Subsidy Control Bill — House of Lords, 2022-01-19
Topic: Macroeconomics
Christopher Fox (Liberal Democrats, Centre to centre-left): My Lords, it is always a pleasure to follow the noble Baroness, Lady Jones. This has been a really interesting debate and has not unfolded in the way I had originally anticipated. In trying to sum up this debate, there is a short sum and a long sum and I am afraid I am going to give both The short sum is that, if the Government table Bills like this, they are going to need more Committee days than they have so far allocated. We do not yet know what this Bill is, and we need to find ways of teasing that out from the Government because clearly they are not volunteering the information at the moment On the longer sum, it is always good to try to work out what the Government are seeking to cause or trying to cause to happen. I think we have to look to Schedule 1 for that. Principle A in Schedule 1 says: "Subsidies should pursue a specific policy objective in order to … remedy an identified market failure"— correct the market, or— "address an equity rationale (such as social difficulties or distributional concerns)." Principle C says: "Subsidies should be designed to bring about a change of economic behaviour of the beneficiary." All of this sounds very social democratic and very interventionalist. That might explain some of the concerns voiced by the noble Lord, Lord Forsyth, about subsidies. However, it is still not clear what sway that schedule will have over the actual behaviours and subsidy behaviours we see. The noble Lord, Lord Lamont, and, I think, the noble and learned Lord, Lord Thomas, made the point about how this is policed and whether Schedule 1 is the rule by which this regime is to be judged. This is still very unclear—in fact, not clear at all In the various letters and presentations supporting the Bill, the Minister carefully painted the picture of a nation handcuffed by the European Union. However, as we have heard from the noble Baroness, Lady Blake, and others, the UK has traditionally handed out less in public funding subsidies than most of the other EU countries. To date, the UK has chosen not to subsidise economic activity to the level that it could have done within the EU. Of course, it was the perfect right of the Government at the time to make those decisions Looking forward, my noble friend Lord Purvis asked how much money there will be. In the past we have funded less than we could. There is a good deal of discrepancy about how much money will be available on a straight like-for-like basis without starting to include funds such as agriculture. Some profit and loss—P&L—for this would be quite handy However much money there is, the next point lacking clarity is how the Government will prioritise what is going on. As my noble friend Lady Sheehan, the noble Lord, Lord Ravensdale, and others said, our guide to this is vanishingly vague. The industrial strategy was scrapped, Build Back Better is essentially a colour brochure, specific plans to reach net zero remain essentially unpublished and the "levelling up" slogan is wandering the corridors of Whitehall looking for a purpose. None of this acts as a useful guide Where, unusually, the noble Viscount, Lord Trenchard, is wrong is that rather than this avoiding political interference, it creates a vacuum where political interference can run wild. There are suspicious people who would say that the actual guide for allocating taxpayers’ money will have to answer only one key question: how does the proposed subsidy benefit the electoral ambitions of the Conservative Party I am sure the Minister would not want that sort of thing running around these corridors. To avoid it, he could start by circulating the drafts of the guidance. He could start by sending out the draft of the support to the Bill, the policy statements and the routes that this Bill will go by. This echoes the point made by the noble Lord, Lord Forsyth As we heard from the noble Lord, Lord Lamont, the EU has a long-standing and rigorous programme that aims to benefit the poorest communities. Rules exist under the EU regional aid scheme that cause higher aid to go to the least developed areas. This was largely through the European Regional Development Fund or the European Social Fund We have heard about Wales, but Cornwall received the highest ERDF/ESF allocation of any English area. Over the last 14 years, that totalled €1.24 billion. Looking forwards, can the Minister confirm whether Cornwall will continue to receive this level of support? The evidence suggests it will not. In fact, subsidy law experts Jonathan Branton and Alexander Rose note that the Bill does not propose a preferential system that would lead to targeted support for disadvantaged regions. They argue that the consequence of this could be better-off areas receiving support that would previously have gone to less well-off areas It is clear, looking at the role of the CMA, that much clarity is required. We need to know how enforcement is going to emerge. Also, the impact assessment says that there will be just 19 new posts within the CMA. Does the Minister honestly think this represents sufficient resource to police this whole scheme The issue of OneWeb was raised by the noble Lord, Lord Lamont, and the noble Viscount, Lord Chandos, and I have a different question around that. In order for that investment to happen, there had to be a letter of direction from the Minister to the Permanent Secretary, which says quite a lot. In future, how would a letter of direction be treated by this regime, given that the Secretary of State is likely to have to refer himself in order to have this reviewed? It is a special case, and I would like to know the answer The subject of reporting thresholds has been well documented today and I will not repeat it, except to say that reporting at £500,000 is absolutely the wrong route to take. In the Commons, John Penrose MP and Kevin Hollinrake MP both proposed amendments, and we will be working with others across the House to propose similar amendments here The effect on devolution has also been well rehearsed, not least by my noble friends Lady Humphreys, Lady Randerson and Lord Bruce, and the noble Lord, Lord German, the noble Baroness, Lady Bryan, and others. I associate myself with them. At the heart of the problem seems to be a take-it-or-leave-it approach to the relationship from London. The Minister has set out a roll-call of meetings with the devolved authorities and their offices, but it is clear these meetings were not dialogues but show and tell meetings. Ministers portray this Bill as a permissive move that empowers local authorities and the devolved authorities, but for their part, the Scottish and Welsh Governments see it as a now regular incursion of tanks on to their devolved lawns by Westminster. We agree with that latter view, and there will have to be amendments, going forward, to address that On Northern Ireland, my noble friend Lord Purvis and others detailed how conflation of the TCA and the Northern Ireland protocol will cause problems. The noble Lord, Lord Dodds, also brought this up. The Minister of State in the Commons sought to address this to some extent and to dispel the issue of double jeopardy, but it is clear that he failed to do that. We need to see, in detail, what legal position and legal advice the Government have had on double jeopardy, and we need to debate that in full when we get to Committee It seems that the Minister is seeking to play down the issue your Lordships have had with the Bill, and certainly will have when he sums up. There are issues from start to finish with it. Further, it is designed as a shell Bill—another shell Bill. It provides the Government with the opportunity to fill that shell with secondary legislation that can, at worst, amend primary legislation. This, again, is unacceptable. Overall, a lot of work needs to be done on this Bill before it leaves your Lordships’ House, and the Grand Committee awaits.