Subsidy Control Bill (Second sitting)

(Limited Text - Ministerial Extracts only)

Tuesday 26th October 2021 Public Bill Committees

[The Chair]

I will bring the Minister in now—I ask him to be conscious that Kirsty Blackman also wants to come in.

[The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Paul Scully)]

I am happy to let Ms Blackman go first.

[Kirsty Blackman (Aberdeen North) (SNP)]

Q Thank you, Ms Nokes, and thank you, Minister. Dr Barker, you seemed to say that pretty much all of the subsidies should be declared—that there should be transparency about all subsidies. Can I check that was what you said there?

Dr Barker: That is what I said, yes.

--- Later in debate ---

[Kirsty Blackman]

Q Okay. Perfect. You are in the unusual position where you represent both those people who may receive subsidies and those who may challenge subsidies. Do you feel that the balance is right? Do you feel that, given how the Bill works, your members are likely to be able to challenge subsidies that they feel are disadvantaging them or their organisations?

Dr Barker: This is why I was arguing for transparency. Transparency is an important part of that. A lot will depend on how quickly and effectively the system operates and how much trust there is in the system. If you are potentially a competitor and you can see that there is a clear justification, based on widely understood principles, for a subsidy—it is something that is not being covered up and that is openly stated—and if you have trust in the decision-making process, the system is going to work well, and there is probably going to be less legal challenge from competitors. But as soon as that trust is lost—because things are taking too long, because there is a lack of transparency, because decisions are being made on a very unsafe basis, or because officials do not understand how to apply the principles—that is going to build mistrust and that will then lead to more legal challenge and more problems from the system. It is very important that all the components of the system have the right resources and the right clarity in terms of guidance, and that there is transparency.

[Paul Scully]

Q Dr Barker, you rightly mention guidance—that you want to give certainty, but not be too prescriptive. I take your point about that, and we need to make sure it works for the whole of the UK. We have a more permissive approach, with the seven principles. Assuming that we set and define subsidies that are of particular interest to your satisfaction—perhaps just the most distorting, rather than the wider definition you were worried about—will that give enough certainty to businesses and the flexibility that they need to be able to prosper in the UK without the more prescriptive system of EU state aid?

Dr Barker: Yes. For us, it is very much about finding the balance. We absolutely do not want a highly prescriptive, bureaucratic regime. We really do see the benefits to our members of nimbleness. It is finding that balance between being nimble and not too nimble, such that decisions are made that then subsequently fall through. It is finding that sweet spot that we need to search for.

[Paul Scully]

Q You talked about appeals and taking things to the court. Presumably you think the Competition Appeal Tribunal is the best place for that, with the expertise that is required to hear these kinds of cases.

Dr Barker: Yes, we do. I realise that various options were considered, but we agree with that option.

[The Chair]

That brings us to the end of this panel. I thank Dr Barker for his evidence this afternoon.

Examination of Witness

George Peretz QC gave evidence.

--- Later in debate ---

[The Chair]

I will bring the Minister in because we will have a hard stop at 3 pm.

[Paul Scully]

Q When you were talking about interested parties and the two definitions, including the Secretary of State, did you define a person whose interests may be affected by the giving of a subsidy as a company boss? Is that what you were suggesting?

George Peretz: No, not a company boss. I think a company, a competitor, would.

[Paul Scully]

Q But when you define that, are you restricting yourself just to a competitor and not a Minister, in a Government, in a devolved Administration?

George Peretz: That is a live question. It seems to me that any court, when reading clause 70(7)(a), is likely to go back and have a look at the trade and co-operation agreement because the concept of “interested party” is a concept of that agreement, as it contains a definition of “interested party”. I do not have the provision before me and cannot remember the exact words off the top of my head—

[Paul Scully]

Q Sorry to cut in, but the only reason I say that is because the Secretary of State clearly might not have a direct interest, so why is he being specified—

George Peretz: The Secretary of State is automatically an interested party because of clause 70(7)(b). The Secretary of State does not have to demonstrate a role; all he has to do is say, “I am the Secretary of State”—he has an interest.

[Paul Scully]

Q But a Minister in a devolved Administration could be a person whose interest is affected by the grant.

George Peretz: That may or may not be right. That seems to be an issue. Other local authorities, or other sub-governmental bodies, are not listed in the relevant provision of the TCA—

[The Chair]

Order. I am sorry, but that brings us to the end of the time allotted for the Committee. I thank the witness very much for his evidence.

Examination of Witnesses

Jonathan Branton, Alexander Rose and Richard Warren gave evidence.

--- Later in debate ---

[Stephen Flynn]

Q Thank you for that, Ivan. Another question, if I may, Chair. On that income support for the agricultural sector, in the discussions—as you understand them—between Scottish Government officials and, indeed, officials from other devolved nations and the UK Government, has there been any indication that there would be a situation that arises where the UK Government would be cognisant of the concerns that the devolved nations have, and would seek to acquiesce to your request that agriculture be not included within the scope of this regime?

Ivan McKee: The proof of the pudding will be if an amendment comes forward in that regard and is accepted. We have not had confirmation that such an amendment would be accepted, so we will see where that goes. In answer to your question, we have not had confirmation from the UK Government that they would accept the exclusion of agriculture from the Bill at this point in time.

[Paul Scully]

Hi, Ivan. Good to see you.

Ivan McKee: Hi, Paul.

[Paul Scully]

Q Very quickly on agriculture and fishing, you will be aware that 81%—I think—of respondents to the consultation said that either agriculture or fisheries should be included in the Bill in some way. Do you at least welcome the fact that existing arrangements for agriculture and fishing subsidies will remain, and that legacy schemes will not need an assessment of compliance with the principles, or to meet the relevant transparency requirements—although, of course, we will continue to talk about future schemes?

Ivan McKee: Clearly the Bill sets out where we go in the future. Agriculture is devolved, so we would be concerned if a scheme or support that we put in place was deemed to be within scope, and could not be put in place as a consequence of the Bill. That would be a concern, obviously.

[Paul Scully]

Q We will continue to work with you and the other devolved Administrations to make sure that the agriculture and fisheries sector policy works across the UK. On engagement, obviously we have been working closely with you, Wales and Northern Ireland in developing the policy; I think we have had something like 34 official-to-official meetings and 12 ministerial meetings across the devolved Administrations—the quad meetings and so on. We will continue engaging throughout the parliamentary process and in the lead-up to implementation. What other engagement would you find useful?

Ivan McKee: I am very happy to engage, Paul, as you know, and to have those conversations at ministerial and official level. The issue is not so much the engagement; it is where the engagement leads. Our concerns have been clearly articulated, and if we do not see movement on them, clearly the engagement and discussion has not led to a solution that we find satisfactory. The challenge on the devolution settlement and the scope of powers is extremely concerning. We are glad that we continue to talk on this, but the real nub is the outcome. If the Bill continues to ignore the devolution settlement, clearly that is of significant concern to us.

On specifics, one thing that could help as part of that engagement process would be early sight of draft guidance and draft regulations; a lot of that has still to be nailed down. As we go forward with these discussions at ministerial and official level, any early sight of those things would facilitate discussions.

[Paul Scully]

That is helpful to know. Thank you.

[Simon Baynes]

Q Thank you, Mr McKee, for your time this afternoon; it is much appreciated. Do you welcome the devolution of powers under the subsidy control regime to local authorities in Scotland?

Ivan McKee: As I say, our main concern is the assault on the devolution settlement; it takes control away from Scotland in devolved areas. That is a significant concern. It is not acceptable for the UK Government to behave like that. Powers in devolved areas should lie with Scotland, and that is our main concern.