Subsidy Control Bill

Debate between Lord Callanan and Lord Lamont of Lerwick

Committee stage
Wednesday 9th February 2022 Grand Committee

[Lord Callanan (Con)]

No, my understanding, on advice, is that it does not form a provision under the internal market Act.

[Lord Lamont of Lerwick (Con)]

Again, before the Minister sits down, I have a couple of questions. I apologise to him for this, but we have had the benefit of actually seeing his words written down in Hansard. Some of the phrases he came out with were quite dense and intricate, and I was rather puzzled by two points. The first was when he talked about the functions of the SAU. He said that it was intended

“to support public authorities in giving the subsidies that are most likely to be distortive.”—[Official Report, 7/2/22; col. GC 383.]

I am puzzled by the word “support”, and puzzled that we would want to support the ones that are most distortive. I am sure I am misunderstanding it, but I would like the Minister to explain.

[Lord Callanan (Con)]

I will have to look back at those remarks myself. It is possible that I was misinterpreted at the time, but I will have a look and come back to the noble Lord.

[Lord Lamont of Lerwick (Con)]

Let me also read out a second bit that I felt was particularly incomprehensible. If anybody in the Committee can understand it, I will be very impressed. I will read it slowly. The Minister said:

“I do not believe there is a contradiction in saying that a full assessment of compliance is light-touch regulation for the public authority but could prove arduous to replicate for the subsidy advice unit.”—[Official Report, 7/2/22; col. GC 383.]

[Lord Callanan (Con)]

I think that speaks for itself. I stand by those words.

[Lord Callanan (Con)]

Yes. Subsidy is not a regulated provision within the scope of the UK provisions. We are debating this in a future grouping, so we will no doubt be able to come back to it, but my advice is that it is not.

[Lord Lamont of Lerwick (Con)]

My Lords, I am very grateful to all those who spoke in the debate and supported my Amendments 55A, 57A and 57B. I am grateful in particular to the noble and learned Lord, Lord Thomas, who made a very powerful speech about the need for an independent evaluation of subsidies. The noble Lord, Lord Purvis, pointed out that, if we had an independent assessment, it would increase the possibility of consistency in the whole regime, which I thought was a very important point. The noble Lord, Lord McNicol, made the point that it was completely counterintuitive, after everything that had been said about the control of subsidies, not to have an independent evaluation. So I hope that there is quite a degree of support in the Committee for these amendments.

I do not think that the Minister today really explained why we could not have an independent regulator. He said that it would require a certain scaling up of resources. Well, obviously, it would. He said that it would become more like a regulator, rather than whatever else it is. Well, we want it to be a regulator—that is the whole point—with control of subsidies. But I really did not feel that he had made out a case against. He told us what the SAU does, but he did not explain why it would be wrong for it to do more things or to be scaled up and become a proper regulator.

The reason why I was particularly interested in the two passages that I put to the Minister—he is going to write to explain them to me—is that the more I listened to him, the more it became clear to me that the general line in this Bill is, “Public authorities know what they are doing, so let them, by and large, get on with it. Maybe somebody will object; they have 28 days. Don’t make it any longer because a lot of them might object; just give them 28 days. But by and large public authorities know what they are doing, so we want them just to get on with it”.

The Minister said that the SAU would not carry out its own assessment of compliance. Is that enough? It seems as though what it is going to do is extremely limited: it is just going to examine process. The Minister said:

“The SAU would be acting without the understanding and body of evidence that the public authority will have created in developing the subsidy”.


That is, the public authority will know more than the people who are checking the subsidy. Is that really the right way round? It seems to me a real Alice in Wonderland to call this control of subsidies, when those who have actually invented the subsidy and paid the money know more about it than the people who are regulating them—and this is admitted by the Minister at the same time. The Minister also said:

“There is no intention to build up an extensive monitoring function within my department or the CMA”.—[Official Report, 7/2/2022; cols. GC 383-4.]


Surely, that is exactly what we need. If we are talking about the control of subsidies, how can we have it without monitoring subsidies? That becomes even weaker when you consider what has been referred to again and again in Committee about the 28 days.

It seems to me that the SAU is far too weak for this really to be a Subsidy Control Bill; it ought to be renamed the “Support of Subsidies Bill”, because that is actually what it is. The reality of the Bill is that it is not attempting to control subsidies at all; it is just giving expression to the undertakings that the Government gave on Brexit in the TCA. I see the Minister smiling, although I shall not refer to that again. The Government gave assurances that were embodied in the TCA about not having subsidies that might distort competition with the European Union, so we have to have a control mechanism, and it is this Bill. But there is also a national interest in having proper competition and control of subsidies, and I do not think, frankly, that the Bill does that. It is far too weak. But having made my points and not persuaded the Minister, I look forward very much to the letter he is going to write to me explaining what he said. With that, I withdraw my amendment.

--- Later in debate ---

[Lord Callanan (Con)]

I thank the noble and learned Lord, Lord Thomas, and my noble friend Lord Lamont for tabling Amendment 67. I also thank them and the noble Lord, Lord Fox, for Amendment 71. Before addressing the two amendments in turn, I will offer some context. We have discussed at length the conception of the new domestic control regime as envisaged by the Government. We have heard criticism to the effect that the regime is, in the view of the protagonists, lacking in robust enforcement.

Of course, international comparisons are somewhat beside the point for our UK-specific approach. It is worth while bearing in mind, though, that the mere fact of establishing a coherent regime for the purposes of subsidy control would place the UK somewhere near the top of the list of the most comprehensive subsidy control regimes. Outside the European Union, no other international partner or competitor will enjoy such a comprehensive and transparent approach to the regulation of subsidies.

[Lord Lamont of Lerwick (Con)]

Is the reason for that not that the EU insisted on it, and that is why the Bill is being brought forward—not to be effective but to strike agreement with the EU?

[Lord Callanan (Con)]

This legislation was predicated in the TCA, as my noble friend points out. We are of course meeting our obligations. One of the purposes of this legislation is to meet our international obligations, not just under the TCA but with other trade agreements that we might strike as well.

In our view, an interventionist regulatory role is not necessary for the effective scrutiny of subsidies and would be detrimental to the smooth development and deployment of subsidies where they are needed. I have confidence that public authorities will take their statutory obligations under this regime very seriously and, in fulfilling those obligations, public authorities will be supported by comprehensive guidance. As a result, I do not anticipate that breaches will be by any means a common occurrence. My noble friend referred to the EU state aid regime, which is a different system, but it is revealing of public authorities’ attitudes to their obligations that since 1999, the European Commission has ordered UK public authorities to recover aid on only four occasions.

Subsidy Control Bill

Debate between Lord Callanan and Lord Lamont of Lerwick

Committee stage
Monday 7th February 2022 Grand Committee

[Lord Callanan (Con)]

The figure I used was 74%, not 76%. I do not have that information, but I can certainly get it for the noble Lord—I will supply it in writing.

[Lord Lamont of Lerwick (Con)]

My Lords, the Minister was very persuasive about tax measures. I quite follow what he said about the uncertainties that would surround trying to calculate the cash value of tax subsidies, but he did not spend very much time talking about the one-month period, which is the one that seems a bit unreasonable. It seems as though they are paying more attention to the compliance costs of the public sector than to the costs of the challenger, which ought to be equally kept in mind. Surely one month is a very short period to challenge a subsidy which may have suddenly arrived out of the blue and may require a private sector company to take legal advice on whether it is challengeable. Four weeks to get legal advice, mount a challenge and go through all the formalities seems a very short period of time.

[Lord Callanan (Con)]

I understand the point that my noble friend is making. As I mentioned in my reply to the noble Lord, Lord McNicol, the limitation period is the subject of separate amendments, so we will have a further opportunity to discuss that in the next Committee session. Again, it is a balance between wanting to provide certainty so that the schemes can proceed and the beneficiary can proceed with some certainty, but I understand the point that my noble friend makes. The whole regime is designed to be as flexible as possible, and probably more permissive in many respects than the EU state aid regime. As I say, we will have a longer period to discuss the limitation period and the challenge on a future occasion.

--- Later in debate ---

[Lord Lamont of Lerwick (Con)]

My Lords, without endorsing what the noble Lord, Lord Purvis, said, I think this is a very important issue—without going into the wider Brexit questions to which he referred—and it is extremely worrying.

I would like the Minister to confirm whether the Government’s position as stated in this Bill, and which was reaffirmed by my noble friend last week when she replied to the debate, is the final interpretation or is an interpretation that is subject to change. As the noble Lord, Lord McNicol, said, there are different legal interpretations of the protocol, and there certainly seem to be different interpretations between the European Union and the UK Government. Does that not therefore affect the assurances that Ministers can give? What certainty can be attributed to the opinion of Ministers as to what is the meaning of subsidies under Article 10 or subsidies under Article 138, and which subsidies are subject to European Union law and which are not?

Last time, I raised with my noble friend Lady Bloomfield the question of reach-back and what would happen if a subsidy was being given to a company in the north of England that was exporting goods to Northern Ireland and whether that would come under the EU regime or the UK regime. She replied by saying:

“The Commission’s … declaration of December 2020 made it clear that Article 10 could affect a subsidy in GB only”—


I stress the word “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.”—[Official Report, 2/2/22; col. GC 244.]

Is that the only case? If there were no subsidiary, would that be a different outcome?

[Lord Callanan (Con)]

My Lords, let me first thank the noble Lord, Lord Dodds, and the noble Baroness, Lady Hoey, for this amendment. I know that the noble Lord has strong feelings on the protocol and he and I have discussed it many times before. I have also discussed it with the noble Lord, Lord Empey, throughout the progress of our various pieces of Brexit legislation. I know the issues that are involved, and I will hopefully be able to update the noble Lord on our interpretation of the provisions and where I think we have got to—although there is a limit, as I am sure the noble Lord will understand, on what I can say.

I start by emphasising that preventing undue distortion or economic disadvantage to any part of the United Kingdom is one fundamental objective of this regime. Subsidies are inherently distorting, but this Subsidy Control Bill exists to ensure that public authorities minimise those distortions and economic disadvantage, ensuring that the benefits of the subsidy outweigh any negative effects.

Public authorities will need to consider this in making their decisions about whether the subsidy should be given and how it should be designed. That particularly affects any negative effects in parts of the United Kingdom other than the target area of the subsidy, but it also includes the effects on international trade or investment where the public authority may have less incentive to take those disadvantages into account in its ordinary decision-making processes.

--- Later in debate ---

[Lord Callanan (Con)]

So shall we finish at this point and start again on Wednesday. Is my noble friend Lord Lamont available for the next Committee session on Wednesday afternoon? We are talking about suspending at this point, because we have run out of time, and returning to this group of amendments then.

[Lord Lamont of Lerwick (Con)]

Yes.

Retail Sector: Unemployment

Debate between Lord Callanan and Lord Lamont of Lerwick

Wednesday 27th January 2021 Lords Chamber

[Lord Callanan (Con)]

The noble Lord makes a good point. I know that he has extensive experience in this sector. I am sure that we will want to do all we can to support the kinds of initiatives that he refers to.

[Lord Lamont of Lerwick (Con) [V]]

My Lords, is not the risk that the demise of vast outlets such as Debenhams will have a domino effect in reducing footfall for other shops? While it would be completely wrong for the Government to rescue retailers that have failed to adapt, there is no reason for all retail to disappear from the high street. Is it not the case that the Government’s own measures against Covid have increased the challenge for viable businesses? Will the Government please consider measures such as extending further the business rates holiday and will they also use their urban regeneration programme to facilitate the conversion of shops to other uses, thus avoiding great black holes in many town centres?

[Lord Callanan (Con)]

I agree with the noble Lord. It is very important that we try to do all that we can to retain town centres and high streets. They are a vital outlet for many businesses and are well loved by the public. We have the levelling-up fund and the towns fund so we are doing all we can to assist the sector in these very difficult times.

Brexit: Divergence from EU Standards

Debate between Lord Callanan and Lord Lamont of Lerwick

Thursday 3rd October 2019 Lords Chamber

[Lord Lamont of Lerwick (Con)]

Does my noble friend agree that the freedom to diverge from European regulations is, as the Prime Minister said, one of the important reasons for leaving the EU, although this will probably apply more to future regulation in evolving technologies such as fintech? Does he also agree that while, like any third country, such as the United States, we have to observe EU regulation when we sell into the EU market, when we sell into our own market or trade with each other it is a matter for the UK Parliament?

[Lord Callanan]

As always on these matters, my noble friend speaks great sense. I agree with the points that he has made. The ability to set our own regulations and to adopt a nimble and flexible approach to regulations on future technologies would be one of the great advantages of leaving the EU.

Further Discussions with the European Union under Article 50 of the Treaty on European Union

Debate between Lord Callanan and Lord Lamont of Lerwick

Wednesday 27th February 2019 Lords Chamber

[The Minister of State, Department for Exiting the European Union (Lord Callanan) (Con)]

My Lords, it is a pleasure to be opening, yet again, today’s debate. Before I begin, I ask noble Lords for their patience, as, like many Members of the House, I am struggling with rather a troublesome cough.

The Motion before the House asks us to take note of the further discussions with the European Union under Article 50 of the Treaty on European Union. Those further discussions were set out in detail during a Statement repeated by my noble friend Lady Evans, the Leader of the House, yesterday. Today, both here and in the other place, we will be taking stock of our position and, in the other place, voting to help set the direction going forward.

Following the vote on 29 January and the mandate set by the other place, the Prime Minister and members of the Government, including my right honourable friend the Secretary of State for Exiting the EU, have been engaging with colleagues on all sides of the House and across Europe to find a way forward that will work for both sides. As my noble friend told the House yesterday, the Prime Minister was in Brussels last week to meet President Juncker, to take stock of the work that has been done by the UK and EU teams so far. The Prime Minister also discussed what legal changes are required to ensure that the backstop is temporary, along with whether there are additions or changes to the political declaration that could be made to secure Parliament’s confidence in this starting point for a strong and ambitious future relationship with the EU.

The Prime Minister has been engaging extensively with EU leaders over the past few weeks, and has now spoken to the leader of every other EU member state to explain personally the UK’s position. We have made good progress in our discussions, and that work continues so that we can leave on 29 March with a deal that commands the support of the other place.

Noble Lords will be pleased to hear that I will not test the patience of the House by restating in full the Statement repeated yesterday by my noble friend the Leader. However, I would like to touch on a couple of the key points made by my right honourable friend the Prime Minister. The UK and the EU have agreed to work on arrangements that will ensure the absence of a hard border in Northern Ireland, with the aim of avoiding the need for the backstop ever to be used, even in a scenario where the future relationship is not enforced by the end of the implementation period. Beyond the backstop, we have been working in other areas so that we can reach a deal that, again, the other place can support. The UK has a proud history of upholding and protecting standards in workers’ rights, environmental protections and health and safety. We are committed to ensuring that leaving the EU will not lead to the diminution of standards in those areas. The Prime Minister set out yesterday how we will bring forward proposals to uphold, and even strengthen, protections in areas such as workers’ rights and health and safety. We will do this engaging with colleagues across parties and with businesses and trade unions.

The Prime Minister has recognised MPs’ concerns that time is running out and Parliament will not be able to make its voice heard on the next steps, as well as concerns over the uncertainty facing businesses. She has set out a clear process that will guarantee that Parliament gets a vote on whether it wants to leave without a deal on 29 March and, if that is rejected, a vote on extending Article 50. The Prime Minister does not want to extend Article 50; she has never wished to do so.

[Lord Lamont of Lerwick (Con)]

I am grateful to my noble friend for giving way. The Prime Minister has made a commitment that there will be a vote by the House of Commons as to whether it wishes to leave without a deal or not, but that is a resolution. The law of the land is that we leave on 29 March, as enshrined in the Act of Parliament. What is the significance of the vote? What will happen as a consequence of the vote if it is, let us say, against leaving with no deal? What would actually happen to alter the law?

[Lord Callanan]

As a consequence of that vote, nothing. What will then happen is that the following day the Government will ask the House of Commons whether it wishes to extend the Article 50 process. If the House decides that it wishes to do so for a short, time-limited period, the Government will introduce the necessary legislation—and will of course need to negotiate the relevant extension with the EU, as that is something that we cannot just decide to do unilaterally.

Brexit: Preparedness for EU Exit

Debate between Lord Callanan and Lord Lamont of Lerwick

Thursday 25th October 2018 Lords Chamber

[Lord Callanan]

As the noble Baroness is aware, we have already had the a people’s vote and the people voted to leave, but we will be exploring this subject extensively in the next few hours in response to the Motion tabled by the noble Lord, Lord Campbell. As I said, we remain confident of reaching an agreement with the EU, but it is only sensible for government and industry to prepare for a range of scenarios. We continue to work closely with a range of partners on the appropriate contingency plans to ensure that trade can continue to move as freely as possible between the UK and Europe in the event of no deal—which, I repeat, is not an outcome that we wish.

[Lord Lamont of Lerwick (Con)]

Has my noble friend noted the statement this week by President Macron of France in which he said that although no deal was undesirable, no deal should not be a cause for panic? He specifically said that ferries would operate, trains would continue to run through the tunnel, planes would continue to serve as normal and business would go on.

[Lord Callanan]

My noble friend makes a very good point. We know that the French National Assembly and the French Government are putting in place preparations for no deal, as are many European countries. That is the responsible thing to do, and I am really not sure why the Opposition think it is such a bad thing to put in place sensible contingency plans.

Brexit: Economic Analyses

Debate between Lord Callanan and Lord Lamont of Lerwick

Wednesday 24th January 2018 Lords Chamber

[Lord Callanan]

My Lords, we are not winding down our membership of these agencies. We are members of the European Union until March next year, and we will continue to meet all our obligations and commitments during that period. I was in Brussels all day yesterday, consulting with the European Parliament on these issues. The Norwegian deal is not a superior deal, in my view. We want a proper, bespoke arrangement that will benefit the United Kingdom and respect the Brexit result.

[Lord Lamont of Lerwick (Con)]

My Lords, if the Government were misguided enough to initiate an inquiry into the three questions posed by the noble Lord, would they add a fourth, which would be a study of whether they expect European trade with Britain as a percentage of our total trade to continue to decline in the next 10 years, as it has in the last 10 years? If the Government were misguided enough to initiate such a study, would they ensure that it was not done by the same officials who made such misguided and wrong forecasts about the immediate impact of a Brexit verdict in the referendum?

EU Exit Negotiations

Debate between Lord Callanan and Lord Lamont of Lerwick

Monday 13th November 2017 Lords Chamber

[Lord Lamont of Lerwick (Con)]

I thank my noble friend for the Statement. I welcome in particular what he said about the European Court of Justice. Can he clarify what exactly is meant in the Statement? He says that we will bring to an end the direct jurisdiction of the European Court of Justice but at the same time he says that our courts can take account of the rulings of the ECJ in this area to help to ensure consistent interpretation. Can he expand on that and explain how the Government think that will work? Secondly, can he say something about the timing of the withdrawal Bill: when does he expect it to be available to Parliament; when will the vote take place; and will that be closely linked to the vote on withdrawal, which I think is a separate matter?

[Lord Callanan]

On the issue of the ECJ, I do not want to go any further than the Statement. We will end the direct application of the European Court of Justice in the UK. That is entirely right—we would not expect a foreign court in any other country or organisation to have effect on UK citizens or the UK judicial process. We expect the debate and vote on the withdrawal Motion to take place before the withdrawal Bill—but of course we cannot have a withdrawal Bill until we have an agreement to withdraw from.