially for such an important Bill I will start with some general remarks and then focus on some specific issues of concern and, I hope, offer some helpful solutions, as have many other noble Lords and Baronesses. I believe that we can use the best endeavours of your Lordships’ House to improve the Bill. In previous dealings that I have had with the Minister and his department, they have listened to reason and good arguments, and I am sure that that will continue My first question, which is about the Delegated Powers and Regulatory Reform Committee of your Lordships’ House, has been partly answered by the Minister. If other noble Lords have not read the committee’s report on the Bill, it is well worth reading. It is scathing, and the Minister rightly said that he and his department will be looking at its recommendations. I want to push him further on that. Will we see some changes and address some of the issues raised in the DPRRC report in Committee, or will that happen later? The sooner, the better As we have heard, most of the concerns about the Bill are not ideological or political. Likewise, Labour’s concerns about it are rooted not in ideological dogma but in a sense of right and wrong, fairness and transparency. What we have before us is, in principle, a positive step. The right subsidies can have a transformative impact on communities across the country. Moving away from the EU regime for pre-approval is a clear win, but only if we are transparent and open about all the subsidies However, as my noble friend Lady Blake of Leeds has outlined, it feels like this new flexibility comes at a staggering and, frankly, unacceptable price: a lack of policy certainty, transparency and safeguards and, most worryingly, as we have heard from many today, a lack of proper parliamentary scrutiny. Some of the debates we will have on the Bill, including on the treatment of the devolved Administrations, could and should have been avoided altogether; had the Government learned from their mistakes during the Brexit process and, more recently, the passage of the United Kingdom Internal Market Act, we could have resolved them. The Minister himself is a veteran of both, so he should not be surprised when he sees the forthcoming amendments as we move to Committee and Report The four main areas, which I will touch on only briefly because they have been covered well across your Lordships’ House, are reporting transparency, the devolved Administrations, statutory oversight and investigations, and subsidies and their use. It appears from earlier discussions in the other place that Her Majesty’s Government will argue that the Bill as written delivers by reducing red tape, reducing administration and protecting competition. Many—including respected colleagues on the Minister’s own side such as the noble Lords, Lord Lamont, Lord Forsyth and Lord Leigh, and many Conservative Members in the other place—believe that that fundamentally misses the point of the Bill. Amending it in respect of reporting thresholds, the quality of the database, the timely manner of reporting and tighter controls on subsidy schemes could and would make the use of subsidies more transparent, reducing the possibility of corruption and shining a light on any cronyism or misuse or abuse of subsidies. As Her Majesty’s Government’s own analysis shows, such amendments, especially on the database, could cost as little as £20,000—a small price to pay to see what is being subsidised across the UK With relatively little transparency and another issue about the large number of various exemptions in terms of what has to be publicly recorded, it is not clear that authorities across the country and the public will have the confidence that public money is being spent according to the Bill’s seven key principles. Of course, local, regional and devolved authorities should be free to establish subsidies in support of their chosen economic objectives, but so too should neighbouring authorities and competing businesses have confidence in the process: that the reporting and regulations are up to speed Much like the UK Internal Market Act, the new subsidy regime will have far-reaching consequences across the UK, not just in the short term but for many years to come. We believe that the Bill can be strengthened and enhanced by a number of amendments. Ensuring that the Secretary of State gains the consent of the devolved Administrations when making secondary legislation and issuing guidance on the Bill would be a great start. Secondly, the Bill should be amended to ensure that the devolved Administrations are represented on the CMA subsidy advice unit; thirdly, it should give the devolved Administrations the power to call in subsidies, as we have already heard; fourthly, it should ensure that the devolved Administrations are explicitly included under the definition of "interested party"; and, finally, it should give the devolved Administrations the power to make their own streamlined subsidy schemes in order to support their own national priorities. When responding, could the Minister let your Lordships’ House know whether his department has given any consideration to a new UK-wide body—an economic prosperity council—where the devolved Administrations and the English regions could be represented Turning to statutory oversight and investigations, subsidy decisions are never going to be purely about competition. That is clear from the seven principles that public authorities have to consider. But does the Minister have confidence that the CMA has the necessary expertise to regulate subsidies, especially as this is a new area outside its existing remit? Currently, the CMA can investigate only subsidies that are referred by the Secretary of State or subsidies of "interest"—if they are volunteered to the CMA by the granting authority—or subsidies of "particular interest". This means that damaging subsidies could go under the radar and not be investigated. This would be a particular risk where public authorities get their assessments wrong, conclude that they are not providing a subsidy or do not even upload them on to the transparency database. Could the Minister also outline any plans to open up the oversight process, or does he believe that the Bill as it is written suffices Many noble Lords have touched on the levelling-up agenda. Due to time, I will not go into detail on that, but the comments made by the noble Lord, Lord Ravensdale, about the Bill being silent on disadvantaged regions and having nothing on assisted areas should be remedied when we go through Committee and Report One of the other areas I would like to question the Minister on is the freeports policy. How does the Government’s current freeport policy feed into or work within the Bill as it is currently written, and how is it represented The Minister mentioned net zero three times in his opening remarks, but, reading through the principles, I did not see the issues relating specifically to net zero. We believe that the Bill could and should be used to promote a cleaner and healthier country We will debate the Bill in Committee very soon, but I hope that the half-term recess will afford the Minister and his officials a much-needed opportunity to think again on many of the issues that have been raised this evening and in earlier debates in the other place, so that we can get right and truly seize the opportunities before us.