The Chair
I am going to request that Members are brief, because many of you wish to ask questions.
The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Paul Scully)
Q
Professor Fothergill: The assisted area maps allow a higher rate of financial support for certain sorts of activities—subsidies, state aid or whatever you wish to call it—than is allowed outside the assisted area maps, so you can provide more intensive support. If you really want to attract inward investors to that locality, you can put more money on the table within an assisted area than you can outside an assisted area. One of the advantages of having a map in advance is that it is a clear signal to everyone concerned. Businesses know that those are areas where financial support can be made available, and local players know that in those areas it is possible to put money on the table if necessary to deliver an investment.
If everywhere is treated the same, everybody will be competing against one another on a level playing field, in terms of powers to give financial support or subsidy. If we are seriously interested in levelling up, we have to back that up with something beyond rhetoric. We have to back it up with some action.
Paul Scully
Q
Professor Fothergill: I disagree that it has not worked. There is plenty of evidence, as I was trying to say earlier, that support for businesses through the various programmes of regional investment aid over the years has delivered substantial numbers of new jobs in the less prosperous areas of the country. Often it has meant that we have been swimming against the tide in many of those places, with old industries disappearing at the same time as we have been doing our best to create new jobs. We have not solved the problem, but plenty of evidence shows that the use of what was state aid—we used to call it regional development grants, or regional selective assistance in England, many years ago—has positive benefits and delivers jobs in the places on the assisted area map.
Paul Scully
Q
Professor Fothergill: I am not an expert on some of the international systems, I have to say. I would hesitate to look across the Atlantic, from what I understand of the system there, because I do not think they have a simple system—a map—that applies in the United States, and therefore you get the horrible situation developing of a subsidy race between individual states. In many respects, that is what we want to avoid in the United Kingdom. We want a system where Guildford is not bidding against Grimsby. We want a system where places that really need the investment have the powers to deliver the investment. It is not just the places—the local place—of course; it is the Department for Business itself having the powers to mobilise its resources to give financial assistance in the Grimsbys rather than in the Guildfords.
Paul Scully
Q
Dr Pazos-Vidal: Yes. I could also say, if I quote some data from pre-pandemic, that in the regional selective assistance scheme in Scotland—I just checked that quickly when you raised that question—there were 69 awards worth in total £24 million, and the jobs created or safeguarded were around 2,500. That is evidence about where these schemes have worked, and we can look at that and evaluate that in terms of the development of the new system.
When it comes to international comparisons, I completely agree with Professor Fothergill. Clearly, the reason why this system exists across the Union—the state aid regime or the procurement framework legislation—is to provide the kind of chaotic system we have in the so-called competitive federalism model, such as in the US. Definitely, the UK would be much smaller and I would say more homogeneous in many ways. We should not actually have a system that is imitating that, because I think even the Americans sometimes would love to have a system that is more consistent than what we had in the EU and probably that we will have in the UK, so definitely no. A system that incentivises subsidy races and competitive federalism such as in the US will not perhaps be helpful.
In any case, it is a matter of choice. On this issue, I have been working with my Finnish and Norwegian colleagues, and one is from part of the EU and the other is not from part of the EU. One—Norway—uses special targeting so that certain remote areas will actually get additional subsidies, whereas Finland does the minimum in what it sets. In that more domestic context—a more European context, I mean, or closer to the UK—there is a variety of models, so it is just a question of finding the model that suits the UK, given the geographies, the mobility and the economy of the UK, specific area diversities that we have in the UK, and also the very specific asymmetric system that we have in the UK.
The Chair
Thank you. I am going to call Kirsty Blackman first, then Steve Kinnock, Kevin Hollinrake, Alexander Stafford and Mr Millar. As already indicated, and looking at the time, could we stick to brief questions and brief answers to carry on up to the allocated time?