Subsidy Control Bill

Debate between Lord Thomas of Cwmgiedd and Lord Ravensdale

Committee stage
Monday 31st January 2022 Grand Committee

[Lord Ravensdale (CB)]

My Lords, I shall speak to Amendments 4A and 5A in my name and first apologise to noble Lords for their late tabling. I thank Jonathan Branton, a subsidy control expert at DWF Law, for his assistance with my remarks today.

As I said at Second Reading, for me the key aspect that is missing from the Bill is how it will assist disadvantaged areas and how it fits with the levelling-up agenda. I see the Bill as being a central part of how levelling up can be delivered through targeted subsidies into disadvantaged areas. What business across the UK really needs is clear visibility and legal certainty about which areas will benefit from financial assistance, through an evidence-based mechanism. Then the market can get on and do its job of driving investment into those left-behind areas of the UK and deliver on levelling up.

I listened carefully to what the Minister said at Second Reading: that the Bill gives public authorities the flexibility to grant subsidies where they are best served to support economic growth in local places. At present, however, it does not give businesses clear visibility of which areas in the UK will benefit from increased help. There is nothing to differentiate between a wealthy area and a disadvantaged one.

Having a commitment in the Bill on levelling up could not be more timely, with the levelling-up White Paper being due for publication imminently. We have had continued debate over the last two years about what levelling up actually means, as the noble Baroness, Lady Blake, said. If the Government could point to a clear strategy within the Bill to deliver on it and prioritise business investment into disadvantaged communities, that would send a powerful signal about their intent to those communities across the UK and indeed to the business community.

My Amendment 4A is in similar vein to Amendment 4, tabled by the noble Lord, Lord McNicol, and spoken to by the noble Baroness, Lady Blake, which I also support. It proposes an areas of disadvantage subsidy strategy, which would need to be laid before Parliament within six months of this Act being passed. Critically, that would need to involve defining what a disadvantaged area was. Under the previous subsidy regime, we had a map defining assisted areas. That mechanism was not perfect; there are a number of issues with attempting to draw on a map which areas would receive preferential treatment. Previous maps were developed by Eurostat, but we now have the opportunity to develop a map that is right for the UK and uses the wealth of economic data available at a local level. For example, I am co-chair of the Midlands Engine APPG. The midlands engine encompasses many of the most deprived areas in the UK and is home to around 11 million people. Our regional observatory produces a wealth of economic data that could be used in the development of such a map.

As I highlight in my amendment, a map is not necessarily required here. A list of agreed economic indicators could do the same job and perhaps provide a more flexible route to defining a disadvantaged area in the context of subsidy control. Again, it would give business the clarity needed on where subsidies would be available to drive inward investment.

My Amendment 5A would simply serve to make Amendment 4A operable, as Part 1 of the Bill deals only with definitions, by making reference to the strategy in Schedule 1.

In conclusion, the way the Bill is drafted, if a manufacturer were deciding whether to locate in Scunthorpe or Surrey, or deciding between Bilston and Buckinghamshire, there is nothing to advantage the former locations. The legal certainty that would come from implementation of an areas of disadvantage subsidy strategy would be attractive for many organisations and businesses considering offers from different areas, and would therefore make a key contribution to levelling up across the UK. I hope the Minister will agree with the logic here and I look forward to her response. In particular, I would like to get her views on how the Bill will support levelling up from a national perspective. When a business is deciding where to locate, what clear visibility of subsidy support in disadvantaged areas will there be to inform its investment decisions?

[Lord Thomas of Cwmgiedd (CB)]

My Lords, I shall speak to Amendment 6. I am extremely grateful to the noble Baroness, Lady Randerson, and to my noble and learned friend Lord Hope of Craighead for their support of the amendment. It tries to grapple with the areas that have been raised so far, but it must be remembered that the Bill applies to agriculture as well, and that makes the task much more complicated. It seems to me that the Bill provides in Schedule 1, that it is possible to have a subsidy that addresses an equity rationale, such as social difficulties or distribution concerns.

It is unfortunate that the word “equity” was used, because we used it in a completely different sense in our earlier debate. That must be one really good reason, if I may say so with respect, for not adopting the amendment of the noble Viscount, Lord Chandos—but I did not mean that as a throwaway line for the Minister. We will need to know what it means, and it is very important, it seems to me, to grapple now with the question of how we take into account the need for levelling up, or providing subsidies, where regional help is necessary in agriculture and fish. I think this is ultimately a political question—I will return to that in a moment—and the worst possible thing to do would be to allow independent bodies, particularly judicial bodies such as the CAT, to be embroiled in political decision-making.

It seems clear to me that we must have some form of agreement or definition of what are the criteria, or a map if need be, by which we can apply levelling up. As I understand it, we could look at GDP per person, which is the European Union method. We could look at GDP per employee. We could look at household income, and could then dream up—I do not mean that disrespectfully because it was no doubt carefully considered when it was done—a broad economic index that takes into account productivity, skills, unemployment rates, population density, employment, et cetera. We must be very clear how a business, or Ministers giving agricultural subsidies, can direct those subsidies according to some metrics that have a UK-wide basis. Is that something that can be done?

My concern here arises out of the criticism that has been made—I do not want to go into the merits of the criticism—of the way the social prosperity fund has had its index looked at. It must, it seems to me, ultimately be a political decision to decide what are the factors that go into making disadvantages which need to be addressed for a levelling up. This is not something a court should do; it is a political question and, for the sake of the courts, we should not be shunting political decisions to a judicial body, or an independent body such as the CMA.

That is the first proposition: this is a political question and it should be resolved politically. There are two ways of doing that. The first way and, I argue, by far the best way is to do it is by agreement in a common framework.