Subsidy Control Bill — House of Lords, 2022-01-19
Topic: Macroeconomics
Jeremy Purvis (Liberal Democrats, Centre to centre-left): 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 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.