Subsidy Control Bill

Baroness Humphreys Excerpts

Committee stage
Monday 31st January 2022 Grand Committee

[Lord Hope of Craighead (CB)]

My Lords, I have added my name to the amendment of the noble Lord, Lord Wigley, and I agree with what he has just said in support of it. As he mentioned, it will be apparent from the many amendments on the Marshalled List that mention the devolved Administrations that there are real concerns that the provisions of the Bill as they stand will have an adverse effect on the relationship between those Administrations and the UK Government.

I recognise that subsidy control was made a reserved matter by Part 7 of the United Kingdom Internal Market Act, but that does not mean that the UK Government should shut their eyes and ears to the views of competent authorities throughout the UK, and of the devolved Administrations themselves, as to the way that subsidies are distributed and controlled. After all, while we were in the EU the Commission had a very robust evidence-based consultation procedure which ensured that other voices were heard, and that should continue to be the position.

“Respect” and “co-operation” were the key words in the recent report by the Constitution Committee, of which I am a member, about building a stronger union in the 21st century, but I am afraid that those virtues were absent when the internal market Bill was being designed and debated in this House and the other place. As a result, relations with the devolved Administrations became very strained. We do not want to go back to that, but the way in which the Bill has been drafted appears to pay very little attention to the concerns and needs of the devolved Administrations.

I am sure that the Minister will remember, very well, the conversations we had with regard to the amendments I tabled to the internal market Bill to enable exemptions from market access principles to be given to agreed common frameworks. They did not seem to get us very far, until, at the very last moment, there was a change of mind in the Government and an appropriate amendment was put through. Of course, I understand that the Minister’s hands were tied, but I hope there may be a little more flexibility this time.

I respectfully ask the Minister to say something about the legislative consent procedure in relation to the Bill. The Constitution Committee said:

“For the Sewel convention to operate well, constructive relationships and good faith is required between the UK Government and the devolved administrations.”


I hope that that is how things are being handled this time and that the Minister will keep the Committee updated as discussions continue, with a view to settling the devolved Administrations’ concerns, which I believe are still there; as I understand it, a consent Motion has not been achieved in either case.

[Baroness Humphreys (LD)]

My Lords, I have added my name to Amendment 1 in the name of the noble Lord, Lord Wigley, and support Amendments 13, 16 and 17 in the name of the noble Lord, Lord McNicol of West Kilbride, to which I have also added my name. Clause 1 provides an overview to the contents of the Bill. Amendment 1, in a few words, points out exactly what is wrong with the clause and the Bill itself, which is that, by their very omission from the Bill, there is no role to be played by the devolved Ministers or the devolved Administrations in the subsidy control scheme, even in areas where they have devolved competence.

All noble Lords agree and accept that the regulation of subsidies is a reserved matter, as do I and my colleagues from the devolved nations, but no consideration is given in the Bill to the sensitive issue of the UK Government acting in the areas of economic development, agriculture and fisheries—areas which, until now, have been overseen by the devolved Administration under powers given to them under the Government of Wales Act 2006. I understand the Minister’s desire to create a UK-wide scheme for the regulation of subsidies, and I know that he sees it as a way to strengthen the union, but I must respectfully disagree with him. Strengthening the union is a political concept and should have no place in underpinning a practical scheme such as this.

I refer the Minister to this document: the supplementary legislative consent memorandum agreed by the Senedd to the Building Safety Bill, which will have its Second Reading in this House tomorrow. I must admit that it gladdened my heart to read it. In that Bill, the Government place a requirement on developers across the UK to belong to a single, independent new homes ombudsman scheme. Paragraph 4 of the Welsh Government LCM reads:

“As housing is a devolved matter, the UK Government has worked with devolved governments to seek agreement for the new arrangements under the NHO to be UK-wide for home owners and developers.”


Amendments were tabled by the UK Government at both Commons Committee and Report stages, one of which provided for consultation with Welsh Ministers before the Secretary of State makes arrangements for an NHO scheme. The list includes amendments made at the request of the Welsh Government that recognise their devolved competence.

So we have another Bill seeking to create a UK-wide scheme, just as the Subsidy Control Bill does, but what a difference in approach between the two government departments. The Department for Levelling Up, Housing and Communities has been constructive, co-operative and willing to recognise the powers of the devolved Governments. Because the housing department has chosen to collaborate with the devolved Governments, one must ask the Business Minister: does he believe that this has really resulted in a weakening of the union? I would argue that the union is at its strongest when each component part is strong and using its powers, experience and knowledge to contribute positively to the proper functioning of the whole. The acceptance of Amendment 1 would begin to achieve that.

The amendments to Clause 10 to which I have added my name follow a similar theme and would clarify the role of devolved Ministers in making a streamlined subsidy scheme. They clarify that those schemes must be laid before the relevant devolved legislature and, if modified, the modified terms must be laid before the relevant devolved legislature too. I fully support those amendments. If both noble Lords wish to table their amendments again on Report, they will have my full support.

Finally, I am aware that the Under-Secretary of State, Paul Scully, was scheduled to meet the Welsh Finance Minister on Thursday last week. Can the Minister confirm that the meeting took place and when, and tell us what was discussed and the outcome?

Subsidy Control Bill

Baroness Humphreys Excerpts

Committee stage
Monday 7th February 2022 Grand Committee

[Baroness Humphreys (LD)]

My Lords, I wish to speak to Amendments 39, 47 and 48 in the name of the noble Lord, Lord McNicol of West Kilbride, to which I have added my name; I also support the other amendments in this group. Taken together, these amendments would improve transparency in the awarding of subsidies and help to spot harmful ones. They would show where the new subsidy spending is working and give businesses the information they need to challenge potentially unlawful subsidies.

As the Bill stands, individual subsidies of less than £500,000 will be excluded from transparency in the subsidy database. As I said at Second Reading, if these rules continue to exist, they will allow for the possibility of multiple subsidies of less than £500,000 to be received by an enterprise. None of that would be published and there would be little other scrutiny.

Amendment 39 would reduce the threshold for entering subsidies into the database to £500 and would bring the subsidy scheme into line with transparency thresholds elsewhere in the public sector. Local authorities, for example, must publish all expenditure over £500, and grants by all government departments and arm’s-length bodies are now published annually by the Cabinet Office.

It has been argued that, in the case of these subsidies, a threshold of £500 is low—perhaps too low—but it is vital that the threshold is set at this level. According to the Centre for Public Data,

“a threshold of, for example, £100,000 would still create distortive incentives for authorities to cluster awards just below the threshold, still allow authorities to make unpublished multiple awards just below the threshold, and would exclude useful evidence for no reason.”

Sometimes, it seems that Governments believe that they own the funds they spend but, in reality, it is the taxpayer who will fund these subsidies. Lowering the transparency threshold will demonstrate to the UK taxpayer that harmful and wasteful subsidies will be identified.

Crucially, it would allow public bodies to answer this important question: how many subsidies of less than £500,000 have they awarded? They could answer the question openly and honestly, with facts and figures. Under the Government’s proposed system, the same question could be met with a vacant stare, as the figures will not be readily available or will not exist. The total of funds awarded would also be unclear.

As the noble Baroness, Lady Blake, said, the Government estimated in their impact assessment that operating the lower threshold would come with a cost of about £20,000—a small price to pay for transparency. However, savings would also be made in the reduction in the number of FoI requests, for example, and fraud risk and fraud recovery costs would be reduced as transparency enables public scrutiny. A transparency database already exists within BEIS for public authorities to report their subsidies, so merely uploading another few rows on to each spreadsheet could provide the transparency that this amendment seeks. All these reasons for this call for transparency also apply to Amendment 48.

I appreciate that Amendment 47 will probably be viewed as problematic by the Minister’s department because, in seeking to introduce transparency into the SPEI financial assistance process, it could create new burdens on authorities. I have no wish to do that. I will listen with interest to the Minister’s response, and reserve the right to bring back on Report an amendment that would deal with the transparency issue alone but would still deliver the flexibility that the Government wish to see.

The 2018 figures show that some £8 billion was allocated to government subsidies in the UK. With levelling up on the agenda along with net-zero targets and R&D, it is very likely that this figure will increase—substantially, we hope. Using the £8 billion as a basis, it is estimated that if the Government’s proposals in this this Bill were enacted, about 50% of the subsidies would not be transparent, so how would the Government be able to account for at least £4 billion-worth of spending of public money?

With transparency comes accountability. In an era of accusations of cronyism and corruption, our ratepayers demand both. I hope that the Minister will understand their demands and be prepared to accept these amendments.