Queen’s Speech

Baroness Bloomfield of Hinton Waldrist Excerpts

Monday 16th May 2022 Lords Chamber

[Baroness Drake (Lab)]

My Lords, the Queen’s Speech contained no emergency measures to address the cost of living crisis that households are experiencing. Rather, the Prime Minister said that

“for every pound of taxpayer’s money we spend on reducing bills now, it is a pound we are not investing in bringing down bills and prices over the longer term … this moment makes clear our best remedy lies in urgently delivering on our mission to turbo charge the economy … and spread opportunity across the country.”

But the challenge to that trade-off—less bread today but more bread and jam tomorrow—is rising inflation. It weakens plans to reduce regional inequalities, every pound of government spending is worth less and it is deepening inequality. Is there a point at which the Government would accept that families’ current struggle with the cost of living was too great and they would have to introduce emergency measures? If so, exactly what is that point?

Reversing the UK’s economic inequalities requires large-scale measures that are well directed and backed by substantial levels of funding over a prolonged period. We heard little about future funding in the Queen’s Speech. We know from Germany that closing regional inequalities takes time and huge sums of public investment. Germany has transferred around €70 billion a year for 30 consecutive years to level up its country.

So I ask the Minister: given that rising inflation means that departmental spending plans set by the Treasury in October are increasingly worth less in real terms, what steps will the Government take to ensure that they meet their new national missions? Will they increase the budgets or lower their aspirations for what can be achieved by 2030?

The UK has one of the most centralised decision-making systems in the OECD, contributing inefficiencies to the imbalances in our country. National decisions are made without a full understanding of their impact on different geographies. The Government accept that a fundamental rewiring of the system of decision-making, locally and nationally, is required to address geographical disparities in England. We wait to see whether those leading the process have the will to deliver it, and whether the Treasury will actually relinquish powers. To quote from the Constitution Committee’s report on respect and co-operation,

“the West Midlands Mayor, Andy Street, said the future of English devolution should involve a sustainable financial settlement that ends the ‘begging bowl culture’ to Whitehall.”

A risk to achieving government aspirations on climate change and levelling up is the financial services Bill; I agree with the noble Baroness, Lady Kramer. The current aims of the PRA and FCA include protecting and enhancing the integrity of the UK financial system and promoting competition. The Bill introduces a new delegated power to promote “international competitiveness”—a chilling sense of déjà vu. Previously, the FCA had a duty to promote international competitiveness. In 2012, the Treasury and Parliament both found that that approach to regulation contributed to the 2008 crisis. In 2019, the Governor of the Bank of England, Andrew Bailey, observed that, previously, the regulator

“was required to consider the UK’s competitiveness, and it didn’t end well, for anyone”.

That is true. The pursuit of the profitability of large international firms trumps public interest. Austerity and rising inequalities followed. The Government now risk making the same mistakes, and, with that, the levelling-up and net-zero aspirations faltering.

Advances in ICT and fintech have been hugely beneficial. Our economy would not have been able to adapt so quickly to mitigate the impact of the pandemic if it had occurred 20 years previously. But such advances bring new risks: communities grapple with access to cash, they face exclusion from data-driven services, and card or online transactions are the new norm.

In 2021 the UK cybersecurity agency took down a record number of online scams—four times as many as in 2020. TSB revealed that impersonation frauds are up 300%. Consumer protections in the Bill are needed, but absent is an FCA duty to have regard to financial inclusion, which is a growing risk in our economy.

[Baroness Bloomfield of Hinton Waldrist (Con)]

Could the noble Baroness bring her comments to a close, please?

[Baroness Drake (Lab)]

Sorry. Okay, well, the FCA’s new consumer duty and consumer vulnerability guidance concentrates on vulnerable consumers with access to retail products; it does not deal with those who do not have access to those products.

Finally, I look forward to hearing the maiden speech of the right reverend Prelate the Bishop of St Edmundsbury and Ipswich. I am newly discovering Suffolk as my daughter and granddaughters have gone there, so I shall listen intently to his contribution.

Nuclear Energy (Financing) Bill

Baroness Bloomfield of Hinton Waldrist Excerpts

Report stage
Thursday 24th March 2022 Lords Chamber

[Baroness Bennett of Manor Castle (GP)]

My Lords, I rise briefly to speak in support of Amendment 5 and particularly to pick up an aspect of it that we did not really discuss in Committee. It was brought to my attention by a foreign visitor. If we are talking about the source of the fuel, it is not just about whether the fuel going into the reactor is manufactured in the UK but where the raw material, the uranium, comes from. As the noble Lord, Lord McNicol, just said, there are issues of security here, as well as issues of human rights et cetera. Looking down the list of the world’s top uranium producers, Kazakhstan is number one and Russia, China—according to an estimated figure—and Ukraine are also in the top 10. I have been trying to establish what the current situation is—perhaps the Minister will tell me, or write to me later—about our current fuel and the origin of the supplies, but it is important in the context of this amendment that we consider that.

[Baroness Bloomfield of Hinton Waldrist (Con)]

I thank the noble Lord for his continued and constructive engagement with the Bill. I state clearly to him and to the noble Baroness, Lady Bennett, that I share the ambition to maximise the opportunities for UK industry in the nuclear supply chain. We are taking steps actively to support and develop the UK nuclear supply chain, including our world-leading nuclear fuel industry, which the recent spending review confirmed will be supported up to £75 million to preserve and develop the UK’s nuclear fuel production capability. We expect developers to play their part in this, supporting UK businesses to compete for opportunities in new projects, and to share their plans with government. For example, EDF has set out that, if the Sizewell C project is approved, it will aim to place 70% of construction contracts with UK companies—up from 64% at Hinkley Point C—and has engaged with the department on its plans for the plant’s supply chains.

For those projects that proceed to construction and operation, we expect that data on their supply chains, including what opportunities are being won by UK businesses, will continue to be shared with the department. Specifying that a nuclear company must use UK nuclear fuel would create a significant risk of putting the UK in breach of its obligations under the TCA, and potentially also of our obligations under the WTO and other international agreements—but we do expect developers to be transparent with the public about UK content in their effective supply chains during construction, as EDF has been with the Hinkley Point C project. We will support developers to make this information public where it does not prejudice commercial interests.

We believe that the matter is best taken forward through negotiations on new projects seeking the support of a RAB funding model and ongoing partnership working with the sector. Therefore, I do not believe that it is appropriate to accept the noble Lord’s amendment today. However, I accept the spirit in which the amendment was tabled, and I hope that I have given some assurance that we will actively aim to maximise the opportunities for UK companies as we deliver on our ambitions for nuclear power. As for the specific question from the noble Baroness, Lady Bennett of Manor Castle, I need to check with my officials to make sure that that can be divulged and, if it can, I will write to her after this stage of the Bill. In the meantime, I ask the noble Lord to withdraw his amendment.

[Lord McNicol of West Kilbride (Lab)]

I thank the Minister for her response and for her assurances. It is good to hear that the information on where the products come from is shared with the department. We were hoping that it could be shared more widely and publicly to help promote our industries. With that, I beg leave to withdraw the amendment.

Subsidy Control Bill

Baroness Bloomfield of Hinton Waldrist Excerpts

Lords Hansard - Part 1 & Report stage
Tuesday 22nd March 2022 Lords Chamber

[Baroness Bloomfield of Hinton Waldrist (Con)]

My Lords, before I turn to this amendment, I want to take this opportunity to correct the record. During the fourth Committee session of the Subsidy Control Bill on 9 February, I stated that data for England from the Rural Payments Agency showed

“that 99.5% of subsidies given to the agriculture industry in the UK would not fall within the remit of the subsidy”.—[Official Report, 9/2/22; col. GC 428.]

This figure was also provided in a letter dated 8 February responding to the points raised by several noble Lords during the third Committee session on 7 February. Late last week, the data was reviewed, uncovering a calculation error. In reality, Rural Payments Agency data for England shows 96.4% and not 99.5% of farm payment recipients are paid below the level of the minimal financial assistance threshold. I wish to clearly correct that for the record today.

But my conclusion still stands. The vast majority of agricultural subsidies will indeed fall below the MFA threshold and will not be subject to the substantive subsidy control rules, including the principles. It is only the largest subsidies, many of which will be to relatively large and well-off landowners, that will need to be assessed to ensure they comply with the common sense principles in this regime.

I turn to Amendment 4, tabled by the noble Baroness, Baroness Randerson—I wish her a speedy recovery—which was so ably introduced by the noble Lord, Lord Bruce of Bennachie. It seeks to add an additional principle to Schedule 1 that would require agricultural subsidies to be connected to the purposes listed under Section 1 of the Agriculture Act 2020. It would also require subsidies for agriculture to take particular account of areas of agricultural disadvantage and levels of marginality of land.

The subsidy control principles set out in Schedule 1 to the Bill are designed to apply equally to all strands of the UK economy. Their central purpose is to help protect domestic competition and investment, as well as trade and investment between the UK and other countries, from undue distortion which can arise from the giving of subsidies. This amendment, however, would radically depart from this. It would create a new principle which is not aimed at reducing distortion to competition, investment, or trade and is of no relevance to most types of subsidies.

The noble Lord, Lord Wigley, is quite correct: I am fully aware of the concerns of the farmers’ unions—particularly those in Wales, whose representatives I have met—and indeed those of the noble Lord, Lord Whitty. I reassure both noble Lords, however, that nothing in the new system will work against the granting of subsidies because, building on what the noble Lord, Lord Wigley, said, both agricultural and non-agricultural subsidies have much in common and need to work together to support rural economies.

The Bill establishes a clear, flexible framework for granting subsidies and will not inhibit public authorities from taking into account areas of agricultural disadvantage if they wish to do so. Agriculture is of course an area of devolved policy under the devolution settlements of Scotland, Wales and Northern Ireland. Spending decisions on agriculture are for the UK Government on behalf of England, and the three devolved Administrations in the areas in which they exercise their responsibilities. It is for them alone to take these spending decisions, so long as they are compliant with their domestic and international obligations, including the subsidy control regime. I cannot accept an amendment that would have the effect of putting further constraints on how devolved authorities exercise their powers.

My noble friend the Duke of Montrose rightly mentioned that the existing agricultural schemes and subsidies will be able to continue. The Bill provides broad and flexible grandfathering provisions for legacy schemes. Subsidies and schemes in existence prior to the Subsidy Control Bill coming into force may continue indefinitely if provided for under the original terms of the scheme. The Bill does not require subsidies made under legacy schemes to carry out an assessment of compliance against the subsidy control principles.

In particular, I cannot accept a reference to the Agriculture Act in this Bill. This section of the Agriculture Act is an excellent list of legitimate reasons to give financial assistance, many examples of which will be considered subsidies under the definition in the Bill. But I do not know whether my counterparts in the Scottish and Welsh Governments and the Northern Ireland Executive would welcome the application of this largely England-only legislation to their own agricultural policy, when it was never intended to serve that purpose.

The Bill has been designed to support public authorities in giving subsidies in line with their policy goals and the specific circumstances of their areas of responsibility, and the subsidy control principles are conducive to that. Principle A, for example, sets out that subsidies or schemes must be designed to remedy a market failure or address an equity concern. A subsidy designed to address agricultural disadvantage could certainly fall under one or both of these categories, depending on the type of disadvantage meant. Indeed, the Government’s amendment to add “local or regional disadvantage”, as an example of an equity rationale, underlines that.

Marginality of land may also need to be factored into the design of the subsidy or scheme where it is relevant. The subsidy control principles require a public authority to design their subsidies and schemes to change the economic behaviour of the beneficiaries, and to limit the subsidy to what is necessary to bring about the policy objective. It may very well be relevant to take into account the marginality of land to ensure that these principles are met. Fundamentally, however, it is not for the subsidy control regime to dictate whether agricultural subsidies—whether given by Defra, the devolved Governments or another authority—should account for less favourable pastoral land. In many cases it may well be appropriate for agricultural subsidies to factor in unfavourable conditions faced by farmers. However, this is for the public authorities themselves to determine and to incorporate into the terms and conditions of their own schemes.

The noble Lord, Lord McNicol, mentioned the common frameworks. The new domestic subsidy control arrangements and the UK common framework on agriculture are complementary. The inclusion of agriculture in the domestic subsidy regime will minimise the risk of distortions to UK competition and investment and ensure consistency across sectors. The common UK frameworks will enable policy proposals to be discussed and areas of disagreement resolved.

I hope I have managed to reassure noble Lords and, for the reasons I have set out, I ask the noble Lord, Lord Bruce of Bennachie, to withdraw the amendment on behalf of the noble Baroness.

[Lord Bruce of Bennachie (LD)]

My Lords, I thank the Minister for her response and all noble Lords who have taken part in this important and useful debate. There are just two or three things that need to be picked up. The noble Duke, the Duke of Montrose, started off with some sympathy for what we were saying but then turned against it, citing the continuation of the existing schemes. As the noble Lord, Lord Whitty, pointed out in his intervention, however, the world is changing—rapidly—and it may well be that, in the coming years, new schemes may be introduced and therefore that assurance would not have validity. Indeed, there is a general concern that marginal farms could be bought up by big institutions and squeezed out of existence.

I take the Minister’s point about the Agriculture Act, but we just wanted to make sure that we could add into the Bill the very good principles in the Act. I accept that it applies to England, but it would be very surprising if the Government of Scotland took issue with the principles in it. The point, nevertheless, is that farmers want an assurance that the support that they have had under various schemes since the Second World War is likely to continue in some form or other. There is a very real worry that that is not the direction of travel in which the Government are heading. That the matter is devolved does not preclude it also costing a significant amount of money, which previously came from the European Union’s common agricultural policy and now has to fall on the budget of the devolved Administrations.

I hope the Minister will understand, therefore, that the reason we are trying to put this in the Bill is to set out an explicit assurance that marginality will be a criterion that will be encouraged, just as a minor detail. Moreover, if that is in the Bill, it will make it more difficult for New Zealand or Australia, for example, to suggest that the subsidy is somehow incompatible with a trade agreement. Speaking with the experience of an MP for a farming constituency, I can assure the House that the suckler cow premium and the hill farmers have been the basis of building up the pre-eminence of Scotch beef and Aberdeen Angus beef. It is a system that has worked extremely well. Take the subsidies away from the hill farmers and prime Scotch beef will be much harder to deliver economically. The same applies to lamb in Wales and in Scotland. The hills of Scotland, Wales, the Borders and the Lake District without lambs and sheep would not be the attraction that they have been in the past.

I regret to say that I do not think that the Minister’s assurances go far enough, and I would like to test the opinion of the House.

Subsidy Control Bill

Baroness Bloomfield of Hinton Waldrist Excerpts

Lords Hansard - Part 2 & Report stage
Tuesday 22nd March 2022 Lords Chamber

Moved by

[Baroness Bloomfield of Hinton Waldrist]

7: Clause 10, page 6, line 36, at end insert—
“(6A) If, within the 40-day period, either House of Parliament resolves not to approve the scheme, or the scheme as modified, then, with effect from the end of the day on which the resolution is passed, the scheme, or the scheme as modified, is to be treated as not having been made.(6B) Nothing in subsection (6A)—(a) affects any subsidies given under the scheme before the end of the day on which the resolution is passed, or(b) prevents a further scheme being laid before Parliament.(6C) In this section, “the 40-day period” means—(a) if the scheme is laid before both Houses of Parliament on the same day, the period of 40 days beginning with that day, or(b) if the scheme is laid before the Houses of Parliament on different days, the period of 40 days beginning with the later of those days. (6D) In calculating the 40-day period, no account is to be taken of any period during which Parliament is dissolved or prorogued or during which both Houses of Parliament are adjourned for more than 4 days.”Member’s explanatory statement
This amendment provides that the making of streamlined subsidy schemes is subject to the negative resolution procedure and provides for the legal consequences if such schemes are not approved.

[Baroness Bloomfield of Hinton Waldrist (Con)]

My Lords, the amendments in the name of my noble friend address the findings of the 17th report of this Session by the Delegated Powers and Regulatory Reform Committee. The report’s recommendations on the powers that the Bill delegates to Ministers have been endorsed with vigour by your Lordships’ House. This is a clear indicator of the high regard in which the DPRRC’s expertise is held, and I am sure that that will continue under the chairmanship of my noble friend Lord McLoughlin, to whom my noble friend wrote last week to set out how the Government were addressing the committee’s concerns with regard to the Bill.

As various noble Lords have noted throughout the passage of the Bill, the DPRRC’s report took issue with some of the ways in which it delegated specific powers to Ministers. I trust it will be reassuring to noble Lords that the amendments I shall now speak to respond to those concerns.

First, Amendment 7 amends Clause 10. Clause 10 provides, among other things, that Ministers may make streamlined subsidy schemes to facilitate the granting of subsidies in accordance with the subsidy control requirements. Streamlined subsidy schemes would be laid before both Houses of Parliament after they are made or amended. The DPRRC report recommended that the power to make streamlined subsidy schemes should be exercised by regulations, and that the negative procedure would be appropriate.

I am pleased to say that Amendment 7 does, I believe, meet the spirit of the committee’s proposal. The amendment provides for every new or modified streamlined subsidy scheme to be subject to the negative resolution procedure, meaning that either House of Parliament may resolve not to approve the scheme within 40 days of it being laid. I remain of the view that the nature of these schemes means that the power to make them should not be exercised by regulations. Specifically, they are designed to be easily comprehensible and used by smaller public authorities and include numerous economic criteria that would not be easily expressed in the form of regulations.

I turn to Amendments 10 to 13 to Clause 16, which concerns short-term export credit insurance as provided by UK Export Finance. The committee’s report recommended that the power to amend the list of marketable risk countries, which is included in Clause 16, should be exercised by regulations subject to a parliamentary procedure, instead of by ministerial direction. I trust the House will be reassured to hear that the Government fully accept the recommendation of the report and these amendments achieve this effect.

Amendments 15 to 17 relate to Clauses 25 to 27, which provide for definitions of “deposit taker”, “insurance company” and “insurer” respectively. The clauses include a power for the Treasury to change the definitions in these clauses via regulations. The committee took the view that the Government have not identified with sufficient precision the circumstances in which these powers would be necessary, and consequently recommended that the powers given to the Treasury to amend these definitions be removed from the Bill. The Government accept this recommendation of the DPRRC’s report. Amendments 15 to 17 will remove from the Bill these powers to make regulations in Clauses 25 to 27.

I turn to the committee’s recommendations on the much-debated Clause 47. Noble Lords will be pleased to hear that Amendments 45 and 46 respond to these concerns. The DPRRC raised several concerns on the drafting of Clause 47, in particular subsection (7). I will restate briefly the Government’s position on the necessity of this clause.

The flexibility to delay publication of a financial stability direction is important where that publication would prematurely disclose the existence of a subsidy. Immediately disclosing certain subsidies could potentially cause further damage to confidence in the recipient enterprise, cause a run on that recipient, and damage wider market confidence. While it may be possible to interpret Clause 47(6) as allowing for a delay in publication, that is not the intended purpose of the subsection, which is intended to provide for a duty of publication. The Government’s view is that it is much more appropriate to provide for an explicit process for delay in publication, with a limited and specific condition for such a delay. This is what the Government have done in subsection (7).

The absence of a parliamentary procedure is not to prevent non-approval of the direction by Parliament, but rather to ensure that the effectiveness of any intervention is not impaired by fear among stakeholders that support could be withdrawn. If there is concern that support could be withdrawn, there is a material risk that a recipient enterprise will reject the support offered or that the market will not be reassured by such support. That is why similar powers to act without parliamentary approval are provided for in the special resolution regime, reflecting the importance of legal certainty for the success of emergency interventions.

As the DPRRC report on this provision made clear, legal certainty was one of several factors considered in relation to a parliamentary procedure for this measure and was not the sole deciding factor for choosing the process in Clause 47. Other factors included protecting information flows and necessary secrecy in certain circumstances, and the speed of deployment.

Amendment 46 makes provision for a delay in publication of a financial stability direction in the event that the Treasury considers that doing so would undermine the purpose of issuing the direction. The amendment makes explicit the need to publish a direction and lay it before Parliament when doing so would no longer undermine the reason it was given. It constitutes a temporary delay in publication, not permanent secrecy, as was perceived by the committee, but which I assure noble Lords was never the Government’s intention. This amendment makes that explicit.

Clause 47(6) requires the Treasury to publish a direction in whatever manner the Treasury sees appropriate. In direct response to concerns regarding parliamentary accountability, Amendment 45 adds to this subsection the requirement for the Treasury to lay a direction in Parliament when publishing a direction. This ensures a direct route for parliamentary visibility of a direction in addition to the requirement in Clause 47(6) to publish a direction to the public. The Government fully agree with the committee: parliamentary scrutiny is vital to our democracy and this Government will not try to avoid it.

To further assuage the concerns of the House, I am happy to announce that my honourable friend in the other place, the Economic Secretary to the Treasury, has written to the Public Accounts Committee and the Treasury Committee; these letters commit to confidentially notify the chairs of the use of a financial stability direction to disapply requirements of the Bill where the publication of a direction is delayed.

Before I conclude with this suite of amendments, I must inform the House that there is one area where the Government have not amended the Bill in line with the committee’s recommendations. The committee stated in its report that it considers the powers in Clause 11 to be inappropriate, recommending instead that key terms relating to the definition of “subsidies and schemes of interest” and “subsidies and schemes of particular interest” are placed on the face of the Bill.

The Government do not agree that these definitions should be added to the Bill. It is important that the Government fully engage with external stakeholders as well as Parliament to ensure that this important element of the new regime is fit for purpose. The Government have already published, in January, a set of illustrative regulations, setting out a suggested approach for defining “subsidies and schemes of interest” and “subsidies and schemes of particular interest”.

In that vein, we can commit that the Government will undertake a public consultation before making the first set of regulations under Clause 11 that establish definitions for “subsidies and schemes of interest” and “subsidies and schemes of particular interest”. This consultation is expected to launch very shortly.

I trust that this demonstrates the willingness of the Government to design this important part of the subsidy control regime in an open and collaborative way, and in a manner that uses the expertise of the devolved Administrations and of legal and subsidy control practitioners at all levels of government within the UK. Following the consultation, the final regulations will be laid before Parliament for approval under the affirmative procedure before the regime comes into force.

Finally, Amendment 8 is a minor and technical amendment to Clause 11. It clarifies that regulations made under Clause 11 may make specific reference to the value of the subsidy or scheme or to the sector in which the recipient of the subsidy operates, as well as other appropriate criteria as necessary. I trust that this amendment makes it clear that the list in subsection (2) was always intended to be indicative as opposed to exhaustive. I beg to move.

--- Later in debate ---

[Lord McNicol of West Kilbride (Lab)]

My Lords, we now come to the first mass grouping of a government concessions package. Like others, I express the thanks of these Benches to the noble Lord the Minister and the noble Baroness and the Bill team for the discussions and this good set of revisions to the Bill. There are 11 amendments in all, and as the noble Lord, Lord Fox, has said, many have been previously moved and supported by noble Lords from across the House, especially in Committee.

As we have heard, this group relates to the recommendations in the DPRRC report, which were plentiful and uncharacteristically forceful. Like everyone else, we are glad that common sense has prevailed, particularly in relation to the situation around Clause 47, whereby certain information could have been withheld from Parliament and, by extension, the public.

The concessions made by the noble Baroness in the name of the noble Lord the Minister are most welcome, but the bigger issue at play here is the frequency with which the Government have attempted to take broad powers for themselves, often without proper justification. We hope that that trend will change as we move towards a new parliamentary Session, and these concessions and these moves help to show that. Like the noble Lord, Lord Fox, we would have liked to see movement on Clause 11, on definition of schemes of interest and schemes of particular interest—but we will take these 11 amendments, with thanks.

[Baroness Bloomfield of Hinton Waldrist (Con)]

My Lords, this has been a short but constructive debate, and I welcome noble Lords’ support for this suite of amendments.

The noble and learned Lord, Lord Hope, requested a report on the obstacles to the granting of LCMs by the devolved Governments, and I am happy to make that commitment: we will bring a report at Third Reading. We also wish to note the constructive engagement of the noble Lord, Lord Fox, who has successfully picked up the mantle on the issues highlighted in the DPRRC report. I am sure that his speech made some difference, alongside the good standing of the DPRRC and our respect for its work.

Amendment 7 agreed.

--- Later in debate ---

Moved by

[Baroness Bloomfield of Hinton Waldrist]

52: Clause 65, page 37, line 17, leave out “fifth” and insert “third”
Member’s explanatory statement
This amendment changes the reporting requirement so that the CMA must prepare its first report three years after commencement instead of five years after commencement.

--- Later in debate ---

Moved by

[Baroness Bloomfield of Hinton Waldrist]

59: Schedule 3, page 58, line 4, leave out “(1)(a) and (b)”
Member’s explanatory statement
This amendment is consequential on the amendment at page 46, line 39 in the Minister's name, and provides that for the purposes of paragraph 8 of Schedule 3, the Clause 33 references to subsidies and schemes are taken to refer to those provided by primary legislation.

--- Later in debate ---

Moved by

[Baroness Bloomfield of Hinton Waldrist]

60: Clause 79, page 45, line 30, at end insert—
“(ea) section 76 (duty to provide pre-action information);”Member’s explanatory statement
This amendment adds the duty to provide pre-action information to the list of matters in Clause 79 on which the Secretary of State may issue guidance.

--- Later in debate ---

Moved by

[Baroness Bloomfield of Hinton Waldrist]

62: Clause 81, page 46, line 39, leave out from “apply” to end of line 40 and insert “—
(a) for the purposes of section 33(1) and (3) (see instead section 33(5)), or(b) if the modification is only a permitted modification (but section 33(5) applies to a permitted modification as it applies to other modifications).”Member’s explanatory statement
This amendment removes the exemption from the duty to enter modifications in the subsidy database, in relation to permitted modifications.

--- Later in debate ---

Moved by

[Baroness Bloomfield of Hinton Waldrist]

63: Clause 87, page 49, line 20, leave out “first” and insert “second”
Member’s explanatory statement
This amendment provides that the sunsetting provision for the Part 4 regulation-making powers will be triggered by the second report that the CMA makes under section 65, rather than the first report.

National Minimum Wage (Amendment) Regulations 2022

Baroness Bloomfield of Hinton Waldrist Excerpts

Tuesday 15th March 2022 Lords Chamber

[Lord Callanan]

That the draft Regulations laid before the House on 31 January be approved. Considered in Grand Committee on 10 March.

[Baroness Bloomfield of Hinton Waldrist (Con)]

My Lords, on behalf of my noble friend Lord Callanan, I beg to move the Motion standing in his name on the Order Paper.

Motion agreed.

Economic Crime (Transparency and Enforcement) Bill

Baroness Bloomfield of Hinton Waldrist Excerpts

Committee stage
Monday 14th March 2022 Lords Chamber

[Baroness Smith of Basildon (Lab)]

My Lords, in some ways, the amendments from the noble Baroness, Lady Kramer—she has done the House a service in tabling them—go to the heart of some of the issues that we have with the Bill as a House. It is that tension between recognising that the Bill is inadequate in many ways and recognising its necessity and why we are passing it today.

I am grateful to the noble Baroness, Lady Kramer, because her speech tonight was very powerful in setting out the reasons why such measures are essential. From what she was saying and in listening to the Minister earlier, and given the impact that these measures could have on the implementation of the measures in the Bill, it seems to me important that the Government look at this as a matter of urgency. There are huge merits to her arguments and it would be useful to know what the Minister can say on behalf of the Government.

It has been clear over a number of years that there is a multitude of undesirable activities that have come to light only because of the bravery of whistleblowers. The process started by this Bill—to be continued, as we have heard, by the second economic crime Bill—will, we hope, result in a lot more information coming forward. If that is the case, we should recognise that those who bring forward information of wrongdoing are performing a public service, and we rely on them to do that. No one should be in the position that they fear giving evidence because of reprisals or because they think no one is going to take them seriously and nothing will be done about it. Both are equally bad.

We accept not only that the registrar’s office should have a mechanism for receiving and processing the information but, on the point the noble Baroness, Lady Kramer, raised, the importance of doing everything possible to protect the individuals who have raised concerns. Without that protection, we are not going to get the people we need coming forward or they will do so at huge detriment to themselves. I hope the Minister will be able to tell us what the Government are doing on this. We have heard previously that this is something they are looking at and that something will come forward, but we need something a little more concrete, given the importance of this to this Bill.

The noble Lord the Minister spoke earlier about the measures that will be in the second economic crime Bill. I think we really needed a commitment not only that something like this will be considered for that Bill—we are happy to have discussions about how that could be done—but that it will come forward not just in the next Session but early in the next Session. To delay anything undermines the very purpose of being here tonight, to see through legislation which is now an emergency but need not have been an emergency. As the noble Lord, Lord Faulks, mentioned earlier, many of these things have been known about and talked about, but they have not come to fruition. Tonight there is an opportunity to say that we recognise the inadequacy of the Bill but also the necessity of it. I hope we will hear a very positive response from the Minister that there will be something to address this in the next Bill and that this will come very early in the next Session.

[Baroness Bloomfield of Hinton Waldrist (Con)]

I thank the noble Baroness, Lady Kramer, for this amendment. I acknowledge that she has a very impressive record of championing the whistleblowers’ cause. Indeed, as a number of noble Lords have said, this is clearly a common cause in the House.

Amendment 40 seeks to establish a whistleblowers’ office within the office of the registrar to receive whistleblowing reports on the accuracy of information and provide confidentiality and protection from retaliation. This amendment would do so by conferring an obligation on the Secretary of State to create the office within six months of Part 1 of this Bill coming into force.

This amendment would make changes to Clause 14, a supplementary clause that relates specifically to Clauses 12 and 13. Clause 12 sets out that an overseas entity must take reasonable steps to identify registerable beneficial owners and obtain the required information. The steps that must be taken in this regard include giving an information notice to any person that it knows or has reasonable cause to believe is a registrable beneficial owner. It also gives the person who is thought by the entity to be a beneficial owner an opportunity to correct inaccurate information where necessary.

Clause 13 builds on what is presented in Clause 12 by providing an overseas entity with additional powers to obtain information in order to identify beneficial owners if necessary. It provides that an information notice can be presented to a person who is thought to be able to assist with providing beneficial ownership information. This clause allows for entities to take extra steps in ensuring they have taken all reasonable steps to identify the beneficial owners. The Government believe that the provisions in Clauses 12 and 13 will help in making sure that the correct beneficial owners are identified and registered.

Companies House already offers an anonymous “report it now” function for anyone to raise concerns about the accuracy of information it holds. We will ensure that this functionality is extended to the new register of overseas entities. It is also worth noting that Companies House will be provided with expanded and stronger powers to challenge and pursue suspicious filings in the forthcoming second part of the economic crime Bill, as set out in our recent White Paper. This will include a new power for the registrar to query information, including in light of concerns raised by third parties. Those concerns might be raised through the “report it now” function or through other mechanisms, including duties on the regulated sectors. We will take care to ensure that those third parties are suitably protected.

The noble Baroness, Lady Kramer, mentioned the American scheme. There are different opinions on the impact of providing financial incentives to whistleblowers, reflecting local legal, political and social norms. However, organisations representing UK whistleblowers, such as Protect, do not recommend the introduction of financial rewards or incentives. The FCA and the PRA undertook research considering an incentive scheme for whistleblowers and published their conclusions in July 2014. They concluded then that providing financial incentives to whistleblowers would not encourage whistleblowing or significantly increase the integrity and transparency of financial markets.

The noble Baroness, Lady Smith of Basildon, asked what the Government had done to improve the whistleblowing framework. This work is ongoing, but we have already increased the scope of those protected by our whistleblowing laws by extending protection to groups previously not included. This greater transparency around the work of prescribed persons aims to increase confidence among whistleblowers that their disclosures are taken seriously and to improve consistency across different bodies in the way they respond to disclosures.

[Baroness Smith of Basildon (Lab)]

I asked not what the Government had done but what they were going to do.

[Baroness Bloomfield of Hinton Waldrist (Con)]

Sorry; I misunderstood.

It is right and proper that the Government review the whistleblowing framework once we have had sufficient time to build the necessary evidence of the impact of the most recent reforms. We acknowledge that an effective whistleblowing framework is an important part of the UK’s ability to tackle corruption and all forms of economic crime and illicit finance. These acts are, by their nature, often covert. The Government are committed to ensuring that individuals are able to speak up about the behaviour of bad actors.

In recent years the Government have continued to improve the whistleblowing framework, and we will continue to do so in future. It is important that whistleblowing disclosures are dealt with properly and by the right body. This is why BEIS maintains and regularly updates the prescribed persons order. Officials work closely with other government departments, the devolved Administrations and regulators to ensure the list is up to date. I can assure noble Lords that this work is ongoing, and we will continue to improve the whistleblowing framework in the near future.

With that, I ask the noble Baroness to withdraw her amendment.

[Baroness Kramer (LD)]

Obviously, I am very disappointed with the answer and the ongoing complacency that undermines the legislation we are passing, but at this point in time I beg leave to withdraw the amendment.

Nuclear Energy (Financing) Bill

Baroness Bloomfield of Hinton Waldrist Excerpts

Committee stage
Tuesday 8th March 2022 Grand Committee

[Lord Teverson (LD)]

My Lords, I will make just a brief intervention. I do not disagree at all with the noble Lord’s amendment, except that clearly we should not use this form of funding for research until we know that we are building something that is going to work. It would be absolutely wrong to use this sort of funding for the research side. In defence of this Government and previous ones, in the area of fusion we have probably been more consistent in terms of our policy and research than we have with nuclear power— so that was probably slightly unfair criticism of the Government in that regard.

At this stage, without getting into heavy weather, the point I want to make is that we have an energy crisis at the moment, which makes this Bill slightly less relevant than anything else. I would be interested to have a statement—just a short sentence—from the Minister on what BEIS is doing at this moment to accelerate the alternative forms of energy that we have in the UK, particularly renewables, given the situation that we are now seeing: not just even higher energy prices but energy prices that will probably remain high for a long time, and the wish and absolute need of the West—Europe and the UK—to disinvest from supplies of Russian energy. I realise that is not great in terms of the UK, but we are as much subject to these global markets as anyone else.

[Baroness Bloomfield of Hinton Waldrist (Con)]

My Lords, before we begin, I understand that the noble Lord, Lord McNicol, is unfortunately unwell and therefore unable to join us here today. I wish him a speedy recovery and look forward to welcoming him back to the House soon. It is a pleasure to open for the Government in response to the amendment tabled by the noble Lord, Lord Wigley. Mae’n ddrwg gen i am beidio a roi ateb i chi yn barod—I am very sorry that we have not given you an answer already. I think that somehow passed me by after Second Reading.

The Government share the noble Lord’s enthusiasm for the potential of fusion energy to play a role in our future energy system. However, I do not believe that the noble Lord’s amendment is necessary or appropriate here. First, the term “nuclear energy” is sufficiently broad that fusion projects can be regarded as already falling in scope. This makes a specific amendment on this point unnecessary.

I also want to make clear to the noble Lord that, despite recent technological advances and increases in private investment, fusion remains a comparatively early-stage technology; prototypes are not expected to be deployed until the 2030s or the 2040s. The Government are supporting the development and deployment of fusion demonstrator facilities by investing in R&D programmes and facilities and developing a proportionate regulatory framework. Indeed, there is already significant private investment in a number of fusion projects both here in the UK and in the US.

None the less, the Government intend to develop an appropriate funding model for commercial fusion energy facilities in due course, as fusion energy moves closer to commercial deployment. This funding model will reflect the nature of this means of energy generation. I hope that I have provided adequate reassurance for the noble Lord, Lord Wigley, that the Government share his goals and that this amendment is not necessary for achieving them. I therefore hope that the noble Lord will feel able to withdraw his amendment.

On our support for renewables, we have enunciated the breadth of work that we are doing in this area a number of times. We have made numerous statements in the House on this issue recently. I would be happy to write to the noble Lord with more information about the Government’s plans, but I do not think it is appropriate just to give a brief statement of our current intent.

[Lord Teverson (LD)]

What I was trying to ask is whether BEIS is getting itself into gear—and I realise that the Government will probably look wider than renewables—and getting its act together now to really look at how we move forward in this area. Can the Minister assure noble Lords on this?

[Baroness Bloomfield of Hinton Waldrist (Con)]

I am sure that this is upmost in the minds of the Secretary of State and the Energy Minister. The Prime Minister has also made statements to this effect, and it is very much on every morning’s agenda. We have a ministerial meeting and it is the first topic at every one of them.

[Baroness Wilcox of Newport (Lab)]

Before the Minister sits down, I had hoped that she would have said that the Bill had been drafted in a technology-neutral manner and that the amendment was therefore not necessary, so receiving a clarification would be useful. We cannot afford to fall off the bus again.

[Baroness Bloomfield of Hinton Waldrist (Con)]

I take the noble Baroness’s point. Indeed, the Bill has been drafted in a technology-agnostic way to cover all forms of energy infrastructure.

[Lord Wigley (PC)]

My Lords, I am very grateful to the noble Baroness for her response and for the interventions on the points that I raised. A moment ago, the noble Lord, Lord Teverson, appeared in the uncharacteristic role of being a protector and defender of the Government on these matters, and I am sure that that will be bankable by the Government at some stage. This is not a party-political point because it is not party politics; I am speaking on my behalf, as my own party has divisions on these issues. Over the past 30 years, we have had “stop-start-stutter” with regard to nuclear; if you do not want nuclear, perhaps “stutter” and “stop” are good options. But if nuclear is going to play a role, it has to be treated in a serious and coherent manner. It needs to be transparent, and we will be coming on to questions of transparency in a number of later amendments.

Returning to the core of my amendment—

--- Later in debate ---

[Baroness Worthington (CB)]

Before the Minister responds, I would be interested in whether we should have a review of the societal demands of how we treat the decommissioning and waste of nuclear, because it seems to me that we are operating against a set of principles that have become detached from the reality of how you can manage this more cost-effectively. A large body of evidence says that geological disposal is not needed, because you can just do subterranean management. If it were not for the widespread lack of understanding about the nature of the problem and the way it can be dealt with, we would not have to incur these costs. If there is a review, we should go back to basics.

The same is true of decommissioning. The simplest and cheapest way to decommission is to leave it alone and then decommission it. The desire to bring it back to greenfield status is utterly unnecessary. These are highly concentrated industrial sites that serve clean energy to millions of people. We should not be seeking to return them to greenfield on an accelerated timescale, unnecessarily incurring huge costs to the taxpayer. We should have a review, go back to basics and consider all of the above in terms of what we should do with our waste and decommissioning.

[Baroness Bloomfield of Hinton Waldrist (Con)]

My Lords, I shall speak to Amendments 3, 17, 20, 42, 44 and 45, laid by the noble Lords, Lord Oates, Lord Teverson, Lord Wigley and Lord Vaux, and the noble Baroness, Lady Bennett. They relate to decommissioning and it is appropriate that they are all discussed together.

Prior to doing that, I will address the comments of the noble Lord, Lord Teverson, on the Nuclear Liabilities Fund. The NLF is a segregated fund which has been set up to meet the costs of decommissioning nuclear power stations currently owned and operated by EDF. The fund is managed by an independent Scottish trust, the Nuclear Trust. The trustees are responsible for ensuring the sufficiency of the NLF to meet decommissioning liabilities. I hope that that answers his questions.

I return to new nuclear and make it clear to the Committee that there is already a robust and effective statutory regime in place that addresses the decommissioning costs of new nuclear power stations. Under the Energy Act 2008, it is a legal requirement that all proposed new nuclear power stations have a Secretary of State-approved funded decommissioning programme in place before nuclear-related construction can commence on site. This includes setting out how the operator will safely manage spent fuel and waste during operations and meet the costs of decommissioning and the clean-up of the site. I note with interest the comments made by the noble Lord, Lord Wigley, and welcome the opportunity to meet him if he would like to discuss this process further.

As part of the FDP approval process, the Secretary of State must consult the Office for Nuclear Regulation—the ONR—and relevant environmental regulators where their functions are concerned. The Government have also published FDP guidance, which clearly sets out the principles that the Secretary of State will expect to be satisfied in an FDP. I note that we expect any approved FDP for a new project to be available publicly, as was the case for Hinkley Point C, save for material of a sensitive nature.

Approximately 94% of legacy waste created by nuclear power stations in the UK is low-level waste, which is either recycled or disposed of safely and securely. Higher-activity waste is treated and stored safely and securely in nuclear-licensed sites around the country. This will then be disposed of in a geological disposal facility, which the Government are committed to developing. The noble Baroness, Lady Worthington, made these points eloquently and I thank her for her contribution. A GDF will ultimately allow the Nuclear Decommissioning Authority to complete the decommissioning and clean-up of the existing nuclear estate and to continue to manage radioactive waste effectively. This is the safest and most environmentally responsible option for managing higher-activity radioactive waste in the long term and there is a process under way to identify a suitable location for a GDF.

The noble Lord, Lord Callanan, recently wrote to the noble Baroness, Lady Bennett, on this very matter. A GDF working group, which is the first formal step in the process to identify a suitable location, has been formed in Theddlethorpe in Lincolnshire and is beginning discussions with the local community. In addition, the first three GDF community partnerships—the second formal step in the process—have been formed in Mid Copeland, South Copeland and Allerdale in Cumbria. These groups provide a platform for long-term community engagement, local investment funding and investigations to assess potential site suitability.

It is for these reasons that I cannot accept Amendments 3, 17, 20, 44 and 45. The FDP regime in the Energy Act 2008 already exists to ensure that new nuclear projects have effective arrangements in place before they begin construction to manage, pay for and dispose of the waste that they create. Amendment 3 in particular would prevent the Government from bringing forward new nuclear power using the nuclear RAB model that we need to decarbonise our power system and help meet our ambitious climate change goals. A GDF is the best option for the long-term management of radioactive waste and I thank the noble Viscount, Lord Hanworth, for his support for such a facility. I also thank my noble friend Lord Howell for his thoughtful reflections on this matter. As I said, a process is already under way to identify a suitable location with a community willing to host a GDF. It is imperative that we bring forward nuclear now, given that arrangements are in place for safe, secure interim storage of waste and its ultimate disposal.

The noble Lord, Lord Oates, made several comments on the potential costs of a GDF and how our understanding of these has developed. The earlier cost figure to which the noble Lord referred represented a lower-end single point estimate around some basic assumptions on the depth and type of rock in which the GDF would be constructed. It included only the cost of disposing of legacy waste. The revised cost range of £20 billion to £53 billion is a more mature and complete estimate based on credible scenarios. It includes figures for waste from new nuclear projects and materials such as uranium and spent fuel from earlier nuclear power stations, which may be declared as waste if no further use is found for them. It also accounts for factors including uncertainty and optimism bias. Uncertainty will be reduced as we progress through the siting process. We will understand the specific geology and associated engineering and technical requirements, allowing us to refine our cost estimates.

I turn to Amendment 42, which was laid by the noble Lord, Lord Vaux. It is our understanding that the intent of the definition of “associated” in Section 67 of the Energy Act 2008 was to provide the Secretary of State with the flexibility to impose decommissioning obligations on entities that would be expected to have a substantial degree of influence over the operator’s normal activities, such as the operator’s group companies and shareholders with an interest in the company significant enough to influence its decisions.

--- Later in debate ---

[Lord Wigley (PC)]

Will the Minister clarify her response on Amendment 20? If the cost of decommissioning, including of the site, goes beyond that which has been built in to the financial agreement at the origin of the scheme, is she saying that the Government would pick up the bill in those circumstances and that there is already a provision to provide for that, or is she saying that in no circumstances would the Government use public money for that purpose? If she is saying the latter, getting a nuclear power station such as Wylfa off the ground does not have a snowball’s chance in hell. There has to be a guarantee that ultimately the public purse will pick up the cost.

[Baroness Bloomfield of Hinton Waldrist (Con)]

All I can say is that all these issues will be negotiated up front in the agreement that we make with the potential operator of a new nuclear site.

[Lord Wigley (PC)]

I am sorry to press this further, but of course there will be negotiations and some sort of a deal will be made with those developers, but if the circumstances change, as happened at Trawsfynydd, and there are immense additional costs beyond what was anticipated, surely there has to be a public guarantee to those communities. Those communities have supported nuclear power on the basis that such an understanding exists. If it is not there, there will be a volte-face, and there will be a reaction against nuclear power. This assurance has to be given one way or the other. If the Government want to go away, think about what mechanism is appropriate and come back on Report, I accept that, but to say that in no circumstances would the Government pick up the tab is to kill off the prospect of those locations.

[Lord Wigley (PC)]

I entirely accept what the noble Baroness is saying, but circumstances will change and there will be costs that have not been anticipated. Those will be picked up either by the local community or by someone else. If it is someone else, who else can it be but central government?

[Baroness Bloomfield of Hinton Waldrist (Con)]

What I can say is that the Government will meet all our obligations to communities in decommissioning the site.

[Lord Vaux of Harrowden (CB)]

When the Minister was answering on Amendment 42, I think that she confirmed the existence of the loophole that I had pointed out, so I will just ask her a direct question. If someone whose stake was, say, 30% managed to structure it so that it was 19% and debt, then that debt was subsequently rejigged to bring us back above the 20% threshold, should that person be treated as associated or not?

[Baroness Bloomfield of Hinton Waldrist (Con)]

I am told that Section 67 of the 2008 Act already provides for this, because the totality of the investment would be taken together. If it is over the threshold, it will be caught.

[Lord Vaux of Harrowden (CB)]

But the whole point of Clause 40 is to create an exemption, so that share security rights that arise from debt are not taken into consideration when deciding whether someone is over the 20% or not. That is the whole point of Clause 40 and is precisely the problem that I was alluding to. I am happy to meet the Minister to discuss it, if that is easier.

[Baroness Bloomfield of Hinton Waldrist (Con)]

I am happy to explore this further out of Committee.

[Lord Oates (LD)]

I thank noble Lords—some more than others—for their contributions to this debate. I particularly thank the noble Lord, Lord Howell, who, while we disagree strongly on these issues, addressed nuclear waste seriously. One of my purposes in tabling Amendment 3 was not only to expose issues about and have a proper discussion around the costs of a geological disposal facility but because it concerned me, at Second Reading, that there was little focus on waste.

I perhaps should have declared an interest at the beginning as, many years ago, I acted as an adviser to the NDA. While I do not pretend to be a scientist, I have some understanding of this and say gently that there are many people, on all sides of this debate, who have an understanding and take different views. Noble Lords should not make assumptions about their greater knowledge to underpin their enthusiasm for nuclear.

On the specific point of my party’s position on this—again, rather than addressing some of the issues, we seemed to get into a rather unnecessary partisan issue—different parties have different views. As my noble friend Lord Stunell pointed out, the agreement in the coalition was no public subsidy for new nuclear and that is the position we took.

The noble Viscount, Lord Hanworth, for whom I have great respect, was uncharacteristically partisan. He told me that I could not have it both ways, but I gently suggest that he cannot have it both ways either. If the issue of nuclear waste is of such marginal concern and I should not be bothering the Committee about it or the costs of it, why are we intending to spend potentially £51 billion—I imagine much more by the time we get to it—on a geological disposal facility? The noble Viscount said, “Well, there are things happening”, but there have been things happening for a long time on the GDF. As my noble friend Lord Stunell pointed out, we have gone backwards in many ways. I have also heard some argue, “Oh, actually, we do not need a geological disposal facility. That solves it, because then we do not have to worry about the costs of that or the difficulties of securing it.” That is not the view of the majority of people I have spoken to, and I have spoken not only to those who are opposed to nuclear but to those involved in the nuclear industry. Certainly, the international view and the international experience is that such a GDF is required.

All I would ask of the Committee and the Government is, if they are intent on going down the road of nuclear—I am quite open that I am opposed to it, not for some ideological reason or from radiophobia but for some very practical reasons relating to the problems; they are not about encased waste, which you can standby or store for 100, 200 or possibly 300 years, but about long-term disposal, as talked about by my noble friend Lord Stunell, the noble Baroness, Lady Bennett, and others—

--- Later in debate ---

[Baroness Wilcox of Newport (Lab)]

I am grateful to noble Lords for tabling their amendments on consultation. I declare that I too am a vice-president of the LGA and—for about another six weeks or so—a member of Newport City Council. I am curious yet not surprised to see the amendment from my noble friend Lord Foulkes, who has apologised that he has had to leave, seeking to disapply the requirement to consult the Scottish Government.

I am sympathetic to some of the arguments made. Any infrastructure project is easier to deliver when there is community consent for it. Communities and local representatives are likely to have very strong views on these matters, as I know of old. I hope that the Minister can outline existing requirements and any additional ones imposed by the Bill and say whether she thinks that the system is sufficient.

[Baroness Bloomfield of Hinton Waldrist (Con)]

I thank the noble Lords, Lord Foster and Lord Foulkes, and the noble Baroness, Lady Bennett, for their amendments relating to consultation with different persons. Regarding the amendments tabled by the noble Lord, Lord Foster, and the noble Baroness, Lady Bennett, I understand their desire to bring the local community into the process. However, the Bill is not the place to do this. It is concerned with the financing of nuclear projects, rather than planning and other regulatory approvals.

While the publicly available information about a project’s progress in seeking these approvals is likely to be relevant to decisions about which projects should benefit from the RAB model, the decisions themselves are separate and independently made. A company benefitting from the RAB model would receive revenue payments funded by licenced suppliers in Great Britain as a whole and, through them, consumers. It would therefore be wrong to grant a different status to either the local authority or particular groups of persons in respect of decisions made by the Secretary of State under the Bill’s provisions.

Both local individuals and authorities would be able to express their point of view regarding any new project through the planning process. They would, for example, have the opportunity to input their views during the hearings that would take place as part of the consideration of a project’s application for development consent. That is the right place and process for those concerns to be considered, rather than in discussions about a financing model that will impact all consumers.

I remind noble Lords of my noble friend Lord Callanan’s comments on, I think, the second group of amendments today about the productive conversations we have been having with the Sizewell C project team during the ongoing negotiations. It is our understanding that the Sizewell team intends to replicate the commitments made in the Hinkley Point C solidarity agreements, which represent a new and innovative approach to industrial relations. Our industrial relations at Hinkley Point have been extremely good and, while I take the point about Sizewell C, this is a Bill for a financing model that is supposed to be for generic nuclear financing; it is not specifically about Sizewell C. Were it to be used, for example, for Wylfa, I am sure that there would be different considerations but, again, that is not the specific intention of the Bill. This is about creating a generic financing model to finance any large-scale nuclear power plant in the future.

Amendment 30 was tabled by the noble Lord, Lord Foulkes. I understand the noble Lord’s concern about the different position on nuclear energy that is held by the Scottish Government, but ultimately it is right that the relevant devolved nations have equal rights under the Bill. It would be wrong to allow the Secretary of State solely to have the power to exclude Scottish Ministers while retaining an unqualified obligation with regard to Welsh Ministers. While this provision requires consultation with those persons, it does not require that they agree with the proposed modifications for those modifications to be made. I further point out to the noble Lord that nothing in the Bill will change the fact that Scottish Ministers are responsible for approving planning applications for large-scale onshore electricity generating stations within Scotland.

I hope that I have shown noble Lords that their amendments are inappropriate in the wider context. I therefore ask noble Lords not to press them.

[Lord Foster of Bath (LD)]

My Lords, I am grateful to the Minister for her response, but I genuinely did not understand it and I apologise for that. The clause is about the designation of a nuclear company. That power rests in the hands of the Secretary of State, who will make the decision based on a number of criteria. As we pointed out, we do not yet know what those criteria are and we are not sure that we are ever going to find out. However, it is also going to be done after consultation, and the consultees are required to be a number of people, as specified in the legislation.

I sought to have local authorities included as a specified group to be consulted. The Minister’s response was that they would get their opportunity to raise their issues of concern in other fora, and that this is not the right place. However, I am absolutely certain that my amendment was intended to ensure that local authorities, representing local people impacted by the decisions that are taken, should be able to be involved in the designation of a company. It is, after all, they who will have done all the work and they who will have brought forward the planning application and the various modifications to it and sought money and received money from central government to help them get on with the task and so on. The designation of the company is critical. I therefore genuinely do not understand why the Minister says that it is inappropriate for this particular aspect of activity. I may be being stupid, in which case I will have time to reflect before the next stage and get a bit more informed before I come back. In the meantime, I beg leave to withdraw the amendment.

Subsidy Control Bill

Baroness Bloomfield of Hinton Waldrist Excerpts

Committee stage
Wednesday 9th February 2022 Grand Committee

[Baroness Jones of Moulsecoomb (GP)]

My Lords, I shall speak to Amendments 62 and 63. Amendment 62 seems pretty basic post-legislative scrutiny, so I am not quite sure why it is not in the Bill already. The Government are bringing in this legislation and it makes sense for the Competition and Markets Authority to report on whether the legislation works in practice. That is fairly fundamental, is it not? If it does not, then, obviously, we can improve the legislation; if it does, then the Government can pat themselves on the back. The amendment should have been in the Bill. I am expecting the Minister to say, “Yes, of course, we’ll write it in now.”

On Amendment 63—I wish I had added my name to it; I agree with everything that we have heard so far from noble Lords—I have said before that we should have a provision such as this in every single piece of legislation. As the noble Lord, Lord Whitty, just said, it is basic to what the Government claim to care about. The principle should underpin everything that they do. We know that the scale and size of the net-zero problem is huge, and the Government will need a lot of help. They will need a lot of private and public investment, and it will involve a lot of changes to government taxation and spending.

Any aspect of government that thinks that the climate emergency is not part of its remit is not thinking hard enough about it. We need both the whole of government and the whole of society to address the work on the climate and ecological emergencies. Every Bill that comes through here, every tax levied and every pound of government spending should move us towards net zero. There is an environmental saying: doing nothing risks everything. The Minister will say that the Government are doing a lot. I would argue that they are doing bits and pieces, so the saying could be: doing bits and pieces risks everything as well. We need a coherent approach.

I was asked whether I would still like a meeting with the Minister. Yes, I would, and I would like to throw down a little challenge. If the Minister or his team can come up with any issue that is not relevant to our climate emergency, I will be happy to argue how it is relevant. I look forward to that meeting, and I might bring some heavyweights with me.

[Baroness Bloomfield of Hinton Waldrist (Con)]

My Lords, each year, the CMA is required by the Enterprise and Regulatory Reform Act 2013 to prepare a report on its activities and performance that year. The report must be sent to the Secretary of State and laid before Parliament.

Clause 66 requires that the CMA include details within its annual report of any subsidies and schemes which have been referred to the subsidy advice unit in that year. This includes referrals made on both a mandatory or voluntary basis, including those made by the Secretary of State, and it is designed to mirror the level of detail required for information on the CMA’s other functions. This information will help to provide transparency as to the number and types of subsidies and schemes referred to the subsidy advice unit. Among other things, it will help both the CMA and Parliament to understand whether the subsidy advice unit is operating as expected and has the appropriate resources to fulfil its functions.

Amendment 62 would add the requirement for the CMA to set out an assessment on the extent to which the regime is meeting its stated policy objectives. On this matter, it is important to draw a clear distinction between the purpose of the CMA’s reporting under this clause, as opposed to the more in-depth review and reporting that it will do under Clause 65. The effect of this amendment will be to combine the purpose of these two distinct categories of report, and in doing so place an unnecessary burden on the CMA in producing its annual report.

In response to the question of the noble Baroness, Lady Blake, on what effect the CMA reports will have, the monitoring reports will already be published for all to see. The Bill contains numerous provisions for amending specific aspects of the regime though secondary legislation. This ensures proper parliamentary scrutiny of any proposed changes to the regime. The purpose of the subsidy advice unit’s regime-level monitoring function is to provide an objective source of information about the functioning of the new system. This feeds into the Government’s objective of monitoring and continuous improvement for the regime, while also providing confidence in the regime to stakeholders and the public across the UK. Requiring more frequent monitoring reports from the CMA, with improved scrutiny and transparency, might indeed seem attractive but in reality, it could cause the opposite effect to that intended by the noble Baroness, resulting in more superficial reports that will be less useful in assessing the overall effectiveness of the subsidy regime.

The information required by Clause 66 is designed to sit within the CMA’s existing reporting requirements. The annual report is a descriptive and limited tool for the CMA to publish key information about its workload and resources and to ensure that it is moving towards achieving its own organisational objectives across all its functions. This report must include summaries of its significant decisions, investigations or other activities carried out during the previous year.

As currently drafted, the requirements under this clause similarly require summary descriptive information in relation to the subsidy advice unit’s functions, which will give an indication of how those functions are being used and whether it has the appropriate resource to fulfil the demand for those functions. This should be placed in contrast to the five-yearly reports specific to the subsidy advice unit under Clause 65, which will provide the CMA with the opportunity to publish a substantive analysis of the operation of the regime and the subsidy advice unit’s role within that regime. Of course, the CMA may include further data or case studies on subsidy control in its annual report if appropriate. Clause 66 is only a minimum list of the information that it will be required to include.

Under the Enterprise and Regulatory Reform Act, the CMA must also include a survey of developments in relation to all its functions, which may include developments within the subsidy control regime that the CMA deems of significant enough importance to publish, and thereby inform Parliament. The Government’s position is that the five-yearly reporting under Clause 65 is the appropriate place for the CMA to provide an assessment of the regime’s performance. The five-yearly report provides for an appropriate timescale for producing such assessments and the CMA is empowered under Clause 67 to gather information for this purpose. This will provide the CMA with the time and resources necessary for the subsidy advice unit to provide for a considered review of the subsidy control regime.

Amendment 62 also requires that the SAU produce its assessment only

“on the basis of the reports it has prepared”.

It is our view that any assessment of the regime’s performance will need to take a much wider view of the regime than only that part of it to which the SAU has reported that year. That is why the five-yearly reporting requirement in Clause 65 has been drafted to give the CMA the scope and power it needs to consider the matter thoroughly. Supplementing those powers with additional requirements in the annual report may only lead to the production of an assessment that is relatively narrow and partial, and that does not have the benefits of a more extensive review over a longer period.

I support the view that there may be circumstances in which we need more analytical and evaluative information more frequently than every five years. I would like to reassure the Committee that the Secretary of State has the power under Clause 65 to direct the SAU to produce a report for a specified period. It is also worth noting that, under the Enterprise and Regulatory Reform Act, the Secretary of State already has the power to request a report or advice from the CMA on any matter relating to its functions.

Regarding parliamentary scrutiny, there should be no reason for any committee of this House or the other place to wait for the CMA’s reporting under either Clause 65 or Clause 66 in order to take a close look at the subsidy advice unit’s functions. It is always open to noble Lords and honourable Members of the other place to examine this regime and the SAU through the usual process of parliamentary committee.

Amendment 63 would expand the scope of the CMA’s annual report to include an assessment of the effect that the regime is having on the UK’s ability to achieve its net-zero carbon emissions goal, set out in the Climate Change Act 2008, and the targets set under the Environment Act 2021.

--- Later in debate ---

[Baroness Boycott (CB)]

Given that the UK has committed to a 50% cut by 2030, a review that takes place only every five years does not seem wholly practical, given that we have only eight years.

[Baroness Bloomfield of Hinton Waldrist (Con)]

It is the Government’s position that five-yearly reports are sufficiently frequent to take a view of how successful this is. They are the appropriate tool to conduct a review of the environment and energy principles. Clause 65 provides an achievable timescale for delivering complex and substantive analysis of this sort. To ask that we prepare something every year would be an unnecessary burden on the whole subsidy control regime and the structures we have put in place to support this.

The CMA will have the ability to gather all the information needed to conduct such an analysis for these five-yearly reports, through Clause 67. These are powers that the CMA will not have in relation to its annual reports. I therefore humbly request that the noble Baroness withdraw the amendment.

[Lord Whitty (Lab)]

The other day, we discussed the inclusion of agriculture in the Bill, but the Government have made it clear that, basically, the future of all agriculture subsidy will be environmental objectives. The Minister’s reply to my noble friend’s amendment suggests that she agrees that agriculture should not really be covered by this approach, or that it should at least be treated substantially differently. What she has said, effectively, is that we cannot judge the environmental side; we have to approach it in the same way as every other sector.

[Baroness Bloomfield of Hinton Waldrist (Con)]

On the specific point about agriculture, I do not know whether the letter addressing those points has been issued yet. I can say that 99.5% of subsidies given to the agriculture industry in the UK would not fall within the remit of the subsidy; they are lower. We do not have the data for Scotland or Wales, but it captures only the very largest subsidy given to the very largest farms. That may include some in Scotland with that sort of acreage—

[Lord Callanan (Con)]

Or Labour supporters.

[Baroness Bloomfield of Hinton Waldrist (Con)]

I hope that that addresses the noble Lord’s concerns.

[Baroness Sheehan (LD)]

Can I ask the Minister about her remarks about the OEP’s remit? I think that she said that it would cover whether the Government are meeting their climate change requirements. However, the OEP’s remit does not cover whether the subsidy control regime is working towards our net-zero targets. What the amendments are trying to say—as we tried to include in the Financial Services Act and the pensions Act, successfully—is that a more granular approach will be needed, which has to be provided by the regulatory authorities within the sectors concerned because, otherwise, we really will not know whether each sector is working towards the net-zero targets that we are all trying to achieve in the timespan that we have.

[Baroness Bloomfield of Hinton Waldrist (Con)]

One of the noble Baroness’s concerns was that there was no overarching principle for the Government’s drive towards net zero. I think that the Environment Act provides the overarching context for whatever we are doing. As I say, the Office for Environmental Protection will also scrutinise the Government’s progress towards targets annually. I do not know what further level of granularity the noble Baroness wishes to apply.

[Lord Callanan (Con)]

There is also the Climate Change Act.

[Baroness Bloomfield of Hinton Waldrist (Con)]

There is also the Climate Change Act, as my noble friend has just reminded me.

[Baroness Sheehan (LD)]

I shall not repeat what I have said, but I do not think that the OEP will be able to tell us whether the subsidy control regime is working in the way that subsidies are being allocated in terms of meeting our climate change requirements. There is precedent in this, as I keep saying, with the Financial Services Act and pensions Act, and the actions that the Pensions Regulator took on the back of that Act. They all speak volumes as to how important it is to have each sector being held to account. Those are the points that the noble Lord, Lord Whitty, and the noble Baroness, Lady Jones, made. Every single sector within the country needs to be shown to be pulling its weight and we need to know where we have to put in greater effort, if it is not working towards the net-zero targets.

[Baroness Bloomfield of Hinton Waldrist (Con)]

I understand the noble Baroness’s concerns, but I am not able to go further than I have done at the Dispatch Box. On the point that the noble Lord, Lord Whitty, made about the steel industry, followed up by the noble Lord, Lord Wigley, we are directing subsidies towards greening industries like that, so we can invest in electric arc technology, and hydrogen as well. It is part of an overall drive by this Government to be consistent with the environment principles that we have laid out.

[Baroness Jones of Moulsecoomb (GP)]

But can the Minister see our point that the climate emergency has to be part of every part of government thinking and at the moment it is not? It just gets dropped out of piece after piece of legislation as if it was not really part of government thinking. It is all right talking about zero carbon, about how we are on our way and all that sort of thing, but if it is not in every single piece of legislation, it will not happen.

[Baroness Bloomfield of Hinton Waldrist (Con)]

We are just going to have to agree to disagree on this point. I believe that it is part of the overarching principles of this Government that the environment is one of our most important points. I do not believe that it needs to go on to the face of every Bill. I know that it is in the pensions legislation, but I cannot go further than I have already gone at the Dispatch Box in the context of this Bill.

[Baroness Boycott (CB)]

My Lords, given how huge this area is in terms of the amount of public money that gets spent and given that the Government have a public commitment to net zero, it seems astonishing that we do not have the legislation blended in to this Bill. We are not talking about minor amounts of money; we are talking about the way in which whole communities live, work and operate.

[Baroness Bloomfield of Hinton Waldrist (Con)]

I remind the noble Baroness that we have a legal commitment to net zero.

[Baroness Blake of Leeds (Lab)]

I thank the Minister for her full response to the two amendments before us. In the contributions that have been made both in the debate and in our following up and further probing, there is a sense that we have to go into this more deeply.

Again, we are asking for the same principles that we have talked about with regard to many of these issues around clarity, sense of purpose and benefit. I do not believe that public authorities will find some of this assessment and monitoring onerous, including having to account for the subsidies that they put forward. That is part of established practice and it needs to be formalised in the sense put forward by my noble friend Lord McNicol in Amendment 62, with annual reports as a mechanism for picking it up.

I absolutely agree on the issue of five-yearly reports. We are already in 2022. Are we saying that the first report into progress in these areas around net zero will not be heard until 2027—possibly even 2028, with the way things are going? That cannot be what the Government intend, given the urgency of the situation in front of us in moving towards net zero.

I will not unpick all the excellent points made by noble Lords in this debate because I know that we will come back to this area. I look forward to hearing how we can bring this together and come up with a sensible way forward. As I said in my opening remarks, if we carry on with the Bill in its current form, we will be sitting on a missed opportunity to do something constructive and positive—particularly, in the context of this debate, around net zero but also, looking further afield, in the wider area of levelling up. The climate emergency is a major contributor to the unequal experience of people right across the four nations. Addressing the matters raised in this discussion would be a sensible way forward. With that, I beg leave to withdraw the amendment.

--- Later in debate ---

[Lord Hope of Craighead (CB)]

My Lords, I want to add to that list of questions. Does the Minister have any information on where the CMA is to be based? It is one thing if it is in London, and quite different if it is in Cardiff, Glasgow, Birmingham or Manchester, for example. One of the concerns is the constant pressure that the devolved Administrations have against the south-east and London-based administrations. If there were some way in which the CMA could locate itself further away from the south-east and closer to other areas, that would at least be to some advantage.

[Baroness Bloomfield of Hinton Waldrist (Con)]

My Lords, Clause 68 requires that the CMA establishes a new committee of its board called the subsidy advice unit for the purposes of undertaking the subsidy control functions set out elsewhere in the Bill. I recognise that nothing I can say at the Dispatch Box will completely allay the fears of the DAs that this is a power grab or that we have malevolent intent in all this. All I can say is that the Government are very well aware of these issues. We talk about them constantly and will endeavour to continue the dialogue as we go forward on many fronts.

To return to these amendments, the subsidy advice unit will be a specific committee within the CMA dealing with subsidy control. It will comprise exclusively staff and members of the CMA. In this instance, “members” of the CMA refers to, among others, the chair and individuals who sit on the CMA board, the CMA panel of competition experts and the office for the internal market panel and its chair; “staff” refers to the civil servants employed by the CMA.

Amendment 64 seeks to allow the CMA chair to appoint to the subsidy advice unit non-executive members

“with relevant experience in relation to each of Wales, Scotland and Northern Ireland.”

The CMA was chosen as the home of the subsidy advice unit because of its experience and credibility in acting as a regulator and adviser in matters of competition and consumer law on a UK-wide basis. In carrying out its new functions under the SAU, the CMA will continue to act as it always has successfully, with the whole of the UK in mind.

It is notable that the amendment does not make any mention of “relevant experience” in relation to England, perhaps implying that the CMA already has an excess of England expertise but a deficit in relation to the other parts of the UK. I cannot possibly agree with the noble Lord on that point, if indeed that was the implication.

The amendment is unnecessary because the CMA can and does already recruit to the unit personnel with “relevant experience” in relation to all its functions, various different markets and all parts of the UK. The CMA has an excellent track record of recruitment and retention of staff and members from across the UK, and currently employs staff in Belfast, Cardiff, Edinburgh and London. The CMA has already undertaken external recruitment to a number of posts in the SAU. These were advertised on a location-neutral basis and were open to applicants willing to be based in any of the CMA’s existing offices. It is unnecessary to impose excessive and unhelpful complexity on the CMA’s recruitment process when it has already proved quite capable of finding persons with the “relevant experience” to carry out its functions.

I turn to Amendment 65. Part 4 of the Subsidy Control Bill represents an important pillar of the new domestic regime. The additional flexibility that public authorities will enjoy to design bespoke subsidies and schemes and quickly bring them to fruition to address identified policy problems must be balanced by a proportionate mechanism to provide an appropriate degree of scrutiny. This scrutiny will be crucial for the most potentially distortive subsidies and schemes, which is why the SAU has been given a role in advising public authorities before they award the most potentially distortive subsides or schemes. In response to the noble Lord, Lord Bruce, I say that neither the SAU nor the Secretary of State will be able to block a subsidy being awarded.

The CMA will also have the role of monitoring the efficacy of the entire regime through a periodic review and report to Parliament. This will ensure appropriate oversight and scrutiny of the regime by Parliament to confirm that it remains relevant to the needs of the whole of the UK.

Amendment 65 requires that the Secretary of State must undertake an assessment of the CMA’s capacity to fulfil its new functions under Part 4 of the Bill and make a Statement to both Houses on their findings. If the Secretary of State finds that the CMA is not sufficiently resourced, their report to Parliament must also outline the steps the Government intend to take to address this. I appreciate the noble Lord’s intention and that this is a probing amendment to ensure that the CMA is properly prepared to carry out its new statutory functions. I therefore offer the following statement on preparations for the new subsidy advice unit.

The CMA was allocated funding of some £20.3 million at the spending review in 2020 to establish three new functions within the CMA: the subsidy control function, the office for the internal market and the digital markets unit. Following the 2021 spending review, this budget of around £20.3 million will be maintained for the next three years. The CMA will continue to allocate funding in the 2022-23 financial year to reflect the estimate of resources needed to establish the new subsidy advice unit. This estimate reflects both the functions set out in the Bill on introduction, and the estimated number of subsidies and schemes of interest and particular interest that would be referred to the SAU.

The estimated case load of around 20 cases of both categories per year was arrived at using the methodologies set out in the Bill’s impact assessment. There is unavoidable uncertainty in this estimation, since the SAU’s referral functions are new and unprecedented. However, Her Majesty’s Government remain confident that this represents a reasonable estimate based on the best available evidence.

In terms of recruitment, to establish the SAU, the CMA has estimated that approximately 50 new posts will need to be created across all its professions. The CMA has recently undertaken external recruitment to fill several policy and project management posts in the subsidy advice unit, as well as allocating resource internally. The CMA will continue to recruit to its pools of economist, legal and business adviser resource over the coming months. The CMA is looking to recruit staff with a range of skills and experience, which includes building on its core competition expertise, as well ensuring the necessary skills in areas such as stakeholder engagement.

--- Later in debate ---

[Lord Purvis of Tweed (LD)]

Before the Minister concludes, I listened carefully to her comprehensive reply, for which I thank her. I think I heard her mention an additional 50 posts. The impact assessment indicated an assumed additional headcount of 19. What happened between when the impact assessment was put together and the current commitment was made? Presumably, there is an understanding that the role is much greater than when the impact assessment was put together.

Secondly, given that agriculture and fisheries will be involved, can the Minister assure us that those with a specific understanding of the geographical, agricultural and fisheries market—as opposed to the other sectors, which previously the CMA did not have—have been part of the recruitment process? At the moment there is no indication that they have.

[Baroness Bloomfield of Hinton Waldrist (Con)]

On the noble Lord’s first point, it has been a year since the Bill was introduced and therefore things have moved on since the impact assessment was done. On his second point, we are looking for a broad range of expertise that will enable the CMA and the SAU to fulfil their functions.

[Lord Fox (LD)]

Can I ask that in future, all impact assessments be given a time lapse, so we know how many weeks they last for, until such time as they cease to be? Seriously, if one year on the impact assessment for this means that the number of people triples, then it was not necessarily a very accurate impact assessment.

[Lord German (LD)]

I wonder if, in concluding, the Minister could indicate the deadline for when the 50 extra advertised posts have to be filled? She may have to do so in writing, I understand that. Also, what is the difference between those who will be allocated to the traditional work of the CMA—competition, mergers and anti-trust—and those on the subsidy side of this split? They are distinct areas of work and quite distinct skills are needed. At some stage, could the Minister also tell me how many lawyers have been recruited so far, and how many they are short of. That would be very helpful.

[Baroness Bloomfield of Hinton Waldrist (Con)]

I think the noble Lord might have to declare an interest on that front, but we will let that lie. I will have to write to him with the specifics on this. Obviously, recruitment is an ongoing process that will continue throughout the next year.

[Lord Wigley (PC)]

Before the Minister sits down, I have what is meant to be a helpful question. Given that there may be a need for expertise in certain areas in the work of the CMA—expertise it does not have in house—could staff be taken on on a secondment basis to overcome the restriction in subsection (4) referred to earlier? This would provide the expertise for the duration necessary in undertaking specialist areas of investigation. I do not expect an immediate answer, but perhaps the Government might consider it.

[Baroness Bloomfield of Hinton Waldrist (Con)]

The noble Lord makes a very interesting point. It does have operational independence, and I am sure that is something it would be able to consider.

[Lord McNicol of West Kilbride (Lab)]

I thank the Minister for her detailed response. When she, the other Minister or the department reply, could the letter be shared between all those who have spoken in this debate?

I have one other question—and I do not expect the Minister to have the answer just now. She talked about a budget of £20.3 million being divided between the SAU, digital and one other body. Could we have the split between the three of them, because they have three distinctive functions, and the one we are concerned about and talking about is the funding of the SAU?

Likewise, I listened in detail but I am not clear whether I missed the point about why Clause 68(4) is so prescriptive and detailed in stating that the SAU will consist

“only of persons who are members of the CMA or its staff”.

If it is that prescriptive, it seems to rule out the points made by the noble Lord, Lord Wigley, so maybe it could be opened up a little.

The Minister, in referring to some of the concerns and issues around devolved authorities, said that the department was well aware of them. These amendments are meant to be helpful and to try to create, foster and build a better relationship—as the noble Lord, Lord Bruce, has outlined—especially as we move from European state aid to our own authorities being able to create and deliver subsidies. One hopes that there are some things in not just this small group of amendments but other groups that will help to generate and foster that better relationship between central government and the devolved authorities. With that, I beg leave to withdraw my amendment.

Subsidy Control Bill

Baroness Bloomfield of Hinton Waldrist Excerpts

Committee stage
Monday 7th February 2022 Grand Committee

[Lord Purvis of Tweed (LD)]

My Lords, I wish to ask the specific question of how, if this Bill includes all agricultural support without the delineated areas we have discussed previously in Committee—such as for upland farmers and areas with less favoured status—it will interact with the internal market Act.

My noble friend Lady Randerson specifically referenced hill farmers. I represented many hill farmers; I will debate with my noble friend separately the merits of Welsh lamb as opposed to Scottish Borders lamb, but it is fairly obvious which is the superior product. The point is that specific subsidy support for the type of production rather than the end product is allowed under the subsidy scheme because upland farms have less favoured area status. It was delineated.

However, the Government proposed under the internal market legislation that no discrimination would be allowed on any of the end product—the lamb. We allowed that discrimination because of the less favoured area status for hill farming. I question whether, if all this is now wrapped into the subsidy Bill, this is open to challenge in terms of competition and non-discrimination, as specific support for the production of one product—lamb—will be provided to certain farmers in certain areas but will not be available to others who do not have less favoured area status.

This Bill removes all those delineated areas. Presumably, all that is now within scope of the internal market Act. That means, I think, that none of this area of support can have the assured status that it did beforehand. I strongly support my noble friend’s efforts to get clarity on this.

[Baroness Bloomfield of Hinton Waldrist (Con)]

I thank the noble Baroness, Lady Randerson, and the noble Lord, Lord Bruce of Bennachie, for tabling this amendment and for their concern for the agricultural sector. This amendment seeks to exempt agricultural subsidies and schemes from the requirements of the new domestic regime. I appreciate that the devolved Administrations are particularly concerned about the inclusion of agriculture in the new domestic regime. This issue has come up during our regular engagement, both at ministerial and official level. We have worked hard to understand concerns here, particularly in relation to existing schemes and how they might be considered under the new regime, as well as in relation to the development of guidance on the principles. We have sought to reassure that existing schemes and subsidies will be able to continue indefinitely.

--- Later in debate ---

[Lord Wigley (PC)]

I am grateful to the Minister for her response on the points that I raised, but does she accept that agriculture is a very different industry from the others covered by this sort of Bill and should have its own legislation? She mentioned consultation. What was the response to consultation from the agriculture industry and the farming unions?

[Baroness Bloomfield of Hinton Waldrist (Con)]

While I absolutely accept that the agriculture industry is completely different from others that will be covered by the Bill for many of the cultural reasons that have been brought up by others, I do not have the information that the noble Lord requests, but we will write, because we undoubtedly have it back in the department.

[Lord Bruce of Bennachie (LD)]

Less favoured area status was mentioned by my noble friend. In Scotland, 86% of the land has less favoured area status. If we have gained, as we have over many years, a reputation for prime Scotch beef, for example, it has been done by an integration of finishing farmers and suckler cow premiums on the hills. The Minister said that that could be a legacy scheme, but we are doing trade deals with New Zealand and Australia, which may want to challenge that. I think that people want reassurances that such schemes, legacy or adapted in future, will not fall foul of the implications of the Bill. That is the sort of concern that our farmers are facing at the moment.

[Baroness Bloomfield of Hinton Waldrist (Con)]

I register those concerns. Consultation with the devolved Administrations continues, but I repeat that the subsidy schemes of each devolved Administration can be devised in the context of the particular differentiation between each separate authority.

[Lord Purvis of Tweed (LD)]

I do not think the Minister addressed the point regarding the interaction with the UK internal market Act, which has also given rise to some concerns. She said that the Bill would be able to focus on agriculture-specific market failures. As my noble friend indicated, it is not market failure as such; it is the circumstances in which the industry operates. Is the Minister saying that, for all these schemes, the CMA will be the unique body that now determines the viability of all the geographical areas? The CMA is the body that has the authority under this Bill to consider whether the schemes are operating according to the principles. Defining what market failure would be within agriculture, on the different types of land, will now ultimately be for the CMA, which is a ridiculous situation to be in.

[Baroness Bloomfield of Hinton Waldrist (Con)]

I reassure the noble Lord that the CMA has an advisory function; the tribunal will be the body that decides. The subsidies will be devised by the local authority, or the devolved Administration, so that they can use the CMA for advice.

To go back to the earlier point, the Bill will allow the Scottish Government to provide subsidies to less favoured areas should they so wish.

To reiterate, the CMA has only an advisory function. It is the responsibility of the public authority to decide.

[Lord Purvis of Tweed (LD)]

We have to read this debate in the context of the previous debates. As the Minister has previously said, the Government want to move away from delineating support for geographical areas, so it is utterly pointless to say that a scheme for less favoured area status could be devised, because the flexibility from this Bill means that Glasgow could provide any agricultural subsidy to any farm anywhere, which is frankly ridiculous.

If it is not the CMA’s responsibility under this Bill, it is the competition tribunal’s. How on earth will the competition tribunal have the capacity to judge all the areas for geographical support, for agricultural support and for industry support? It seems a bit of a nonsense.

[Baroness Bloomfield of Hinton Waldrist (Con)]

The public authorities can devise their own schemes according to their own policy priorities, as long as they comply with the principles of the Bill.

[Lord Fox (LD)]

Let me give a specific example. Herefordshire County Council decides, within the seven principles of the Bill, to subsidise the production of beef in Herefordshire, brands it “Herefordshire beef from Hereford animals”, and then markets it in Aberdeenshire at a rate that undercuts Aberdeen Angus or whatever it is that my noble friend Lord Bruce is peddling in his area. It seems to me that this Bill puts in place a chaotic situation that cannot be managed. We do not know what an area is, we are allowing flexibility for any authority to take action as long as it sits within the seven principles, and then we are going to rely on the CAT to adjudicate. Is this really what the Government have in mind?

[Baroness Bloomfield of Hinton Waldrist (Con)]

I think a lot of this overlaps with the internal market Act, which we will debate at length on a later group of amendments. All I can say is that the set of principles will cover the position of the Herefordshire farmer.

[Baroness Randerson (LD)]

This has been an interesting debate. The noble Lord, Lord Wigley, will understand my point when I say that, as a former Assembly Member for Cardiff Central, I did not think I would be leading on a debate on agriculture—at one point I still had a farm in my constituency, but they built on it.

I learned a lot about agriculture as a Minister in two Governments. I learned about the concept, which comes up time and again, that farming is a way of life. It is a way of life wherever you are a farmer. I have lived in East Anglia and it even applies there where you have the grain barons, because if your farm fails, you lose your home. That is what makes things different from most other occupations. All speakers, with the exception of the Minister, have echoed my concerns.

I want to pick up a couple of points very briefly. Clause 41 refers to a specific amount of money for subsidy below which you will not have transparency. That amount of money is astronomical in relation to subsidies for farming and totally inappropriate. If those figures are used, there will be no transparency even for subsidies of the largest order for the largest farms. That cannot be right.

This is, of course, a probing amendment and I am specifically seeking information on how the special circumstances of agriculture will be dealt with. I hope the Minister will send us some very long letters to explain the situation because there are so many complexities and contradictions in the Government’s position. The EU treated subsidy as exceptional, in general, and something that must be justified, but it treated agricultural subsidy as normalised within a strict policy structure. The WTO treats agricultural subsidy as normalised, but the Government are now apparently applying the approach where subsidy is exceptional for agriculture. That is the basis of the seven principles. You cannot apply those seven principles in the same way that you do to other industries and businesses. Agriculture is not subsidised because of market failures; it is subsidised to ensure supply of a basic requirement of life at a reasonable price. The complexity of the Government’s situation is made worse because of the uncertainties already being felt within the market from the trade deals with Australia and New Zealand which provide additional hurdles.

--- Later in debate ---

Will the Minister please now accept that, as written, this Bill just does not fit agriculture? I can see she wishes to respond.

[Baroness Bloomfield of Hinton Waldrist (Con)]

There are a couple of points I would like to address now, and obviously I will cover the other points in greater length in writing. Just to reassure the noble Baroness, on the minimum financial assistance in the Bill that she referred to, for most subsidies, including agriculture, it is £315,000 rather than the figures in Clause 41. If the figures are far too high for agriculture, then they will simply be exempt from the requirements and none of those concerns will apply. We are looking at whether the £315,000 is set at the right level, and we have the power to change it for specific sectors.

In answer to the noble Baroness’s question, I am afraid that we did not ask respondents to the consultation where they were based because it is a UK-wide regime, but we will write with more detail if we have it back in the department.

Lastly, as the noble Baroness brought up the difference between the WTO and the EU regimes, I just say that the Agreement on Agriculture within the WTO and the new subsidy control regime fulfil very different purposes. The AoA is an international agreement aimed at reducing distortion of international trade in agriculture; the proposed domestic subsidy control regime facilitates compliance with our international commitments but goes beyond this by protecting UK competition and investment. The WTO provisions are no substitute for a domestic subsidy control regime. The EU is a case in point of a system that has both WTO subsidy commitments and its own internal regime, and this is the approach that we are taking for subsidies in all sectors in the UK.

I will write with any further responses that I need to make, having reviewed Hansard in the morning.

[Baroness Randerson (LD)]

I thank the Minister for that. I fear that she makes my point for me in terms of Clause 41. My argument is that there needs to be transparency on this, and the amounts of money are set so high that there will not be that transparency. If this scheme is going to work on a farm-by-farm basis, which is what it will have to do, the Government will need to set separate, different and lower figures for agriculture. The Government really need to go away and look at this again.

Please could the Government consider applying some real-life worked examples of how this would apply in different parts of the UK—even within different parts of England? They need to be worked through, and public authorities need to have further information on how this would work. I urge the Government to discuss this issue with local authorities and the devolved Governments before the walls of our systems are bulldozed through in the latter stages of the Bill. I beg leave to withdraw the amendment.

Subsidy Control Bill

Baroness Bloomfield of Hinton Waldrist Excerpts

Committee stage
Wednesday 2nd February 2022 Grand Committee

[Lord Fox (LD)]

My Lords, it is with great pleasure that I follow my noble friend Lady Sheehan and the noble Lord, Lord McNicol, in support of these amendments. Subsidy schemes seem to be designed as monoliths with no granularity at all. Why is that one of the central theses of this Bill? What possible advantage do the Government seek to gain, other than the ability to hide what money is going to whom? To those of us on this side of the Committee, that appears to be what is going on.

Amendment 21 would ensure that subsidy schemes cannot be used to hide subsidies that would, if they were stand-alone subsidies, be reported, as my noble friend set out. It is clear to all three of us that there is huge scope for significant and expensive subsidies to be hidden in these schemes. That seems to be the only reason why this is in the Bill. I am sure that the Minister will want to explain the reasons, because that must be the response to these amendments. I am sure that we will all be happy to throw our hands up if we are wrong and there is a hugely important reason why this is needed for the operation of the subsidies.

Amendment 24, co-signed by my noble friend, would require individual subsidies given under the subsidy scheme to be judged against the energy and environment principles. Once again, we are back to Monday evening, when my noble friend Lord Purvis posed a question regarding principle G in Schedule 1. The noble Lord, Lord Callanan, got to answer it; I suppose that this time it is the turn of the noble Baroness, Lady Bloomfield. During that debate, the Minister seemed to make it clear that sustainability considerations are indeed implicit in every aspect of the Bill. He suggested that, by implication, there must be some benefit for these things to be legal, but there is no explicit reference to that. I apologise if I am putting words in his mouth because principle G says the opposite. Therefore, rather than repeat what I have said, I have invented another one of my little examples, for which I apologise in advance.

Let us say that I have won a subsidy to expand my pottery business. As part of the submission, I cite increased employment and increased local sourcing of services as the beneficial effects that investment in my pottery business would bring. Nothing in the schedule or the rest of the Bill says that I have to benefit the environment by using less energy. If I am successful, I employ 30% more people and use 30% more local services, therefore achieving the scheme’s objectives, while also using 30% more energy to fire my products. That would appear to be how the Bill will work. Therefore, we need Amendment 24 to include consideration of the environmental impact that that subsidy would bring. It is very simple.

Amendment 68 would allow individual subsidies given under a subsidy scheme to be reviewed. Once again, it is cracking open the monolith and being able to look at the granularity within a scheme. Again, it follows my initial points: we need to be able to see inside these schemes for transparency to be available.

[Baroness Bloomfield of Hinton Waldrist (Con)]

I thank the noble Lord, Lord McNicol, for tabling Amendments 21, 24 and 68. Perhaps it would be helpful if I started by explaining the status of subsidy schemes in the Bill and why the Government have taken this approach.

Public authorities that seek to give multiple subsidies have three options available to them. First, they can consider each subsidy separately and assess its compliance with the principles and the other requirements in the Bill. Secondly, they can set up a scheme—that is to say, they can identify a group of possible subsidies, with defined parameters, and ensure that any possible subsidy within that group complies with the subsidy control requirements. Thirdly, they can use a streamlined subsidy scheme or another scheme where a public authority—perhaps the UK Government or one of the devolved Administrations—has already assessed that defined group of possible subsidies as compliant with the requirements.

Clauses 12 and 13 place a duty on public authorities to consider the subsidy control principles and the energy and environmental principles respectively before deciding whether to give an individual subsidy or make a subsidy scheme. A public authority cannot go on to give the subsidy or make the scheme unless it is of the view that it is consistent with the principles, including the energy and environmental principles the noble Lord, Lord Fox, emphasised. Once created, public authorities can then award multiple subsidies under that scheme with the confidence that they comply with the subsidy control principles.

By making a scheme instead of assessing multiple individual subsidies against the principles, public authorities will save themselves the administrative time and effort—ultimately equating to taxpayers’ money—it takes to consider any assessment, even one that is light touch and common sense. Schemes also provide a way for public authorities to grant subsidies with greater confidence and security because anyone wishing to make a challenge in the Competition Appeal Tribunal must do so to the scheme itself within the limitation period of one month following publication of information about the scheme on the transparency database. That one month period can be extended by a pre-action information request. We believe that this strikes the right balance between facilitating proper scrutiny of the scheme and removing any perpetual threat of challenge, which can make public authorities more reluctant to give, and recipients more hesitant to accept, beneficial subsidies.

Noble Lords will be aware that this subsidy control regime presents a new approach tailored to the specific needs of the United Kingdom. I do not believe that it is generally useful to justify elements of the Bill on the grounds that they correspond to how things used to be done in the EU state aid system, but it is helpful to underline that public authorities have been making use of subsidy schemes for the purposes of administrative simplicity for a long time. Although the EU mechanisms for decision-making and challenge were quite different, public authorities that gave subsidies in compliance with pre-approved schemes generally did not need to obtain further approval for each individual subsidy under a scheme and could proceed to give those subsidies with confidence.

I also add, as the noble Lord, Lord McNicol, pointed out, that transparency is very important. Subsidies given under schemes over £500,000 must be uploaded on the transparency database under the Bill as it stands. We believe that the £500,000 threshold represents an appropriate balance between minimising the administrative burden and requiring subsidy transparency in the public interest.

--- Later in debate ---

[Baroness Sheehan (LD)]

On Amendment 21 to Clause 12, if that amendment was agreed to and the line

“In subsection (1) ‘subsidy’ does not include a subsidy given under a subsidy scheme”


was taken out, it would have no impact on a public authority’s ability to continue to allow subsidies under the subsidy scheme. It would not slow the process up.

[Baroness Bloomfield of Hinton Waldrist (Con)]

I take the noble Baroness’s point on that. I would like to discuss it with the team when I have had a chance to look into it more thoroughly.

As I have just set out, under the terms of Clause 70, an interested party may not submit an application for the Competition Appeal Tribunal to review a decision to give an individual subsidy under a scheme. This is to ensure that scrutiny and challenge occur at the scheme level. The noble Lord’s amendment would enable applications for review to be made to the Competition Appeal Tribunal for individual subsidies granted under a subsidy scheme without the requirement for the broader subsidy scheme also to be reviewed.

[Lord Fox (LD)]

I am glad that the Minister has come to this point. Earlier on, I think I heard her say that transparency on a subsidy would raise the potential for a challenge to happen, but the whole system of policing this is through challenge, so how can challenge happen if invisibility is the result of this?

The Minister was suggesting that you can challenge only the overall scheme, not the individual granularity of a scheme within it, but that flies in the face of the central principle of the Bill which is that if I am a business and another local business gets a subsidy, I can challenge that through the CMA, assuming that there are grounds for it. If I do not know that my local competitor is getting that money because its subsidy is locked inside one of these schemes, I cannot challenge it. So the Minister is correct: transparency will lead to more challenge and that is the purpose of the systems put in place within the Bill. We need some working through of this from the Minister—it may not be now but perhaps in writing—because it seems that there are two things working in opposite directions.

[Baroness Bloomfield of Hinton Waldrist (Con)]

Given that the whole structure of the subsidy regime is to have the overarching scheme, compliant with all the principles contained in the Bill, and then a series of other subsidies given within that, if you increase the likelihood of challenge and therefore reduce people’s confidence in it, why would a local authority or a government body give a subsidy? Why would there be any incentive for them to give a scheme? While we are wholly appreciative of the importance of transparency, there is a balance to be struck here. Perhaps we could make more progress and I can write to the noble Lord.

[Lord Fox (LD)]

It was the Government who chose to put the principle of challenge on the face of the Bill. The noble Lord, Lord Lamont, and I are coming to the idea of creating a body that can police those things. Perhaps that would solve some of the problems that the Minister suggested—but those problems are central to the way in which the Government have decided that subsidies should be policed under the Bill.

--- Later in debate ---

[Baroness Bloomfield of Hinton Waldrist (Con)]

I understand the point the noble Lord is making, but I suggest we would do better to continue this discussion with officials, and come back to him and to the whole Committee in writing.

Making individual subsidies granted in line with the terms of a subsidy scheme eligible for review by the tribunal would undermine a key benefit of creating a scheme—which, as I was saying, would be the administrative simplicity for public authorities, including the security that subsidies can be granted under the terms of a scheme without additional challenge or assessment. However, I fully recognise noble Lords’ underlying concern that schemes could be used to shield unlawful subsidies from challenge. If a subsidy purports to be part of a scheme but does not comply with its terms, an interested party may indeed bring a challenge. This would be on the basis that the subsidy should not enjoy the protection of the scheme but was instead a stand-alone subsidy where the public authority did not consider the subsidy control principles.

[Lord McNicol of West Kilbride (Lab)]

On that point, how would another business or organisation know the subsidy existed if it was part of the scheme?

[Baroness Sheehan (LD)]

May I intervene too, on the same point? If a business does know about a subsidy and thinks it is unfair, it cannot go to the public authority and ask for a review. The bar is so high that the review can only be at the level of the scheme—which the business had nothing to do with designing. The public authority would have to do it. The business has no comeback.

[Baroness Bloomfield of Hinton Waldrist (Con)]

Every grant made over £500,000 will be visible. Noble Lords may be arguing that that bar is too high, but maybe we will come to that at a later stage.

[Lord McNicol of West Kilbride (Lab)]

The fundamental point remains: how do people know that the subsidy has been given if it is part of a scheme? They cannot challenge it.

[Baroness Bloomfield of Hinton Waldrist (Con)]

If it is over £500,000 it will be visible.

As I was saying, a challenge would be on the basis that that the subsidy should not enjoy the protection of the scheme but was instead a stand-alone subsidy where the public authority did not consider the subsidy control principles. The CAT could be asked to determine that question. If the CAT finds that the subsidy ought to have been treated as a stand-alone subsidy, it could also be asked to determine whether the relevant subsidy control requirements had been met.

It is also important to note that subsidies given under the schemes may be subject to other obligations and other forms of challenge. A public authority that gives a subsidy in breach of its general public law duties may be challenged through the judicial review process in the general courts, even if the subsidy is given under a scheme. And of course, if the scheme is substantially changed beyond the parameters set out in Clause 81 on permitted modifications, it must be reassessed and uploaded to the transparency database, and can again be challenged. For the reasons I have set out, and with the caveat that we shall return to some of these questions, I ask that, for the moment, the amendment be withdrawn.

[Lord McNicol of West Kilbride (Lab)]

As we have said in the back and forth of the discussion on these three amendments, there are still a number of real concerns about the subsidy schemes: how they operate and, more importantly, how they can be challenged and dealt with. I will withdraw Amendment 21 at this stage, but I seek some conversations with the department and the ministerial team before we progress to Report.

--- Later in debate ---

[Baroness Blake of Leeds (Lab)]

We are extremely grateful to the noble Lord, Lord Purvis, for tabling these amendments and outlining his thoughts on this incredibly complex and very difficult issue, as the noble Lord, Lord Lamont, stressed. This needs huge sensitivity in dealing with it. I do not think that we have anything to add at this stage, but we welcome the fact that a light has been shone on this issue. The feeling we had was that it is surprising that more amendments have not been tabled on this topic, but we expect that there will be more as the groups progress. For now, having heard from the noble Lords, Lord Purvis and Lord Lamont, we will be extremely interested to hear the Minister’s initial response to the matters being raised.

[Baroness Bloomfield of Hinton Waldrist (Con)]

It might indeed be an initial response, because the noble Lord has the advantage of me: I was not aware of the announcement made this afternoon by Northern Ireland’s Agriculture Minister, while we have been in Committee. However, I thank the noble Lords, Lord Purvis of Tweed and Lord Fox, for tabling these amendments. I appreciate that they are intended to be helpful and generate some discussion about these issues, which I suspect will be ongoing.

I begin with Amendment 22, which would require public authorities to make an explicit statement as to whether a subsidy scheme falls under the new domestic regime or EU state aid rules before it is made. Clause 48 already makes it clear that the subsidy control requirements do not apply to a subsidy given, or a subsidy scheme made, in accordance with Article 10 of the Northern Ireland protocol, nor do the requirements apply to a subsidy or subsidy scheme to which Article 138 of the EU withdrawal agreement applies.

It follows that, in the very limited number of cases where public authorities determine that schemes are operating under EU state aid law, the required information will be uploaded to the relevant EU databases on the Commission’s website. All other schemes, which represent the vast majority, will fall under the new domestic regime and be uploaded to the UK transparency database. As such, we do not consider it necessary to include a requirement on public authorities to make a statement as to whether a scheme operates under the Bill or EU state aid rules.

I thank my noble friend Lord Lamont for his comments. I understand his concerns about the interaction between the state aid regime and the subsidy control regime. I assure him that the EU state aid rules under the Northern Ireland protocol currently apply only in certain circumstances to aid that affects trade in goods and electricity between Northern Ireland and the EU. Such subsidies are within the scope of the protocol only where there is a genuine and direct link to Northern Ireland and a real, foreseeable impact on trade between Northern Ireland and the EU. The Commission’s unilateral declaration of December 2020 made it clear that Article 10 could affect a subsidy in GB only if there was a genuine and direct link in Northern Ireland. This would be the case if, for example, the beneficiary had a subsidiary in Northern Ireland.

EU state aid rules also apply under Article 138 of the withdrawal agreement in relation to aid for EU programmes and activities within the multiannual financial framework as a transitional provision. To respond to the concern of the noble Lord, Lord Purvis, that state aid rules would continue to apply even if the UK’s negotiating position were accepted, these are specific and limited circumstances. I trust that this will allay the Committee’s concerns on this important issue.

Amendment 53 from the noble Lords, Lord Purvis of Tweed and Lord Fox, would require a mandatory referral to the CMA’s subsidy advice unit, or SAU, for any subsidy which the public authority believes has a connection to economic activity in Northern Ireland, but where that authority has decided that the proposed subsidy is not within the scope of Article 10 of the Northern Ireland protocol. The SAU would then, as part of its report, determine whether EU rules would apply.

I am afraid that I must reject this amendment as we believe that it is unnecessary. The Government have already provided guidance for public authorities to determine in advance whether the subsidy they are planning to give will be in scope of the Northern Ireland protocol. A requirement for the subsidy advice unit to make a report in advance would needlessly delay the deployment of a large number of subsidies that are clearly not in scope of the Northern Ireland protocol. It would also significantly increase the workload of the SAU and the cost to taxpayers.

The Government have published guidance for public authorities on the Northern Ireland protocol, making it clear where it does or does not apply. This guidance was last updated in June 2021, and we will continue to update it as needed. This guidance supports public authorities to make an informed decision on whether their proposed subsidy is in scope of the Northern Ireland protocol, and there exists in the department an advisory team that any public authority can contact for additional support. We need not bring delay into the system unnecessarily.

I emphasise that this amendment is at odds with the Bill’s position that a measure that would currently fall within the scope of Article 10 of the Northern Ireland protocol should not be subject to the rules and processes contained in this Bill. That is the whole purpose of Clause 48. This means that it cannot be referred to the SAU for any reason, and the SAU will not undertake any evaluation in relation to the protocol or the EU state aid rules. It is the responsibility of central government to ensure that the UK is compliant with those rules. As such, any subsidy in scope of the mandatory referral provisions in Clause 52 is, by definition, not in scope of the Northern Ireland protocol provisions for the application of EU state aid.

The SAU has important advisory and scrutiny functions: to evaluate public authorities’ own assessments of compliance with the subsidy control requirements; and to monitor and evaluate the operation of the domestic regime as a whole. However, it is not a regulator with responsibilities for making definitive judgments, including on whether a specific subsidy is in scope of the Northern Ireland protocol.

I therefore ask the noble Lord, Lord Purvis, to withdraw his amendment and other noble Lords not to press theirs.

[Lord Purvis of Tweed (LD)]

I am grateful for the Minister’s response. As much as the Government are asserting that there will not be a challenge or confusion, it is necessary to have greater clarity for those who are putting the schemes together and those who will potentially challenge some of the recipients.

I am grateful to the noble Lord, Lord Lamont, for raising the issue of reach-back. It will remain an issue. The fact that the Government state that they will take responsibility for notifying the Commission about subsidies given does not necessarily mean that they will be free from challenge. Given the fact, from our discussions with my noble friend Lord Fox, that this is fundamentally a challenge-based system, greater clarity on this matter will be important—particularly given that there could be areas of dual approach.

We all know that Northern Ireland has a high number of intermediary businesses. These are for both businesses that have activity in Northern Ireland and GB and businesses based in Ireland or the European Union that have some form of manufacturing or processing in Northern Ireland as well as in GB. These enterprises will, by definition, operate under dual systems and potentially apply for either state aid or subsidy control operations; indeed, I would be amazed if they did not. This means, therefore, that any of those applications or schemes are potentially open to challenge.

I did not agree with the Minister when she said that increasing the role to provide that certainty will represent an increased cost to taxpayers. I have read the impact assessment. If the Government are right that this applies to limited areas, I do not think that it will be a massive burden on the 19 people in the CMA who will be operating on this anyway. The Government seem to be relying on the fact that any confusion or uncertainty can be resolved by seeking advice from BEIS or Defra and the department’s subsidy control team.