Subsidy Control Bill

Angus Brendan MacNeil Excerpts

2nd reading
Wednesday 22nd September 2021 Commons Chamber

[Stephen Flynn]

My hon. Friend could not have put it better. It is a pity that there are not more Tory Back Benchers present to hear her and understand the damage that they are going to do to their own communities.

The Bill’s key objectives also include net zero. Again, there is no detail on net zero or how the Government intend to subsidise its delivery. We are being told to just believe—to hope on a whim and a prayer—that the Government will do this, that they will deliver. Let us look at that from a Scottish perspective. Let us look at the Government’s record. As the Minister and, indeed, others in this Chamber know only too well, Scottish renewables projects, which are key and fundamental to reaching net zero, pay the highest grid charges in the entirety of Europe. In the UK—on these islands—renewables projects in the south-east of England get paid to access the national grid, whereas renewables projects in Scotland have to pay to do so.

[Angus Brendan MacNeil (Na h-Eileanan an Iar) (SNP)]

That is a vital point that will come forward in the next couple of months, when the Scottish islands could be providing as much as is coming across from some of the European interconnectors at present. On subsidies, the right hon. Member for East Antrim (Sammy Wilson) made a good point on enforcement. In part 5, an “interested party” is defined in clause 70(7) as “the Secretary of State” while others are just people who “may be affected”. Should not Scottish Ministers, Welsh Ministers and Northern Ireland Ministers be specifically outlined? Or is this something seen as being granted by London and London only, leaving London to make arbitrary decisions on subsidies? My hon. Friend makes the point very powerfully that producing renewable energy in certain parts elicits a subsidy, while in other parts it is penalised.

[Stephen Flynn]

Absolutely. My hon. Friend makes that point incredibly well and I will come on to that clear power grab from the UK Government.

To finalise the point in relation to net zero, the UK Government are telling us that we should trust them. Well, we don’t and we won’t.

The second objective of the Bill I want to touch on briefly relates to empowering devolved Governments—I mean, come on! Empowering devolved Governments. We are going to have a subsidy advice unit set up, a new independent body that will sit within the remit of the Competition and Markets Authority, yet the devolved nations have no say, no input at all whatever, in the role of that organisation or, indeed, who sits on the board. So of course that is not the devolved nations being involved as they should be. [Interruption.] The hon. Member for Stoke-on-Trent North (Jonathan Gullis) says it is independent, but of course that is not the case. Was it not the former Prime Minister who had a role in appointments to the board of the CMA, or have I got that incorrect? I think what he is referring to in terms of an independent body is the subsidy advice unit. Of course that is, but it sits within the remit of the CMA—that is the point I am making. The devolved nations have no role in that body. Those are two very separate but important points that am sure he will come to reflect on.

The biggest and most concerning aspect relating to the devolved nations is the fact that when a public body in Scotland or Wales decides that it wants to invest in a project, the UK Secretary of State, irrespective of whether the project relates to devolved areas, can choose to call them in under the remit of the CMA. That is a clear step into devolution.

[Angus Brendan MacNeil]

We could have a situation where somebody in England decides to set up something on the Welsh border or Scottish border without, seemingly, the powers of Scottish or Welsh Ministers, or even the Scottish Government, to try to remove the attention of Westminster. That is like the Scottish Government setting something up across the North channel almost in direct competition with Northern Ireland, with perhaps Northern Ireland not having the power of equivalence that it appears to be giving to the supremacy at Westminster, which I think is very wrong.

[Stephen Flynn]

That is an entirely fair and accurate point.

--- Later in debate ---

[Nigel Mills (Amber Valley) (Con)]

It is a pleasure to speak in this debate and to follow the hon. Member for Aberdeen South (Stephen Flynn). I echo my hon. Friend the Member for Weston-super-Mare (John Penrose) in broadly welcoming the Bill’s direction, and indeed its existence; I think that we need a robust subsidy control regime and I am glad that we are putting one in place.

I largely welcome the Government’s central decision to put parameters and rules in place and then trust public authorities to follow them, rather than having a very strict consent regime that would then become slow and cumbersome. I think that that is the right way to go, but it is intriguing to read the Bill and find a control regime that applies only if there is a

“subsidy…of interest or particular interest”,

neither of which terms is defined. At some point, a future Secretary of State could end up with quite a controlling regime by defining “particular interest” as any subsidy of more than half a million pounds, and then we would be back where we were.

It would be interesting to hear what the Minister thinks a “particular interest” might be and what the criteria might be for going into it, so that we know roughly where the line will be drawn, where the discretion for authorities is, and where we will start to expect mandatory or voluntary referral for advance clearance. I do not object to that process, because one of the key things for any subsidy regime is getting certainty so that when a business receives a subsidy, it knows that the rules have been followed, that it is entitled to it, and that there will not be a claim in six months’ or a year’s time that ends up with its having to repay the subsidy and being in worse distress than at the start. Having a regime with clearly drawn lines, so that everyone knows where they are and knows that once something is given it will stick, is hugely welcome. When we consider the Bill in more detail, it would be helpful to know where the line of discretion will be drawn.

The quid pro quo of a regime without intrusive up-front clearance is that we must have transparency on what is being paid, so that everyone knows that it is consistent with the rules and that some public authorities around the country are not misinterpreting them or, heaven forbid, deliberately doing things that they should not be doing. Clearly a risk in any subsidy regime is money being paid out in unlawful ways, so we want to be able to identify that situation pretty quickly.

[Angus Brendan MacNeil]

The hon. Gentleman is making some excellent points. I think that a Bill’s Second Reading is the time to test the arguments. He mentioned transparency, and a colleague of his debated a similar point with the SNP Front-Bench spokesperson, my hon. Friend the Member for Aberdeen South (Stephen Flynn). The crux of it comes back to the state aid point. In the European Union, there were 27 or 28 states and a very defined gamekeeper among all those poachers, namely the European Commission. The concern that I think SNP Members share is who the gamekeeper is and who the poachers are. Are the UK Government playing both gamekeeper and poacher in regards to subsidy? I am testing the arguments in this debate, but over time the Government will need to address the point and be very clear that they are not taking both sides, as poacher and gamekeeper.

[Nigel Mills]

I think that I understand the hon. Gentleman’s point. One attraction that I think the EU system had for the Treasury and occasionally for some politicians was that they could say, “We’d love to give you a grant to save your business, but tragically we’re not allowed to under EU rules,” when actually they did not want to because they knew it was not the right thing to do, so it was handy to have somebody else to blame. I think the Bill sets out that the CMA is the body that will or will not give clearance. It will not be Ministers doing that, so if the hon. Member wants a gamekeeper in this situation, I think it is the CMA.

[Angus Brendan MacNeil]

But is the CMA not a body of Westminster construction, as opposed to being a body of the Union?

[Kevin Hollinrake]

This is the United Kingdom Parliament.

[Angus Brendan MacNeil]

Well, there are many Parliaments in this United Kingdom at the moment, and we know that each and every one should have the same voice. If this is the poacher and gamekeeper Parliament, surely that is a problem for Northern Ireland, Scotland and Wales—that is the argument that I would postulate.

[Nigel Mills]

I think it is fair enough for a UK single market to have a single regulator that decides a subsidy regime to ensure that the application of the rules is consistent across the whole of that single market. The hon. Gentleman wants to go back into the EU single market, which has a single regulator which decides things across the whole of that its single market. He does not seem to accept that the EU single market should have the same arrangement.

--- Later in debate ---

[Kirsty Blackman]

Freeports are not covered by the subsidy regime we are talking about today. They are a separate thing. I can say from the Back Benches that I am not particularly keen on freeports, but the idea is that there is a wall around the port—the guidance specifically says that there has to be a physical barrier around the area—and there is a different taxation regime within that wall. I am yet to be convinced of the economic benefits that will come as a result.

We hope to have green ports in Scotland, and the failure of the UK Government to agree that we can pay the real living wage and focus on net zero within those green ports means that the freeport system, as it stands, is not nearly as advantageous as it could or should be. Even though the freeport system is set up to encourage such things, I have not seen evidence that it will actually do so, particularly given the rejection of the key principles we want to put in place.

[Angus Brendan MacNeil]

It is unclear that the UK Government have a strategy to replace the EU’s successful regional structural funding for Wales, Northern Ireland and many parts of the highlands in Scotland. Such funding and state aid go hand in hand, and they are seen as different things. Indeed, the freeports are seen as a different thing. There needs to be something else to go with this for areas of the UK that are disadvantaged by policy set in the south-east of England for the south-east of England.

[Kirsty Blackman]

Absolutely. We need to replicate the good things we had in the EU, the things that supported different areas. A system has been put in place to ensure that different parliamentary constituencies can get money from the UK Government, but it is super-interesting that the constituencies the Government have chosen to put at the top of the list are those constituencies represented by Conservative MPs, rather than the constituencies with the highest levels of deprivation. The difference is dramatic.

It is hugely concerning that, if the UK Government are left to do so much in this Bill by guidance, as set out in clause 79, we are going to have a situation where the Secretary of State will have significant control and flexibility without even having to come through door of this House. The Bill says that the Secretary of State is going to issue guidance about

“the practical application of—

(a) the subsidy control principles;

(b) the energy and environment principles;

(c) the subsidy control requirements in Chapters 2 and 3”.

I am clear that there needs to be detailed guidance, but we should be at the stage where we are scrutinising it. When we come to the evidence sessions in Committee, the people before us should be able to talk about the guidance. I get that some of the regulations are going to be made by the affirmative resolution and some by the negative resolution, but my major concern is not those that are going to be made by resolutions in this House; it is those that are going to be made by guidance.

Let us we look in detail at some of the stuff in this Bill. Schedule 2 says:

“Subsidies in relation to energy and environment shall be aimed at and incentivise the beneficiary in—

(a) delivering a secure, affordable and sustainable energy system and a well-functioning and competitive energy market, or

(b) increasing the level of environmental protection compared to the level that would be achieved in the absence of the subsidy.”

I am keen to know what “environmental protection” means. What does it mean? It is not in there. We do not know what it means because we have not seen the guidance that the Secretary of State is going to be allowed to produce on their own without running it past this House.

The same applies in respect of

“a secure, affordable and sustainable energy system and a well-functioning and competitive energy market”.

Does that mean a well-functioning and competitive energy market for those people who buy and sell energy, or for the consumer? Does it mean for the person who is being hit by those higher fuel bills or for the people trading gas on a daily basis? I do not know what it means because we do not have that information. If the Government were willing to provide us with the guidance, and we had access to it and seen it, we would be able to ask questions and comment on the specificity of the guidance. When we have experts come before the Committee, we would be able to hear their expert opinion on it, but we cannot, because we do not have the guidance. It is really unfortunate that, on Second Reading, when we are deciding whether or not the Bill should go forward, we have not got the information we need in order to do that.

I want to make a couple more points about energy. One of my colleagues mentioned the transition charges. The subsidy regime that is being set up says, “We can’t have one part of the UK advantaged over another part of it.” However, it also says, “No subsidy can negatively affect interconnectors.” So we will still have a situation where energy from the EU is allowed to come into the UK—the companies are not paying any charges for using our network—yet people who have wind farms in Scotland are paying £5.50 per unit of energy. And those in Wales are being paid £2.80 per unit of energy. That system was created when fuel was driven around in vans and had to be driven to places that then used the power. One of my colleagues said that there is an incredible level of disinterest among those on the Government Benches about dealing with transmission charges. I appreciate that some of them have considered it, but a Minister has not stood up to say, “You are right. This is a travesty and we need to fix it.” We would really like a commitment on that, particularly if this Bill is going to give protection to interconnectors but no protection to those wind farms in the north of Scotland that are being charged an absolute fortune.

I want to talk about the Labour party’s position on the Bill, as I am really disappointed that it is not willing to vote against it. It is important for it to do that. We are going to vote against it. I am on the left. I appreciate all the things that the Labour party has done in the past, but I have spent six years getting increasingly frustrated by the failure of the Labour party to oppose this Tory Government and to stand up even for the Welsh Government at this point. This is really unfortunate. I do not understand at all why the Labour party is not voting against this tonight. We are voting against it. I am not going to support this Bill, as I do not think it should get its Second Reading. I say that for reasons of the power grab, the massive inadequacies in the Bill and the fact it is going to do the opposite of levelling up—it is going to entrench the inequality we already have.