Subsidy Control Bill

Lord Whitty Excerpts

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

Moved by

[Lord Whitty]

3: Schedule 1, page 53, line 6, at end insert—
“(c) progress towards targets under section 1 of the Climate Change Act 2008 (UK net zeroe emissions target), and section 5 of the Environment Act 2021 (environmental targets).”Member’s explanatory statement
This amendment requires public authorities to consider whether proposed subsidies would have any negative effects on progress towards the UK’s legally binding net zero and environmental targets.

[Lord Whitty (Lab)]

My Lords, I shall also say a few words about Amendments 51 and 61 in this group. I do so in lieu of the noble Baroness, Lady Boycott, who, unfortunately, has to be at a funeral this afternoon. I declare my interests as set out in the register but in particular a very new one, which is that I have become a director of Peers for the Planet.

This amendment is pretty straightforward. It says that our climate change strategy, our net-zero strategy, about which the Government have been very clear, should be taken into account in their subsidy policy. It is odd that it is not in the Bill, either in Schedule 1, which we are discussing, or virtually anywhere. However, we are lucky tonight because the Minister is of course also Minister for many aspects of net zero. I therefore assume that my amendment will be received with acclaim by the Government Benches. They might think they have a better form of words that they want to bring forward later, but I think my form of words is fairly clear.

We are on Schedule 1 to the Bill, which is headed “The Subsidy Control Principles”. That a flagship policy of the Government which has been said by Ministers time and again should apply across all government policy is not included in that schedule is very odd indeed, and it must surely be an oversight. Even more surprising, it is not referred to in Schedule 2, which relates to energy and efficiency principles, because that is mainly about energy policy. There is a reference which could be said to be relevant, which is to subsidies directed towards the reduction of carbon use and to help decarbonisation, but those are specific subsidies. What my amendment is concerned about is that all subsidy schemes should take into account their implications for our target zero policy and climate change objectives.

I would find it difficult to think the Government could reject that. Ministers have said on many occasions that it is one of our most important policies and strategic commitments. The Public Accounts Committee has recently said that all government departments must take it into account, and that includes new legislation. This is substantial new legislation which may not obviously directly affect climate change, but everything indirectly affects it. Subsidies after all, whatever their form, are about interfering with the market to get a different outcome. It would be odd indeed if the Government did not accept that, if the market was moving in the direction which was more or less in line with our climate change agenda, we should not intervene with a subsidy which reversed it or at least offset it. We are not saying that every subsidy has to be directed at climate change, but the implications have to be taken into account when considering the validity of that subject.

I am expecting a positive response from the Government. I do not think it would cost them a lot in terms of the overall nature of the Bill, but it would give credibility to the overall policy that our net-zero targets should be followed through across the whole of government and all public authorities. If the Government reject it, I will find that very difficult to accept, and I think we would wish to test the opinion of the House. I hope that the Government will be reasonable and either come up with their own wording or just accept the wording which the noble Baroness, Lady Boycott, and I are proposing. I beg to move.

[Baroness Bennett of Manor Castle (GP)]

My Lords, I rise with great pleasure to follow the noble Lord, Lord Whitty, who has powerfully and clearly introduced this group of amendments. I will offer the Green group’s support for Amendments 3, 51 and 61. Were we not in a state of continual juggling of different Bills, I am sure that we would have attached one of our names to them.

Amendment 3, on which the noble Lord indicated he is likely to test the opinion of the House, is particularly important in considering the negative effects. I am influenced in that view by a visit I made yesterday to a village called North Ferriby and a site threatened with the development of an enormous Amazon warehouse, with significant environmental effects. From those environmental effects flow effects to people’s lives and well-being. It is the absolute reverse of levelling up in that it is making people’s lives much worse. It is clear that, when talking about economic development, there is inadequate consideration of local environmental effects and the broader effects on the state of our world.

However, I rise chiefly to speak to Amendment 5 in my name. Rather than trying to stop damage, this amendment is trying to lead the Government in a positive direction, which could help them deal with some of the issues facing them today and will be tackled by the Chancellor tomorrow.

Amendment 5 is all about helping small-scale community energy projects to make a big impact in the energy system. In Committee, the Minister suggested that community energy is not within the scope of the Bill, but I hope we might see a broader response today, and at least a positive response and acknowledgement from the Minister that this is a huge lacuna in government policy that desperately needs to be filled.

This amendment adds community energy to the list of circumstances that may be used to determine a subsidy, where the generator is a community energy project. What we see is that the rural community energy fund is soon winding down, despite its success. The Minister and I have, in another context, discussed the lack of any other community energy schemes, despite the Government’s promises to deliver them.

You might ask, “Why would subsidies be needed?” The fact is that community schemes often need early-stage seed funding to get them to the stage where they can seek investment. Without that, many communities, desperately keen to set up their own scheme, are never able to get one off the ground. What we are talking about is perhaps something like an electric car club, where a community can generate its own energy. I saw this in Stroud a few years ago: solar panels on the roof of a doctor’s surgery powered an electric car club car. This had all been supported by community investment and was run by the community, with the nature of the project being chosen by the community.

It is clear that this can unlock more than £64 million in private capital investment. It is an incredible opportunity for public money to kick-start a community-led green revolution. Importantly, thinking about the levelling-up agenda, this means that communities with money can put it into their local community and get the money circulating around that community. This is a cost-effective way of unleashing the possibility of many new green jobs.

I am not expecting the amendment to pass today, but there is a huge opportunity here. The crisis the Government are facing is clear: the cost of living crisis and concern, particularly in the context of the tragic situation in Ukraine, about energy self-sufficiency. But there is energy all around us: energy from the sun, the wind and people within communities desperate to help tackle the climate crisis and meet the needs of their own communities. Let us make sure that we have a subsidy scheme that can support all that physical and human energy and put it to good purposes to improve the lives of us all and our environment.

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I stress to noble Lords that the UK’s existing commitments and practices in relation to this critical priority are extensive and world leading, including, for instance, the various principles set out in the Environment Act which Ministers must give regard to when making policy. I believe, therefore, that we already have the right framework in place. For the reasons that I have set out, I hope that the amendment can be withdrawn.

[Lord Whitty (Lab)]

My Lords, I cannot really hide that I am deeply disappointed by the Minister’s response. One modicum of comfort, if that is the phrase, is that he did say that guidance to public authorities would include a reference to the climate change objectives. I therefore can see no possible reason for him rejecting Amendment 61 on that basis.

On the central issue, the Minister referred to all the existing mechanisms, and there are important existing mechanisms and commitments, but the Climate Change Committee has said to the Government time and again that every new policy ought to include a cross-reference to climate change targets. This is an enormous area of new policy that, rightly or wrongly, we have taken back from the European Union so that we control the levers of power for a new era. Yet the Government stumble at the first hurdle and do not put it in this very important legislation. I do not understand the logic.

To be fair to the Minister, he wants all these things delivered, as the Government appear to do. This is not to say that they override all other policies and objectives, but they should be part of the balance when these things are being considered. There is a danger, in rejecting such amendments to this important legislation, that the interpretation out there—which in a sense has been fed by the media over the last few days—will be of a backing off from commitments to climate change within government circles.

The Government are missing the point and missing a trick here. If they want to reassert that they are still on schedule to deliver the government commitments and the net-zero strategy to which the Minister is committed, that should be in this important legislation. I hope I am wrong, but in order to ensure that this House at least has a chance to give its view on these matters, I am prepared to put this issue to the vote tonight. I beg to move.

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It is a little surprising to me that this amendment was not grouped with Amendment 2, in the name of my noble friend the Minister, which has been so warmly received on all sides. It is likely to achieve exactly what the noble Baroness and the noble Lord, Lord Bruce, would like to see, so I do not support this amendment.

[Lord Whitty (Lab)]

My Lords, I will say a couple of words in support of the amendment and widen it slightly. In Committee, we argued that agriculture had to be dealt with somewhat differently. Clearly, the most acute issue is those on the uplands and other disadvantaged areas. It is right that this amendment addresses that and that the Government—at least in words, if not in the Bill—accept that this will have to be the case.

There is another aspect to it. If we drive those farmers out of business and there is no farming on the uplands and other disadvantaged areas, relatively well-heeled organisations will buy that land, claim they are reforesting it or engaging in some other form of environmentally desirable activity and receive a government grant for it—but in the meantime they will destroy the communities, the culture and the whole nature of our upland areas.

I add the proviso that, as the new schemes come in, the subsidy policy will have to be reconciled with other aspects of agricultural policy. It will not be a simple area. As the noble Duke just referred to, the SIs we have seen so far do not give us any clear indication of the way that policy will develop. This will be an ongoing issue between the subsidy regime and the agricultural support scheme.

[Lord McNicol of West Kilbride (Lab)]

My Lords, I am grateful to the noble Baroness, Lady Randerson, for tabling Amendment 4 and wish her well in her recovery from Covid—it seems that working on BEIS Bills is a Covid-risky business for us all. I also thank the noble Lord, Lord Bruce, for introducing the amendment.

On our Benches, we have been puzzled by the Government’s decision to include agriculture and fisheries in the new subsidy control framework. These are complicated sectors already governed by their respective post-Brexit Acts of Parliament. Given the complex nature of agriculture, I imagine it will be high up on the list of streamlined subsidy schemes created by the Secretary of State or by devolved authorities with approval.

There are genuine concerns around the Government’s approach to the withdrawal of CAP funding and the seven-year transition to environmental land management schemes, ELMS. We support ELMS and the UK Government and devolved Administrations having far greater flexibility than that afforded under the CAP. Nevertheless, as the NFU president Minette Batters has made clear in recent comments, these are challenging times for UK food producers. There has been a worrying long-term trend in the agricultural sector, as my noble friend Lord Whitty just stated, with smallholdings being snapped up by ever-growing larger conglomerates. We take no issue with the bigger producers being present in the UK, but we are concerned about the ever-increasing squeeze on family farms and hill farmers, who struggle to make a living without stable subsidy support.

I am sure the Minister will tell us that this amendment would raise all sorts of unintended consequences, not least that it would fundamentally undermine the ability of the Welsh Government to support their farming sector. However, due to Her Majesty’s Government’s treatment of subsidy control as an entirely reserved matter, there is not a common framework on this topic. This was already touched on in detail in Grand Committee. Specific nations and regions of the UK may have very different interests from those of their neighbours.

Public authorities will of course be able to do what they deem appropriate in the context of overarching subsidy control principles, but this is one area where we may end up seeing subsidy battles and/or legal appeals. Ultimately, this is an opportunity for us to say that, where agricultural subsidies are given, public authorities should have particular regard to issues around the hardship and profitability concerns of smaller producers. As with Amendment 3, we do not believe this text in Amendment 4 precludes any public authority from awarding any particular subsidy; it merely adds an additional consideration to the decision-making process.

Amendment 4 may not instantly solve the problems faced by Welsh farmers, for example, but let us remember that in terms of the Welsh sheep industry something like 90% of the breeding stock fall within upland areas and 70% are in what are known as severely disadvantaged areas. These farms are a crucial part of the British landscape and, while they may not be as profitable as others, there is a public interest in preserving them. We will listen very carefully to the noble Baroness’s arguments, but at this time we are minded to support Amendment 4.