Subsidy Control Bill — House of Lords, 2022-01-19
Topic: Agriculture
Malcolm Bruce (Liberal Democrats, Centre to centre-left): My Lords, I am happy to follow the noble and learned Lord, Lord Thomas, and indeed some of his arguments. This Bill shares the same characteristics as the internal market Act. It lacks detail and clarity but shows disregard and a lack of sensitivity to the devolution settlements. This House managed to secure amendments during the passage of that Act, and I hope that we will succeed in securing amendments to this Bill The Bill replaces the EU state aid rules, which developed in a way that had the advantage of practicality and clarity. However, it is not clear whether the lack of clarity is because the Government have no coherent strategy for any subsidy regime or they have one but are keeping it under wraps until they have the powers under the Bill. We need to know. Either way, the devolved Administrations of Scotland and Wales have reacted with understandable concern and, so far, have indicated unwillingness to give legislative consent The Law Society of Scotland stated in its helpful submission: "We … stress the importance of ensuring that this bill and its accompanying guidance implements a regime that is clear, proportionate and gives businesses and local authorities (and their advisers), the tools to operate confidently within it." As it stands, the Bill does not do that. The imbalance between the role and powers of the Secretary of State and those of the devolved Administrations aggravates the situation. The Government argue that these are reserved powers. However, devolution requires consultation—genuine consultation—co-operation and respect, not the cavalier application of reserved powers Both Wales and Scotland have also expressed opposition to the inclusion of agriculture in the Bill. Indeed, the question arises as to why it is being included, given that we had extensive debate on the Agriculture Act, and that other national and international controls and commitments exist. NFU Scotland has stated that it is "unequivocal that agricultural and rural development financial support"— that is, subsidy— "must be kept separate from the subsidy control regime being proposed." Some 86% of Scotland’s land is recognised as having "less favoured area" status. The management of that land has required consistent subsidy and support. Although the nature of the support has changed over the years, moving away from reducing livestock subsidies towards environmental and area payments, there is no doubt that these rural areas will require continued support Rewilding has its place, but tension is already emerging between this approach and support for traditional farming, land management conservation, tourism and small-scale economic development as a means of averting depopulation, which is re-emerging in rural Scotland having been reversed for many years The lack of clarity in the Bill means that there is an inherent contradiction. On the one hand, compared with EU state aid rules, public authorities may be able to provide subsidies that would have been prevented under those rules. However, they do not know whether they can and whether they will be challenged. This means that agencies could well refer the proposals to the EMA—although whether the EMA will be effective in reviewing them is doubtful—meaning more bureaucracy and delay, or they may simply decide, "It is all too difficult, let’s not do it", and the schemes will be abandoned. The imbalance in the rules makes this even worse. Making the EMA the arbiter raises questions about the fact that the regime is excessively centralised, whether the EMA has the capacity or the expertise, and how it can be fair and effective to apply its role without the specific involvement of the devolved Administrations, which is not proposed at all This leads directly to the role of the Secretary of State. He or she has the power to define subsidies or subsidy scheme of interest or particular interest. The Minister really must give an indication of what the heck the Government mean by "interest or particular interest". Can he give us examples or any idea of what is in the Government’s mind? The Secretary of State also has the power to refer to the CMA and, further, to challenge the ruling before the Competition Appeal Tribunal on the basis of government regulations that we do not even know about yet. This presumably means that, if the Welsh or Scottish Governments proposed a subsidy scheme for their disadvantaged areas or sectors that the Secretary of State did not like or challenged, the scheme could be blocked. However, if the Secretary of State—acting as an English, not a UK, Minister—supported a subsidy regime in England that the devolved Administrations deemed unfair, there would be no such right. It may reflect reserved powers, but it fails to recognise the reality of devolution, which requires respect and consent. In reality, the Scottish Government’s interventions have been disastrously mismanaged, delivering neither jobs, production nor economic benefit. However, the way to deal with that is to throw them out, not challenge their right to do so I will certainly seek to support amendments to address the balance of the Bill and press the Government for clarity and transparency on how, in practice, they think this will operate.