Employment (Allocation of Tips) Bill

Simon Baynes Excerpts

3rd reading
Friday 20th January 2023 Commons Chamber

[David Johnston (Wantage) (Con)]

Like many people, I was surprised to discover that tips are not being passed on. I think our understanding has always been that we pay the money on a restaurant menu for the food, and any additional money we leave is for the service. We have all given particularly generous tips for very good service, and I dare say we may have given a not so good tip, or maybe no tip, for particularly bad service, although never in our constituencies, obviously—there would never be bad service in my constituency, I hasten to add.

It sticks in the craw to think that a person may have worked so hard and received no benefit for that hard work, and that the tip would just be taken by the business owner. There are particular peak periods, such as Christmas, when the amount earned in tips can be a vital boost to a person’s income for that month, and maybe even for that year.

[Simon Baynes (Clwyd South) (Con)]

My hon. Friend is surprised that this is an issue. Has he or anyone he knows come across the difficult question of whether to tip by credit card or in cash? If the tip goes on the credit card, it is perhaps less likely to go to the employee. Has he given a great deal of thought to that issue?

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[Simon Baynes (Clwyd South) (Con)]

It is a pleasure to follow my hon. Friend the Member for Sedgefield (Paul Howell), and I, too, pay tribute to my fellow Welsh Conservative Member of Parliament, my hon. Friend the Member for Ynys Môn (Virginia Crosbie), and to my hon. Friend the Member for Watford (Dean Russell). As was mentioned during the previous debate, a huge amount of work goes into private Members’ Bills, but I know that both my colleagues are extremely hard-working and intelligent people, so it is no surprise to me that they produced this Bill in a timely fashion and in very good shape.

I grew up in the hospitality industry. My father ran Lake Vyrnwy hotel in Wales, which is only a few miles south of my constituency. Along with my brothers, I used to work for my father in the holidays, and I have just been trying to cast my mind back to the wage that we were paid. I think—and this is a measure of how old I am—that it was 20p an hour, which in those days was actually a very good rate for a teenager.

[Richard Fuller]

Was that old or new money?

[Simon Baynes]

Just in new money! It was 20p, not 20d.

That is why the hospitality industry is always of huge interest to me, not only in my life in general but, in particular, in my capacity as Member of Parliament for Clwyd South. My hon. Friend the Member for Wantage (David Johnston) said that this was not just about the hospitality industry, and I fully appreciate that, but hospitality is the key sector when we come to consider the Bill.

Clwyd South—like Ynys Môn—is an area full of tourism and hospitality businesses. Indeed, at exactly this time a week ago I was visiting Tyn Dwr Hall hotel, a wedding venue in my constituency just outside Llangollen, and talking to Tracey Owen, who runs the business and whose family own it. One of the points that came up in that discussion—and this, too, has been touched on by other Members today—was the vital importance of bringing young people into the hospitality industry. As I remember from my experience many years ago, hospitality is a wonderful training ground for young people, enabling them to learn a skill and also to learn some discipline in terms of turning up for work on time, doing a job properly and so on. Many hospitality businesses, of which Tyn Dwr Hall is a good example, go out of their way to bring in young people such as sixth-formers to do holiday work and learn a skill.

There are many other such businesses in my constituency, such as Iscoyd Park, another wedding venue; the Sun Trevor, a very popular pub; the Hand Hotel in Chirk, and, also in Chirk, Caffi Wylfa, a social enterprise-run café; The Hand at Llanarmon; The Boat at Erbistock; the Corn Mill in Llangollen; Gales Wine Bar, famously often frequented by a former Prime Minister, my right hon. Friend the Member for Uxbridge and South Ruislip (Boris Johnson), when he was the parliamentary candidate for Clwyd South back in 1997; and the Three Eagles, the Chainbridge hotel and the Wild Pheasant, all in Llangollen. There are many more I could mention, and it is probably invidious to pick out some and not speak of all, but those are just a few that spring to mind: they are businesses that I have visited and know well.

When I visited the Wild Pheasant, the staff made that point about recruiting young people into the industry. When Brexit brought changes to the employment market, it offered opportunities to people who might not previously have gone out to work at a young age in quite the way they are now, and also turbocharged those businesses to get out there, bring people in, train them up, and give them a good job. I think that that is an important background to the debate, because, as has been mentioned by many Members, it is the younger people who are often serving in hospitality businesses and are therefore the focus of the Bill.

Like my hon. Friend the Member for Wantage, I was pretty astonished that there are currently no laws directly concerning the distribution of tips as between employers and their workers. Tips and gratuities paid directly to the employer are presently the legal property of the employer, as are all service charges. It is worth repeating that, because it is pretty extraordinary. It makes the Bill all the more important.

Retention of tips is a very complicated issue. Like other hon. Members present, I would not say that there is a particular problem in my constituency, but my elder daughter has been working in hospitality in various places in London, having studied international hospitality management at university, and she says that the problem is rife in restaurants and so on. There is an idea that this is a limited problem, but that is probably not the case, which is another reason why the Bill is so important. The National Minimum Wage Regulations 1999 (Amendment) Regulations 2009 included a provision stating that tips could no longer be used to make up the national minimum wage, but they did not address the wider issue of unfair retention and distribution.

I strongly support the purpose of the Bill, which is

“to create a legal obligation on employers across sectors to allocate all tips, gratuities and service charges”

in the way that has been described. Another key point is how tips are distributed: the Bill intends

“to increase fairness for employers who already allocate all tips to workers by ensuring that all employers follow the same rules and by preventing a return to further unfair tipping practices in the future.”

Yes, we can hand tips to employees, but if we do not make distribution among employees fair, we will still not have fully solved the problem. Employers will therefore be required

“to have regard to a statutory code of practice…when complying with their obligation to allocate tips fairly.”

That is vital.

I note two other points from experts in the industry. Michael Kill, CEO of the Night Time Industries Association, has said:

“At a time when the hospitality industry is dealing with record vacancy levels, attracting people into work in hospitality businesses is already difficult enough. Taking tips off staff at a time when the cost of living is going up…the potential external economic pressures on our staff need to be considered.”

That is a fundamental point.

Kate Nicholls, chief executive of the industry body UKHospitality, is known to many Members of this House. She does a fantastic job as an ambassador for the hospitality industry. I pay tribute to her: during the covid pandemic, she did more than perhaps any other representative of the hospitality industry to bring its concerns to the Government, with fruitful results. She has urged the Government to work closely with businesses and employees to make the system work for all as venues face mounting costs:

“For hospitality businesses…customers tipping with a card incurs bank charges for the business, and many also employ external partners to ensure tips are fairly distributed among staff”.

That is an important balancing point that we need to consider.

As somebody who was born and bred in the hotel business, I have nothing but support for this tremendous Bill. I commend it to the House.

Neonatal Care (Leave and Pay) Bill

Simon Baynes Excerpts

3rd reading
Friday 20th January 2023 Commons Chamber

[Simon Baynes (Clwyd South) (Con)]

It is a pleasure to follow the eloquent and moving speeches of my hon. Friend the Member for Ynys Môn (Virginia Crosbie) and other Members across the House. This is an important Bill.

I pay tribute to the special care baby unit at Wrexham Maelor Hospital, which is in the constituency of my hon. Friend the Member for Wrexham (Sarah Atherton) but is frequented by many of my Clwyd South constituents. The maternity unit there was under some degree of threat about seven years ago, and I campaigned alongside many others for its retention. Using information provided by the special care baby unit, I will mention a little about what it does, because one aspect that we should include in this debate—I will come to parents and families in a minute—is the fantastic dedication, skill and care of all those in the health service who look after babies, and their families, in neonatal care.

The unit at Wrexham Maelor Hospital has 12 cots: one stabilisation or short-term intensive care cot, two high-dependency cots, and nine lower-dependency cots. The babies are cared for by a team of medical staff, led by a paediatric consultant, and a team of specially trained nursing staff, supported by healthcare support workers, neonatal outreach, speech and language therapists, physiotherapists, and many other professionals who work in the team. A Bliss volunteer also attends the unit every Wednesday from 10 am to 12 pm to provide emotional support. I say that not only to pay tribute to the hospital that serves my constituency so well, but to highlight the sheer skill of the people there and the wide range of complex processes that are required to ensure that babies are properly cared for in neonatal units.

As has been mentioned, one in seven babies born in the UK receives some level of neonatal care shortly after birth. Many people who have not had the experience of a baby in neonatal care—such as my wife and I, because our children did not go to neonatal care—would be surprised by that high number of babies, which further commends the Bill that the hon. Member for Cumbernauld, Kilsyth and Kirkintilloch East (Stuart C. McDonald) has brought forward. I commend him for persevering with it, because it is to everyone’s benefit. As has also been mentioned, about 50,000 babies in the UK spend more than one week in neonatal care after birth every year. For many families, the inflexibility of current parental leave laws exacerbates those issues and adds to the stress for the whole family.

When the Government launched a consultation in October 2019, it found overwhelming—almost unanimous —support for what the Bill proposes. Some 99% of respondents agreed that parents of babies who are admitted into neonatal care should have access to additional weeks of leave and pay; 93% supported the proposal for a right to neonatal leave from the first day of employment in a role; and 81% felt that the maximum number of weeks for neonatal leave should be the same as the maximum number of weeks for statutory neonatal pay. As I said, I commend the hon. Member for bringing forward the Bill and I am delighted that it has unanimous, cross-party support. Under the terms of the Bill, families will be entitled to paid leave if they meet the minimum service and earning requirements, and leave and pay will last for a maximum of 12 weeks on top of their other parental entitlements.

It is estimated—this important point has not been drawn out in the debate so far—that the annual cost to the Exchequer of neonatal care leave, if paid at the statutory flat rate, would be £14.2 million a year on average, alongside the one-off cost of £5 million required to update His Majesty’s Revenue and Customs’ systems. To be honest, that is not a large amount of money compared with the figures of billions of pounds that we hear mentioned in the House, and given that one in seven babies receives some level of neonatal care, it addresses a vital issue.

[Dean Russell]

As mentioned earlier, it is also important to look at the long-term anxiety and depression among parents from what could happen—ultimately, there is trauma in those first few weeks. When we look at the statistics, we see that many more people are taking sick leave for mental health and wellbeing reasons, which ultimately means a loss of income and damage to the individual, as well as a loss to the Treasury. I wholeheartedly agree that there is an economic argument and a very personal, long-term one.

[Simon Baynes]

I thank my hon. Friend for his intervention, and fully subscribe to his points. If it is not indelicate to say so, I felt that the comments made by my hon. Friend the Member for Ynys Môn about how traumatic it is for her to recall the experience, even now, make the point about the mental health issues that lie at the heart of this matter better than anybody could.

With regards to the Wrexham Maelor baby care unit, I mentioned Bliss, which we have already discussed this morning. It is a key charity that supports parents with sick and premature babies, and I commend that charity on having campaigned since 2014 to extend leave and pay for parents of babies in neonatal care. In 2019, Bliss conducted a survey that found that two thirds of fathers of premature babies had to return to work while their baby was still receiving neonatal care, and in 2018 that charity ran a campaign encouraging people to call their MPs

“to put pressure on the Government to extend leave for parents of babies in specialist care.”

Bliss noted that over 90% of MPs were reached through that campaign.

There have been many other very articulate and eloquent submissions, including from Catriona Ogilvy, founder of The Smallest Things charity; Sophie, a midwife from Tommy’s, the largest pregnancy charity in the UK; Jane van Zyl, chief executive of Working Families; and Caroline Lee-Davey, chief executive of Bliss. They have all pointed out that this is a vital issue, as has been said already this morning, and I am so pleased that we can come together in the House today to send the Bill further on its way.

[Alex Davies-Jones]

While the hon. Member is mentioning all the fantastic work that charities do to support parents every day, will he join me in commending the work of Ronald McDonald House Charities, which supports parents who—like his constituents—have to travel to access specialist services, and need support and accommodation so that they can be with their babies when they are separated and far from home?

[Simon Baynes]

It gives me great pleasure to support the hon. Member’s comments—she also made a very moving and eloquent speech this morning, which will stay with me for a long time. The point she makes about outreach on neonatal care is one of the points that was made in Wrexham Maelor’s description of what it does. From the farthest west of my constituency—in Corwen, Llandrillo or Cynwyd—it is a long way to Wrexham Maelor Hospital. Indeed, in Wales generally people have to travel a long way to get there. This goes back to the point about the complexity of what is supported, but I certainly support the hon. Member’s comments.

In conclusion, I congratulate the hon. Member for Cumbernauld, Kilsyth and Kirkintilloch East on bringing this Bill through the House, and I am pleased and proud to support it.

Ban on Fracking for Shale Gas Bill

Simon Baynes Excerpts

Wednesday 19th October 2022 Commons Chamber

[Alan Brown]

I agree wholeheartedly with the hon. Gentleman, and I recommend that he reads the report by Landfall Strategy Group, which illustrates that Scotland could have 385,000 jobs created in the future by developing a green hydrogen strategy. That would certainly benefit his constituency. I have been up to the port in Eigg, and it is fantastic to see what its plans are for the future.

There is so much more that the Government can do. Fracking is not required, and it is not the answer to reducing people’s energy bills. It certainly will not do anything to help the transition to net zero. It is opposed by the majority of the public. Seemingly just a few people in the Government are trying to force their will on the rest of Parliament, and possibly these communities.

[Simon Baynes (Clwyd South) (Con)]

The Secretary of State has brought a proposal to the House. There is clearly disagreement across the House on the issue, but at least he is opening up an honest debate on a very important matter.

The hon. Gentleman has made a number of criticisms of the Government’s general energy policy. I would like to know how the SNP will balance out energy security, given that it opposes nuclear, and oil and gas exploration.

[Alan Brown]

Scotland is already a net exporter of oil and gas, and the equivalent of our domestic electricity consumption is already generated with effectively 100% renewable energy. We export electricity, so it is clear that in terms of energy Scotland can stand on its own two feet. It is time that we are able to realise the benefits of being such an energy-rich country, because right now it seems to me that the broad shoulders of the UK are preventing us from realising the benefits that we should have.

The SNP has introduced a ban on fracking. We will not issue any fracking licences in Scotland. I would like to think that the UK Government will respect that aspect of the devolution settlement and not try to overturn what we are doing in Scotland. If they do so, it will add a further few percentage points to those who believe that independence is the future for Scotland.

Oral Answers to Questions

Simon Baynes Excerpts

Tuesday 7th June 2022 Commons Chamber

[George Freeman]

I would be delighted to meet the hon. Lady. We have allocated £8 billion over the next three years for life science and medical research across the Medical Research Council, the National Institute for Health and Care Research, and all relevant agencies. We will launch a cancer mission shortly and I would be delighted to talk to her about it.

[Simon Baynes (Clwyd South) (Con)]

T7.   I declare an interest as the chairman of the all-party parliamentary markets group. The “Love Your Local Market” campaign, supported by many Members across the House, has just come to an end. Does my hon. Friend agree that local markets and traders are a vital part of the local business community and make a huge economic contribution to the health of our high streets and the regeneration of our city and town centres?

[Paul Scully]

I congratulate my hon. Friend on his work and interest. We absolutely recognise the contribution that markets make to the vibrancy and diversity of our high streets up and down the country, and indeed of our town centres. We believe that local markets should stay at the heart of community life, and we want them to flourish all over the country.

Reducing Costs for Businesses

Simon Baynes Excerpts

Tuesday 11th January 2022 Commons Chamber

[Simon Baynes (Clwyd South) (Con)]

As a Welsh MP representing Clwyd South in north Wales, on the border with England, I see very clearly the considerable difficulties for local businesses arising from the Welsh Government’s covid restrictions, compared with the more enlightened and balanced approach being taken by the UK Government across the border. Sadly, the Welsh approach is not working, and we can see that in the way it is curbing covid cases, which in recent weeks have risen two to three times faster in Wales than in England.

The crucial point that I want to make this evening is about how we approach the debate. The overall structure and conditions for business are of critical importance in reducing costs for businesses and creating a pro-business environment in which companies and enterprises can flourish and plan for the future. I commend the UK Government for creating that environment. We have heard much talk today about the £400 billion of support, which has gathered compliments from both sides of the House. This obviously has defended and supported jobs and livelihoods, and the package is more generous than that of any other country in the world.

I would like to highlight one or two other aspects of the support package provided by the Government. First, I am very pleased that they have extended the recovery loan scheme to June 2022, providing a guarantee to lenders on finance up to £10 million. This too has had a wider impact for companies, because it has brought them closer to some of their lenders and improved their financial position for the longer term.

Secondly, I would like to highlight the provision of £100 million of new discretionary funding for local authorities to support other impacted businesses, which has been crucial. I am delighted that Wrexham and Denbighshire councils have been so adept at passing on that support to companies across my constituency.

Finally, I wish to highlight the cutting of business rates by at least 50% next year for 90% of retail, hospitality and leisure businesses. My goodness, that is needed in Wales at the moment. I make regular visits to companies in Clwyd South that frequently express their approval of the UK Government’s measures, which have made a huge and very positive difference to the health of their business. That in turn has made a significant contribution to the UK having the fastest growing economy in the G7.

In conclusion, I applaud the Government’s strong support for businesses, both the measures that they have taken and the favourable environment that they have created for businesses in the UK.

Subsidy Control Bill (Seventh sitting)

Simon Baynes Excerpts

Thursday 4th November 2021 Public Bill Committees

[Bill Esterson (Sefton Central) (Lab)]

I beg to move amendment 52, in clause 55, page 30, line 29, after “Secretary of State” insert

“, the Scottish Ministers, the Welsh Ministers and the Department for the Economy in Northern Ireland”.

This amendment extends the call in powers under this section to the Devolved Administrations.

It is great to see you back in the Chair, Ms Nokes, bright and early this time.

The amendment addresses the call-in powers as they relate to the devolved Administrations. We think that the power to call in is a good power to have in the Bill, but it needs to be consistent and apply to the devolved Administrations, not just to the Secretary of State.

Clause 55 allows the Secretary of State to request an assessment of a subsidy or subsidy scheme if the Secretary of State believes it could be breaking regulations or having negative effects on competition and investment in the United Kingdom. As we have said a number of times, it is important that the First Ministers and the Northern Ireland Department responsible have those same powers. It makes no sense that the Secretary of State should be empowered to call in Scottish, Welsh and Northern Irish subsidies that may damage English interests, but the Scottish, Welsh and Northern Irish leaders cannot call in subsidies that may damage the interests of their own nations. That is what we heard in the evidence sessions.

I start with the evidence from Thomas Pope, deputy chief economist at the Institute for Government, who told us that subsidy control

“affects devolved competence and the operation of policy in all four nations of the UK. I therefore think it is appropriate that there be better devolved representation.”––[Official Report, Subsidy Control Public Bill Committee, 26 October 2021; c. 31, Q43.]

[Simon Baynes (Clwyd South) (Con)]

Will the hon. Gentleman give way?

[Bill Esterson]

The hon. Gentleman is wearing a mask, so I will give way.

[Simon Baynes]

In the previous discussions on this issue, the opinion of the Bill Committee seemed to be that these matters were the responsibilities of the Secretary of State. It therefore makes no sense to me to devolve those responsibilities to the devolved Administrations. In some of their comments, Opposition Members have fully accepted that these matters are the responsibility of the Secretary of State, because it is a reserved power.

[Bill Esterson]

Just because the Government keep winning the votes, which they always will do because they have a majority in Parliament and therefore on the Committee, that is not a reason for us to not make valid arguments. This is a slightly different point on our concerns about the failure to reflect the devolution settlement in the Bill. Call-in is a slightly different aspect of the powers needed for a functioning subsidy regime, and it is right that we are raising it at this stage of the deliberations.

Subsidy Control Bill (Second sitting)

Simon Baynes Excerpts

Tuesday 26th October 2021 Public Bill Committees

[Seema Malhotra]

Q Finally, on that point, do you think that £315,000 or £500,000 as a threshold for subsidies under a subsidy scheme is too high?

Dr Barker: I would not say whether it is too high or too low. I think that there should be transparency at every level of subsidy, but I think it is reasonable to have a threshold in defining a faster-track decision-making process. That seems reasonable but, regarding transparency, I do not think that should be related to the size of the grant.

[Simon Baynes (Clwyd South) (Con)]

Q Thank you for your time this afternoon, Dr Barker; it is much appreciated. I wanted to look at the part of the Bill to empower local authorities, public bodies and central and devolved Governments, particularly the public bodies aspect. Do you see this as a welcome broadening-out of the routes by which subsidies can be brought to business, not only through central devolved Governments but through local authorities and public bodies?

Dr Barker: That is potentially welcome, but now we are extending subsidy-granting powers to a large number of bodies—about 500 in total. That will create a requirement that each of those bodies understands the principles for granting the subsidy and the processes that need to be gone through. They need to have some degree of expertise to guide business through the process in a confident way. In practice, that will probably mean that the subsidy advice unit in the CMA will be called on a good deal from a lot of those bodies for advice, information and to try to get an indication of whether the process being followed is the right one.

I am slightly concerned that consulting the subsidy advice unit may become a kind of quasi-obligatory stage in the subsidy approval process. The question is, will that delay things? Will it take away the nimbleness of the system? Does the subsidy advice unit have the necessary resources to deal with the hundreds of public bodies that will be consulting it? That is an uncertainty and a concern.

[Stephen Flynn (Aberdeen South) (SNP)]

Q Thank you for your helpful answers and input so far, Dr Barker. I think earlier you alluded to—those who gave evidence this morning certainly alluded to it—the lack of detail behind the Bill, the lack of guidance and the powers that sit with the Secretary of State. That prevailing situation is unlikely to change before the Bill comes into law. Do you think that is a help or a hindrance to businesses as it stands?

Secondly, we know that historically the UK’s spend when it comes to state aid, as it is more commonly known, has fallen well below that of European partners. Do you think the Bill will change that in any way, shape or form? Is there any indication in the Bill as it stands that it will change, certainly from a business perspective?

Dr Barker: I do think that more clarity is needed around a number of the concepts in the Bill. The need for more detail increases with the number of public bodies that are being empowered to grant subsidies. To give some examples, there is uncertainty around what would constitute a subsidy of particular interest, which is a subsidy that requires much more detailed pre-assessment by the CMA. Will that apply to a significant proportion of potential subsidies, or will that be done just on an exceptional basis? The answer will affect the nature of the entire system. At the other end of the spectrum, I think we still lack detail about the streamlined subsidies that can benefit from fast-track approval.

Another area that is important, particularly for IoD members, is the extent to which this regime can facilitate the support of start-ups, particularly those companies that do not have a long-standing financial track record and are still some way from generating profit or even revenue. I think that the proposed regime in this respect is preferable to the previous European Union regime, which had a prohibition over supporting undertakings in difficulties, which really ruled out start-ups. Within this measure, the only thing that is ruled out is the support of ailing or insolvent companies, which increases the scope of what can be supported. However, we still need clarity about what kind of going-concern assessments will be conducted to ensure that a potential recipient is eligible.

To answer your first question, there is still some way to go to provide all the interested parties with more clarity about how the system will operate. With your regard to your second question—do I think that this framework indicates that we will have more state support of business?—in itself, the answer is no. As I said before, it provides a framework in which that kind of policy could be pursued, but there is nothing about it that necessarily implies that it will be pursued. As I have said previously, in certain sectors there is a need for a changed approach to match those of our key competitors. That is really how the IoD is viewing it—is it going to be useful for that purpose? The answer is that it could be.

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[The Chair]

Before I bring in Simon Baynes, may I remind panellists that five more Members wish to ask questions? Could we keep the answers succinct, please?

[Simon Baynes]

Q One quick question. I think it was Mr Rose who said that the transparency register would be relatively easy to fix. Is there any comparable register that we could look at to learn from? This is perhaps not applicable, but from my own experience as a trustee of arts and heritage organisations, the requirements of the Arts Council and the lottery are very stringent in terms of transparency and what information you have to provide. Is that a comparable situation?

Alexander Rose: Absolutely. In terms of improving, you are starting from a relatively low base, so it is quite easy. There are plenty of databases, but ultimately it is about service functions. For example, I receive updates every day from Government on what they are doing. That kind of technology is there and it is ready to be put in place.

Jonathan Branton: I would second that. It is really difficult to argue against transparency and say, “Why wouldn’t you have transparency about the dispensation of public money in this way?” There is an overwhelming case for having a strong database that is searchable by whatever means anybody wants to search it, quite frankly. You can insist on that and be very plain. All the enforcement and strength flows from that later.

[Stephen Kinnock]

Q Just zooming out for a second, I know that you all have an interest in this levelling-up agenda. The stated priorities of the Bill are to be able to drive forward both the levelling-up agenda and the transition to net zero. Mr Rose and Mr Branton, do you think it is possible to achieve the levelling-up agenda without an assisted areas map or some way of actually focusing resources? There is also the issue that relocations are prohibited. What impact does that have on the levelling-up agenda?

We will achieve net zero in this country only if our steel industry transitions towards it. Mr Warren, what kind of state aid support do you think would be needed for that? Do you think there should be more explicit guidance in the Bill about how to achieve the transition to net zero as part of this overall strategy?

Jonathan Branton: I will start with the levelling-up question. I think you were asking whether it is possible to do something there without the equivalent of a regional aid map. The short answer is yes. You do not have to have a map of the country with shades of different colours for different levels of qualification in order to do something similar. The point is to give some form of preference or favouritism to areas based on some kind of measure of comparative disadvantage.

You could quite easily do that if you established a series of criteria. If you found that a given area had exhibited one or more of those criteria—and there would obviously need to be quite some thought given to what they were—that would be a means establishing that somewhere is regionally disadvantaged. Obviously, you can layer that with all sorts of different complications and grades of disadvantage, if you wish. That might be complicated or overly political, but you can establish the fundamental point of something being disadvantaged or not by reference to, I would like to think, a set of criteria, which would not be too hard.

For the relocation point, the wording in the Bill talks about something prohibiting subsidy that was given as a condition of relocation. In some ways, to my mind, that invites somebody to give a relocation that is not a condition, but achieves it anyway. Maybe that is just lawyers being cynical. Perhaps it is not fit for what it seeks to achieve, but is that a good thing anyway? I have seen a number of situations where a relocation has taken place, which has been positive for several reasons—perhaps someone relocates to make physical space for an infrastructure project, for example. Linking that back to levelling up, relocations can be advantageous and good in the grand scheme of things, and definitely positive for redistributing wealth. Having a prohibition in the Bill, even a badly worded one, is potentially too blunt a tool, which might backfire.

Alexander Rose: I have a slightly different position on clause 18. I think the way to resolve it would be to put in a value figure—maybe £20 million. I also agree that relocations can be hugely beneficial. Schedule 1 outlines the common subsidy principles and paragraph F is designed essentially to avoid competitions developing within the internal market.

I think that the issue trying to be resolved here is avoiding what would be regarded as a distortive subsidy. The way to deal with that is to define distortive subsidy and say that that would then be referred to the CMA, or however that works. That leaves you with the potential to include a replacement additional principle—you mentioned levelling up and net zero. I note that the strategy announced last week requires all civil servants to take account of net zero, yet these rules will be used by more than 550 public bodies. That is a great opportunity to instil that kind of thinking in every single subsidy.

Jonathan Branton: Without necessarily preventing them.

Richard Warren: To answer very briefly, yes, undoubtedly decarbonisation of the steel sector will require considerable subsidy or state aids, however we wish to term it. In sectors such as the power sector, we see billions of pounds’ worth of subsidy to decarbonise, and the steel sector will need precisely the same. Net zero or low-carbon forms of steel production will add anything from 30% to 50% to the costs of steel production, depending on which route you go down. If other countries are not moving at precisely the same speed or putting the same constraints on their industries, you will need some sort of intervention to correct that market failure.

There are two key areas where we would like to see additional movement. Again, I come back to competitive electricity prices. Fixing the issue there will require some sort of intervention. Secondly, we need pretty hefty support for capital investment in carbon capture and storage, hydrogen or even new electric arc furnaces. That will require hundreds of millions of pounds of investment.

On your final point about whether we need anything further in the Subsidy Control Bill to direct us towards that, I think that the light-touch approach is the right way to go. It does not exclude the Government from doing anything and it leaves open a huge number of options.

For example, the clean steel fund of £250 million that we hope will be confirmed in the spending review tomorrow is perfectly legitimate under the current regime. Maybe under the EU system, which says, “You can do this, you can’t do that”, you would have had to go through a more complicated approvals process. By the time you start introducing explicit requirements for certain industries, you will get a bunfight where everyone wants something mentioned in the Bill. You may end up down a route of, “If it’s not mentioned, maybe we shouldn’t be doing it”, so I think that the light-touch approach is the best way to go.

--- Later in debate ---

[Bill Esterson]

Q Two final thoughts. How long do you think an investigation is likely to take? And, on your point about local authorities, have there been representations as part of the consultation from local authorities to say that they are more likely, or for that matter less likely, to make referrals?

Rachel Merelie: On the second one, it was BEIS carrying out the consultation. We have not actually been in the frontline of engagement with stakeholders yet, partly because we are at this quite early stage of the Bill’s passage through Parliament. We will obviously be engaging with public authorities much more actively post Royal Assent, and perhaps in the run-up to Royal Assent as well. We do not yet have that information; BEIS may be able to answer that question.

On the question about how long an investigation would take, we have a very tight deadline for the reviews that we are undertaking of subsidies of particular interest. We are being asked to do those in 30 days, so there will be a bit of a run-in period—a pre-notification, to make sure that we have all the relevant information. Once we have published, I think there is a five-day cooling-off period and then the ability for the public authorities to implement their subsidies. They are quite tight timescales. You could imagine a team having a maximum of a couple of months on a particular review, then moving on to another one.

[Simon Baynes]

Q Just a quick question. We have talked rather a lot in this session about the four nations, but the terms of the Bill are such that the devolved Administrations take their place alongside local authorities, public bodies and central Government in being involved in delivering the subsidies to businesses. Therefore, do you agree that they are of equal importance in this endeavour and that, in a sense, the whole point of the Bill is that it spreads the responsibility across the UK and across different levels of government?

Rachel Merelie: Thank you for the question. It is really important that all granting authorities are treated fairly and equitably, regardless of whether they are in the devolved nations or in England. Yes, certainly the spreading of the load across the different granting authorities, and the ability for the subsidy advice unit to engage with each of those on an equal footing, is very important.

[Kevin Hollinrake]

Q On the minimal financial assistance, how are you going to monitor that? It is up to the company to record the assistance it receives. A company could receive assistance from numerous local authorities if it has premises in different parts of the country—for example, through the business rate grants that we saw last year. Those items will not be recorded anywhere. How would you monitor that?

Rachel Merelie: We will be taking the submission from the public authority, and it will be assessing its subsidy against the seven principles that are set out. It will then be for us to look at whether it is providing the evidence that we need to take a view on the strength of its assessment against those principles. That is what we will be relying on in order to do our assessment. Where necessary, we will be able to ask questions of third parties, but in the time available, we will be largely reliant on the public authority giving us the information we need.

--- Later in debate ---

[Paul Scully]

That is helpful to know. Thank you.

[Simon Baynes]

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

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

[Simon Baynes]

Q Does that mean that you would rather local authorities did not have these powers under the Bill?

Ivan McKee: The main issue we have is around the devolution settlement. It is quite clear: UK Government Ministers can have authority over devolved issues, which should be decided on in Scotland as per the devolution settlement. That should not be trampled on. That is something we are very concerned about, and we are opposed to that.

[Simon Baynes]

Q But do you support devolving powers to local authorities in general as part of the devolution settlement?

Ivan McKee: Clearly, it depends on what it is. In the devolution settlement, local government is obviously a devolved area, and those areas are for Scotland to decide on.

[Kevin Hollinrake]

Q It seems to me, looking at schedule 1, that you are able to design a scheme that the devolved Administration in Scotland deems appropriate. I think you said that you were worried that, having done that, you might be challenged—by the Secretary of State, for example. However, under clause 70(7)(a), you could challenge another part of the UK on their scheme, too. Why does Scotland have any less discretion in challenging another part of the UK than another part of the UK has in challenging you? It seems to be exactly the same either way.

Ivan McKee: Not really. Look at the calling-in powers, for example, that the Secretary of State has that we do not. The streamlined subsidy schemes, which have not been clarified yet, can be made only by the Secretary of State, not by the devolved Administrations. The cooling-off period, again, has no equivalent powers for the devolved Administrations. Requesting a report from the CMA cannot be done by the devolved Administrations. Referring to the CMA’s subsidy advice unit can be done only by the Secretary of State and not by the devolved Administrations, so the Secretary of State has a range of powers that can operate in areas where the devolved Administrations do not have the authority to do those things as well. That asymmetry in devolved areas is something that we are concerned about.

Subsidy Control Bill (First sitting)

Simon Baynes Excerpts

Tuesday 26th October 2021 Public Bill Committees

[The Chair]

Dr Pazos-Vidal, could you speak up a little bit?

Dr Pazos-Vidal: Yes, sorry. I withdrew from the mic. The general provisions are more state aid-like than just regional aid guidance received in the assisted areas, as my colleagued referred to previously. On the issue of assisted areas, it is important to highlight that assisted areas of regional aid guidance, as they used to be known, were done in complement to the so-called structural funds. Likewise, it is important that we develop the UK’s shared prosperity fund. It appears there will be an announcement on that in tomorrow’s statement by the Chancellor.

As we have seen so far from the pilots of the shared prosperity fund that are already running—the community renewal fund or the levelling-up fund more generally—they already do some special targeting. It makes sense that the assisted areas map that might be developed should complement the geographical prioritisation that we have seen, and probably want to see now in the shared prosperity fund. Sometimes to reinforce that, and sometimes because these things were not prioritised by the shared prosperity fund subsidies or grants, policy outcomes could be promoted by way of public subsidy. It is important to develop both the shared prosperity fund and the assisted areas map in parallel to make sure they are consistent.

As I said earlier, the UK has incredible advantages in terms of the amount of data that it has. For instance, I know from my experience of international work on EU legislation that it was very common for UK impact assessments of UK input of EU law to be taken as a reference for other countries, because they were very well done. We have a huge degree of knowledge that we can use in the UK to develop maps that deliver, and to learn from possible mistakes, or non-optimal allocation of subsidies in the past in the UK.

Perhaps connected to that is the ongoing work on better regulation by the UK Government, and the need for special and better input of the rules. That is something that the UK will be well equipped to provide, if the Government are allowed to be helped by different parts of the UK and the competent authorities there.

[Simon Baynes (Clwyd South) (Con)]

Q Thanks to both our witnesses for their excellent presentations this morning. I want to look at this issue of the maps from the point of view of a north-east Wales MP. That area has really missed out on a great deal of subsidy compared with west Wales and south Wales, as you mentioned, Professor. That is obviously due to the assisted area map. You raised points about perhaps questioning exactly how that is drawn up. As a former county council and town councillor, I feel that it is often at the council level that the areas of deprivation are properly understood, rather than at the devolved Administration level. I feel that the Subsidy Control Bill gives us an opportunity to recast the way in which we provide subsidies, so that we are more flexible and not so obsessed by area maps; you just alluded to their shortcomings. Another Member mentioned the question of how you deal with issues at the boundaries, which is always a major problem. Does the Bill gives us an opportunity to be more flexible and drill down to the local level, which is often where the knowledge lies of what should be done about areas of deprivation?

Professor Fothergill: I would not deny that there are huge amounts of knowledge at local level, but local economies tend to operate beyond the boundaries of individual local authorities. Local economies do not operate at the level of standard statistical regions, but neither do they operate on the small geographical scale of most local authorities; they tend to span several neighbouring areas.

The problem is that if we do not have a map and some sort of discrimination in favour of less prosperous areas, you would be treating potential investment in Guildford, let us say, on the same basis as potential investment in Grimsby. You would not be attempting to incentivise the levelling up of the United Kingdom. In certain places, if we really are serious about levelling up, we have to put more resources into that effort, and we have to use state aid as one of the tools for delivering new jobs.

There is a lot of evidence, accumulated over many years, that state aid subsidies for investment do work and deliver extra jobs in the more disadvantaged areas. It is an effective policy tool, as long as we do it properly and do not squander public money by giving grants automatically; obviously, we would have to scrutinise each case individually, within a set of broad rules. In west Wales and the valleys, for example, it has been possible to give investment projects capital grants of up to 30%, whereas in the more prosperous parts of south-east England, it has not been possible to support investment at all. There has been that positive discrimination in favour of the less prosperous places.

There is a boundary problem; that is inherent in any drawing up of maps. Maps can be drawn sensitively, though, and in a hierarchical way. You do not have to have an area that is entitled to loads of money, and have the rest of the country entitled to no support. You can have a gradation of areas. Indeed, we had a gradation of areas under the old EU system, and under the old UK system before we joined the European Union.

Dr Pazos-Vidal: The Bill is, in a way, is an expression of the legal and cultural difference between continental, EU and UK law. In EU and continental law, everything that is not explicitly mentioned is forbidden, whereas in common law, and certainly in this Bill, it is almost the opposite principle: you can do everything that is not specifically forbidden. That works in theory; in practice, it does not, and that is why we need guidelines, block exemptions, and maps. You need commonly understood criteria across the UK to avoid subsidy rises and the opposite, which is doing less, because the UK public sector is much more risk-averse than the public sector in other European or western countries. We see that at the moment. The old EU rules are de facto being used by managers in local authorities across the UK because they are far more detailed, safe and understood than the provisional framework we have at the moment.

If you do not have a common understanding across the UK about how rules should be applied, what subsidies, even if you leave a lot of local latitude, which we support, of course, we might end up going down the track of, “Are these investments that are actually needed?” and that is why this has to be done. In the same way, there has to be a certain common framework across the UK, because if you leave the onus for doing checks on local authorities, some will not have the capacity or resources, and others would. A common understanding across the UK is helpful for everybody, and that also includes maps.

[The Chair]

A lot of Members have indicated that they want to speak now. I have the list and I will call those whose eye I have caught—I will try to call Members whom I have seen first. Seema Malhotra, do you have a question?

--- Later in debate ---

[Seema Malhotra]

Q Would that include the devolved Administrations?

Professor Rickard: That is a good question. I do not have an opinion on that; I do not think I could say.

[Simon Baynes]

Q Thank you, witnesses, for your contributions this morning. Which subsidy system internationally would you consider the best role model for the UK, and why?

Professor Rickard: That is an excellent question. The UK is in a unique position because of the TCA. It is hard to find a perfect analogy internationally because of the TCA, and the structure and the limit of the TCA puts the UK in a unique position.

However, there are world-leading examples in transparency, for example Norway and Germany. They are extremely transparent in their subsidies. States within Germany provide annual subsidy reports that run to 50, 60 or 70 pages. I am not saying that that is necessary, but that is the kind of world-leading transparency that the UK could and should aim for.

What the UK is setting up in the subsidy control regime here is closer to what we see in the World Trade Organisation. The WTO allows subsidies, except for those that are prohibited, a bit like what is suggested here. Granting authorities are allowed to provide subsidies, and they self-certify that their subsidies comply with the rules, as we see in the Bill. Those subsidies then persist until they are challenged. That is the best analogy that we see.

The challenge in the WTO system is that many subsidies that do not comply with the principles, with the agreed upon rules, persist for a long time, and in fact may never be challenged. That is the challenge in the subsidy control regime here: granting the ability to self-assess your own subsidies to ensure that they comply with the principles, but thinking about what happens when a subsidy that does not comply with those principles is enacted. How long does it persist before it is challenged? Certainly in the WTO system they persist for a very long time, because it is difficult to enact that challenge.

[Simon Baynes]

Q But is there one country, in the overall scope of what we are talking about—not just transparency but effectiveness—that you think is a role model?

Professor Rickard: I think that Norway is an excellent role model, but again it is in a slightly different situation because it is not bound by the TCA. It has a different system, because it does not have devolved Administrations or devolved authorities. It has Parliament providing budgets to particular subsidy categories, and then an independent body assigning subsidies to groups based purely on economic logic and cost-benefit analysis. So there are politics involved in the budgeting—“We allocate this amount of money for subsidies to research and development”—but then the decision making is granted to an independent body of experts. That works particularly well, because there is still democratic accountability at the budgeting level, but the actual decision-making process is apolitical and led by experts, based on economic logic.

[Simon Baynes]

Thank you, Professor. Thomas?

Thomas Pope: As Professor Rickard was alluding to, we are going to be more or less unique in having a domestic subsidy control regime like this. The main examples internationally are the EU state aid system and the WTO system, both of which have that international dimension. We have looked in our research at other systems and what other countries try to do, such as Canada in its inter-provincial free trade agreement. It has more barriers to trade than we do. It has a consulting requirement on subsidies, although it is not a very strong one.

Having looked at other countries, what you see in those countries that do not have a domestic subsidy control regime, which is most of them outside of the EU, are the negative effects of not having one. The US is the obvious example, which other witnesses have alluded to, where you get these quite big subsidy races between cities or states. In Canada, there have also been issues with the risk of subsidy races.

Very centralised countries are in a different situation, because if only one authority can grant subsidies, you are not worried about subsidy races. In a world made up purely of central Governments, I think that it would still be good practice to have a set of rules like this, but you would probably design the rules and the system slightly differently. In the UK, we have the three devolved authorities, which puts us in a different situation and means that, even though we are unique in having a domestic subsidy control regime and even though it is required by our TCA obligations, it is a positive thing and it will be very helpful.

[Simon Baynes]

Q Is there one country that you particularly admire, and how do they do it?

Thomas Pope: As I say, I do not think that there is one that has a domestic regime. We are charting our own course here.

[Bill Esterson]

Q You have both outlined your concerns about the system in relatively general terms. Do you have specific advice on what you would do differently on some of the challenges? Professor, could you speak about the challenges in self-certification and marking your own exams, which you have referred to? Mr Pope, perhaps you could address some of the timeframe points that you started to touch on?

Professor Rickard: That is an excellent question. Some of the things that could help would be lengthening the time available to challenge—extending it beyond a month would be helpful—and clarifying, and potentially expanding, the definition of interested parties who could potentially challenge a subsidy if they are concerned.

Clause 71(3) has this really interesting phrase. It says that the relevant date you can challenge from is the date on which the subsidy has been published to the database or

“the date on which the interested party first knew or ought to have known”

about the subsidy decision in question. That is difficult. What is the date that a potential challenger ought to have known about the subsidy? That is one particular phrase that jumped out at me, and I am curious to think more about it. We should think about extending the time that you can challenge and defining more clearly and broadly who potential challengers may be, but also about how we will learn about a subsidy if it has not been notified and if we do not have publicly available information about it.

Potential challengers can ask the granting authority for information, and the Bill provides a duty on the granting authorities to provide that information. However, it is difficult to know, particularly within this short timeframe, how I will learn of this subsidy. How will I learn that there is a subsidy that is disadvantaging me and that I think is not complying with the principles? How can I learn that in this very short timeframe? Those are some concrete examples of changes that could be made to increase the ability of interested parties, competitors, businesses and others to scrutinise the subsidies that are being provided.

Employment and Trade Union Rights (Dismissal and Re-engagement) Bill

Simon Baynes Excerpts

Friday 22nd October 2021 Commons Chamber

[Kevin Hollinrake]

Yes, but it would require a huge scaling up of the role and there are no money resolutions attached to the Bill. [Interruption.] If I or any other person does not want to see this Bill passed, we have a perfect right to stand in this Chamber and express that opinion. That is exactly what I am doing. As I say, it is better to have no legislation than poor legislation.

The capacity of employment tribunals is another big issue. The ACAS document says that employment tribunals are under enormous strain today. The Bill would likely significantly increase the workload of employment tribunals. Additionally, it would require them to make all kinds of interpretations. The ACAS document observes that tribunals are not economists. Tribunals would consider the situation between businesses and workers and would have to make decisions that, in my view, they may not be capable of making. This might introduce undesired complexity, for example. There are all kinds of questions, not just about capacity but about the competence of employment tribunals.

I am also concerned about duplication, as it seems to me that there are provisions in the Bill about situations covered by redundancy.

[Simon Baynes (Clwyd South) (Con)]

Can my hon. Friend perhaps provide a little more information from his expertise about the additional costs, both financial and for staffing, that he estimates will result from the high number of employment cases that might arise from this situation?

[Kevin Hollinrake]

I would like to be able to, but I am not sure that is incumbent on anybody who opposes the Bill. It is right for somebody who introduces the Bill to state alongside it what extra capacity will be needed, and the cost of that to the taxpayer or the businesses concerned. To my knowledge, that work has not been done.

I am also concerned about clause 27D, on the unilateral variation of employment contracts. No doubt some of the evidence taken showed that some contracts of employment allow unilateral variation. That is not something I have never done in my business practice, but nevertheless the Bill seeks to make those provisions unworkable or not legal, meaning that employers will not be able to rely on that in future, and those elements of the contract will effectively become null and void. I do not blame the hon. Member for Brent North for seeking to do that. As an employer I would not involve myself in such a practice, but it seems to be retrospective legislation. It is bound to make businesses nervous if we legislate retrospectively about such matters, and I wonder whether he has considered that point.

Subsidy Control Bill

Simon Baynes Excerpts

2nd reading
Wednesday 22nd September 2021 Commons Chamber

[Seema Malhotra]

I will just leave the right hon. Lady with the Institute for Government’s feedback on the Government’s plan for growth, which was that it seemed more like a shopping a list than a prospectus. If those who independently look at what the Government are producing in terms of a plan and our industrial strategy make such comments, the Government would be wise to heed some of that feedback, in the interests of our country. I would like to be having a different debate. I would prefer to have a debate that was much more about content than on whether there is a clear plan.

Let me come back to my speech. We recognise the debate about whether the Government have a strong record on industrial strategy. Last week, the Confederation of British Industry urged the Government to

“build an economy of the future through catalytic public investments”

and to re-find its “role as market maker”. On research and development, innovation, regional growth and hydrogen—on which, perhaps, a strategy has since come forward—the CBI said that further action was needed for the UK

“to remain internationally competitive against peer nations where business investment levels–and public spending…far outstrips our own.”

Sufficiency of strategy is important here; it is not just about the publication of a document. There has been feedback on that, too.

We want to see well-designed, proportionate subsidies as part of the wider industrial strategy that we need to grow the businesses and industries of the future and to invest in our transition to net zero. Labour has also said that we must buy, make and sell more in Britain, as called for by our shadow Chancellor, my hon. Friend the Member for Leeds West (Rachel Reeves). That is part of how we can ensure resilience in our economy—the need for which has been highlighted only too starkly by the gas-price challenge and the CO₂ challenge of the past week.

The Bill lacks in not only vision but key details and scrutiny. The Institute for Government has expressed concerns about the ability of this House and the other place properly to scrutinise the new subsidy control regime, given the important issues that are being left to secondary legislation or guidance. The Institute for Government claims that the gaps left in the Bill by the Government

“could deny Parliament a proper chance to scrutinise how the new system will work”.

The Government’s own impact assessment says:

“There are considerable unknowns—because key features of the regime will be defined later in secondary legislation or statutory guidance. The analysis of the regime’s impact is also based on historical data when UK public authorities had to comply with the EU State aid regime.”

The impact assessment also says:

“We should expect the behaviour of public authorities”—

perhaps the Secretary of State was alluding to this when he talked about culture change— “and the resulting distribution of subsidies to change under the new regime—although it is not possible to forecast how this will change.”

We are yet to hear how the Government plan to define categories such as subsidies “of interest” and “of particular interest”—categories that will determine which subsidies are voluntarily or mandatorily referred to the Competition and Markets Authority. Such definitions are to be determined not now, but through secondary legislation, in respect of which Parliament is given less opportunity to scrutinise the Government’s decisions. To aid scrutiny, which I believe the Secretary of State will want to be to the standards we would want in this House for a regime that will stand the test of time, he should set out the timeline for consultation on and the publication of secondary legislation that covers critical aspects of the new system.

[Simon Baynes (Clwyd South) (Con)]

Will the hon. Lady say why no Labour Back Benchers are present in the Chamber? If this issue means so much to the Labour party, why is it not properly represented in the debate?

[Seema Malhotra]

I have been involved in extensive discussion with my colleagues, and they will want to make significant contributions in Committee to address the gaps in the Bill. We continue to work on that.

As I was saying, the Secretary of State should set out the timeline for consultation on and the publication of secondary legislation that covers critical aspects of the new system. I know the House will want to see that in good time.

Public bodies have faced significant difficulties since the start of this year precisely because of the lack of guidance on how to interpret the subsidy control principles agreed in the trade and co-operation agreement, so clarity on how public authorities should demonstrate that their subsidies comply with those principles will be an important part of the subsidy regime. I am sure the Secretary of State will agree that we will want to see some decisions being made in the interests of how we recover and how we are to grow our economy for the future.

On the important issue of devolution, most importantly of all we are concerned that the Bill has not taken the four-nations approach that is essential for an effective UK-wide subsidy control regime. For example, the balance of the power to challenge between the Secretary of State and the devolved Administrations is asymmetric. I am sure that the Secretary of State has heard those representations made to him directly. Twelve months ago, the shadow Secretary of State stood at this Dispatch Box and warned the Prime Minister of the risks of undermining with policy decisions the devolution settlement that has been part of our constitution for two decades and is vital to our Union. However, on the evidence of the legislation before us, it appears that a shift in mindset and thinking has not been a part of how the Government have brought forward this legislation, and we hope that they are going to listen to the concerns that we and other Members are raising.

--- Later in debate ---

[Stephen Flynn]

I welcome the hon. Gentleman’s intervention. It does not put a stain on all of politics; it puts a stain on the Conservative party, where it firmly belongs, because Conservative party donors and friends have gained the most from this pandemic when it has come to contracts. [Interruption.] Conservative Members can argue all they want, but the facts are as clear as that.

Now, to the Bill before us; we got a little side-tracked there. It is important to look at the wider context of the Bill: the present situation, the past regime, and what is to come, which of course is what the Bill sets out. Let us look first at what is in place at this moment in time. As I see it, and as I think all of us in the Chamber will see it, we left the European Union, but we left to a system of nothing. We do not actually have an effective system at the moment. Indeed, I think it was the Institute for Government that deemed the current system to be completely ineffective.

That is understandable. Of course, a public body looking at what it is going to be doing does not want to break any rules, so if it does not have a full understanding of what the rules are, it will obviously err on the side of caution. In many ways, that might be an argument for the Bill. I can certainly understand why that may be the case, and that was what the shadow Minister, the hon. Member for Feltham and Heston (Seema Malhotra), intimated in terms of meeting international obligations and the like. I do not think anyone would necessarily disagree with that.

Let us reflect slightly on where we have come from in relation to state aid. Some of this has been touched on already by Members on both sides of the House, but there is one specific aspect of it that I think needs to be aired properly. It was mentioned by the former Foreign Secretary, the right hon. Member for Esher and Walton (Dominic Raab), at the Dispatch Box during Prime Minister’s questions earlier, and again by the Secretary of State—perhaps not directly, but he certainly inferred it—that state aid was a problem of unelected bureaucrats in Brussels. Yet if we look at the facts before us, 95% of all state aid measures did not even go near the European Commission’s desk, so we are almost fixing a problem that did not exist in the terms that the Government think it did, irrespective of how much they want to make Brussels seem like the bad guys.

I appreciate, though I disagree with, the stance of some Conservative Members—the hon. Member for Weston-super-Mare made this point, as I think did the right hon. Member for South Northamptonshire (Dame Andrea Leadsom) when she was in her place—that we did not, when we were in the European Union, make the most of what we could do under state aid regulations. However, the facts are that, under those terrible state aid regulations, we invested but a third of what the Germans invested, and a fraction of what others invested, so the big bad guys in Brussels were not so bad after all. Yet we left that arrangement for a system that, at this moment in time, is completely ineffective.

That brings us to the next stage, as represented by this Bill. As I see it, the Bill’s objectives are to enable strategic interventions to support economic recovery, levelling up and net zero. That is not wholly different from the EU state aid rules, which were, of course, to support the environment and innovation. The one slight difference, however, is that the EU state aid rules had a specific remit for the EU regional aid system, whereby people advocated money to be directed to less developed regions.

I have to say that I am a little surprised that there are not a few more red wall Tories present, whose regions could be described as—[Interruption.] The hon. Member for Stoke-on-Trent North (Jonathan Gullis) is waving at me; I am sure he will seek to intervene on me in due course. If I were a Conservative Back Bencher representing a constituency in the north of England, I would be deeply concerned about this aspect of the Bill. Although the Government say that the objective of the Bill is to level up, it contains no detail at all. It says that the Secretary of State will come back, subsequent to the Bill, to provide the detail on how levelling up will work. More importantly, we have walked away from a system that put money directly into less developed regions.

[Simon Baynes]

I am a Conservative Back Bencher representing a red wall seat in north Wales. The previous EU system was very biased against regional and localised issues of deprivation. It went for large areas, but there are plenty of areas in north-east Wales that require the same amount of help as was gifted under the European system. I would argue that the new system is much more direct, much more localised and much more effective.

[Stephen Flynn]

I admire the hon. Member’s optimism, but I am not quite sure where he has read that, because, of course, the Bill does not have that detail. He is hoping that the Secretary of State will subsequently provide that detail, but the Bill does not make that clear.

Another extremely important point that the Bill does not make clear is in relation to relocation subsidies. Essentially, the Government are saying that they will not relocate subsidies to areas with a more significant problem. They might want to level up—to use their term—but that is not going to happen under the terms of the Bill.

--- Later in debate ---

[Simon Baynes (Clwyd South) (Con)]

I welcome the Bill, particularly as a Welsh Member of Parliament, because it will provide the framework for a new, UK-wide subsidy control regime. This will, for the first time, enable authorities, including the devolved Administrations and local authorities, to deliver bespoke subsidies that are tailored to local needs. I want to reinforce that point because it has been a key part of the discussion, in reference to the EU subsidy areas. In my opinion, those regions were not targeted enough. Large parts of Wales were not included in them, despite having areas of deprivation. The Bill will apply to the parts of Wales where need is greatest.

The Bill is also essential—the UK internal market is essential to our prosperity. Trade with the rest of the UK is worth more than trade with the rest of the world combined to Scotland, Wales and Northern Ireland. That is especially the case in Wales, where Welsh businesses purchase more from the rest of the UK than from Welsh businesses plus the rest of the world.

The Bill promotes accountability through a standardised, UK-wide database. Transparency and simple comparison will provide accountability across the UK. It must be stressed that reporting by the devolved Administrations is often absent or uses different criteria, which prevent like-for-like comparisons. For example, the Welsh Government do not publish waiting list times for all NHS procedures, unlike other parts of the UK.

The Bill promotes the Government’s levelling-up objectives. The UK is built on local communities, not just Belfast, Edinburgh, Cardiff and London. Building up and streamlining local authorities’ partnership with the UK Government are key to strengthening the Union. Speaking as a Welsh Member of Parliament, I have to say that the Welsh Government are not the easiest organisation to deal with for those living in north Wales and looking for Government help. Their focus is very much on south Wales. The message from the debate that giving money and subsidy control to the Welsh Government will mean that money is spread across the Principality is incorrect. I was interested by the remarks of the hon. Member for Carmarthen East and Dinefwr (Jonathan Edwards). He should be fair and recognise that Plaid Cymru is riding two horses in negotiating an agreement with the Welsh Government in Cardiff, yet criticising the Welsh Labour party while here. Plaid Cymru Members need to recognise that they cannot have it both ways.

The Bill benefits the devolved Administrations, too. That message has not come across strongly enough in the debate. It lowers costs and streamlines decision making, including for the devolved Administrations. Streamlined subsidy administration ensures that the devolved Administrations can roll out their own regimes at lower cost and greater speed. The UK internal market competition distortion principle will protect the devolved Administrations and the English regions from being pushed into competition spirals with neighbouring authorities.

I am pleased to back the Government on the Bill, which takes back control from the EU, allows us to deliver on the British people’s priorities, strengthens the Union and gives confidence and certainty to businesses and investors. It will enable local authorities across the UK to play an equal role, rather than everything always being put in the centre, in London and in the devolved Administrations. We need to enable the whole country, at a local level, to become involved and provide the dynamic to create a better life for all our citizens.