Draft State Aid (EU Exit) Regulations 2019

Brendan O'Hara Excerpts

Wednesday 10th April 2019 General Committees

[Kelly Tolhurst]

The Government made it clear in the intergovernmental agreements on the European Union (Withdrawal) Act 2018 that state aid would be a reserved matter. The SI before us relates to a UK-wide regime and would transpose retained EU law into UK law. Any further discussions or decisions on future state aid policy that might or might not be introduced will obviously not be for this Committee. As I said in a previous answer to the hon. Member for Sefton Central, I will happily provide him with the letter to which he has referred. However, I point out that the Secretary of State has communicated comprehensively with colleagues and with the devolved Administrations, and through officials. There has been no lack of communication between the Secretary of State and the devolved Administrations.

The hon. Member for East Lothian referred to appeals against decisions. The CMA is not the arbiter; it will be the decision maker, and the courts—either the High Court in England and Wales, or the Court of Session in Scotland—will make the judgment on an appeal. Looking at how the EU regulations already work, the Commission makes a decision and the courts then make a decision on an appeal. All law will always be a mixture of legal judgments and future policies. There is no contradiction in what I have said. The CMA will effectively be the decider and will hold the powers, and it will be for the courts to decide whether that decision is correct.

[Brendan O'Hara (Argyll and Bute) (SNP)]

I appreciate the fact that the Minister is taking so many interventions. This SI, like so many others, seems completely half-baked. Given that there is such opposition to it in Cardiff and Edinburgh, can she tell us whether the discussions with the devolved Administrations have ceased, or are they ongoing? Has any thought been given to what indemnifying policy or process could be given to the Scottish and Welsh Governments, should they be found in breach of these state aid regulations?

[Kelly Tolhurst]

I point out to the hon. Gentleman that the devolved Administrations are highly aligned with the policy position on setting a UK-wide state aid regime. Our conversations with the devolved Administrations are ongoing and will continue as they are. The Secretary of State has made it very clear that he is committed to meeting the devolved Administrations to discuss these matters and many others in relation to how we exit the EU. In fact, the Prime Minister has made it clear that, were we to enter into an agreement with the European Union and therefore not be in a no-deal situation, we would extend the opportunities for devolved Administrations to feed in.

--- Later in debate ---

[Kelly Tolhurst]

The hon. Gentleman makes a good point. If we entered into an agreement, we would go into an implementation period, and we would be bound by EU rules as they stand until the end of that implementation period. In any arrangement for our future relationship with the European Union, state aid would be subject to debate and to further negotiation and agreement. It would not be right for me to anticipate that. I am here to talk about a no-deal scenario and the legislation in front of us.

On the hon. Gentleman’s shopping list of state aid requirements—the things he would like to spend money on—I point out that the Post Office effectively does receive state aid. We subsidise the Post Office. We have maintained our network of 11,500 post offices, unlike previous Governments, who have undertaken programmes of closures. I am proud to stand here as the Minister responsible for post offices and say that the Post Office is in a much better place financially than it has been for many years. We are committed to delivering postal services in rural areas, and there are a number of funds to support that. I am determined that that will continue under these regulations.

It is a matter for debate whether, how, where and how much money will be granted to other worthy schemes. It is not for us to decide today which schemes and which parts of the country will receive additional funding. This debate is about the regulations—the rules—and how those decisions will be made. I understand the hon. Gentleman’s wants, but this debate is about the rules for agreeing or disagreeing.

The hon. Gentleman spoke about support for the regions. As he will know, the regional growth fund and most of the regional support funds granted through state aid are covered by the block exemption regulations, so these measures do not stop the Government supporting local communities and regions where required. This Government operate a successful industrial strategy and are determined to continue to invest in research and development, regional growth and opportunities, particularly for small and medium-sized enterprises. Let us not forget the funding available from the British Business Bank, which is an example of where those regulations have been used to benefit SMEs and provide access to finance.

On the devolved Administrations, I repeat that the Government consider the regulation of state aid to be reserved to the UK Government. However, individual choices about how and when to give aid within that framework are for public authorities, including devolved Administrations, to make. The devolved Administrations will have full autonomy in state aid case management and in dealing with the CMA. As I outlined, I recognise that there is a difference of view about whether the regulation of state aid is a reserved matter. However, given that the UK Government are closely aligned with the devolved Administrations on the substance of the policy, and given the limited scope to depart from mirroring the EU regime using powers in the regulations, it is not necessary to resolve that question now. The Government will continue to work closely with the devolved Administrations on the development of state aid policy.

[Brendan O'Hara]

The Minister says it is not necessary to decide that now. If not now, when will it be decided?

[Kelly Tolhurst]

As I have already outlined to the hon. Gentleman, the Government are clear that we believe state aid to be a reserved matter. I have tried to outline that a number of times, and I have outlined that there will be no loss to the devolved Administrations.

As I have said, under the current regulations, when the devolved Administrations decide to give aid they have to notify the European Commission. In the future, they will notify the CMA. As I have outlined, the Secretary of State will continue to consult, work with and have conversations with the devolved Administrations on any future aid policy. The Secretary of State has made that commitment, and there is no reason to suspect that it will not happen.