Subsidy Control Bill

Debate between John Penrose and Nigel Mills

3rd reading
Monday 13th December 2021 Commons Chamber

[Nigel Mills (Amber Valley) (Con)]

Does my hon. Friend agree that there is a general presumption that there should be more transparency about people receiving money effectively from the taxpayer? We could have a strange situation where if I am being paid £600 for grass cutting for my local council, the council would publish the invoice on its database, yet if I am receiving tens of thousands of pounds of taxpayers’ money, it would not be published. Surely, that cannot be the right balance.

[John Penrose]

That is absolutely right. Although I appreciate that there is a technical distinction between amounts of subsidy and amounts of general local authority spend, it is a very strong comparison. If it is worthwhile recording £500 spend on anything by a local council, why are subsidies so special and why should they be different? If anything, because of the scope for potential cronyism and other concerns, we should be tougher on subsidies than on other kinds of spending. Let us at least make the thresholds the same at £500, and then there can be no concern or worry about it.

The first collection of amendments is about the amount. The second collection of amendments, about which we have already heard a bit from the hon. Member for Aberdeen North, is about speed. As I have mentioned, in today’s digitising economy, publishing details of a subsidy potentially almost two years later, or even six months later, could be way too late. A company could have gone under if it had been faced by a successfully heavily subsidised competitor in its local area. Jobs will have been destroyed, wealth will have been destroyed, investment will have been forgone and, most importantly, the reputation of that local economy as a free, fair, sensible level-playing-field place to do business will have been damaged.

Clearly speed matters today, and it will matter more and more as our economy moves faster through digitisation. It makes no sense at all, therefore, to allow six months, and in some cases even longer, for those subsidies to be declared. When someone dishes out a subsidy, a letter has to be sent to the person receiving it, so in most cases they could put the subsidy on to the database at the same time—they could probably do it electronically if they had the right interface. I am suggesting that that could happen within a month; it could probably happen within days, but let us be generous and kind, and give people a bit of space.

I will expand on the point about tax-related subsidies. It is true, as we heard, that a tax-related subsidy can take almost two years to be recorded and to become transparently visible under the current proposals. I cannot see any reason why that should be the case, not just for tax-related subsidies but for anything else at all. In general, for most tax-related subsidies, we can do it immediately because we know the value with some certainty right up front. If I am giving someone a subsidy as a reduction on their business rates, I know how much the value of that subsidy is going to be on the day it comes out, so I can put that out on the subsidy database right there and right then. The same goes for most other kinds of tax-related subsidies, such as subsidies on VAT or whatever it may be.

Only for a very small number of tax-related subsidies would there be uncertainty for any length of time. As we have already heard, and I think this is absolutely right, it is perfectly possible to come up with a good estimate to begin with, and I do not think it works—it is not an adequate piece of logic—to turn around and say, “Well, because we don’t know precisely what this particular subsidy amount will be, we should not reveal it at all.” That is making the best the enemy of the good, and the trouble with that, and with saying that we are therefore not going to put anything out, is that we do not end up with the best or the good. We end up with something that is actually pretty dreadful, because we are keeping it secret for up to two years. How does that make sense when, as we have already heard, we can estimate it very accurately? In fact, in many cases these things are done in bands, and we can certainly say, at the very least, that it will be roughly in this or that band. Even if we get it wrong, we can still correct it later, and people know it is there, what it was and roughly how much it will have been. That will have allowed challenge, if necessary.

Subsidy Control Bill

Debate between John Penrose and Nigel Mills

2nd reading
Wednesday 22nd September 2021 Commons Chamber

[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.

[John Penrose]

May I strengthen my hon. Friend’s point by saying that whatever people’s views of the CMA may be, it is pretty well respected as being a robustly politically independent organisation, no matter who is in government?

[Nigel Mills]

I am grateful to my hon. Friend, but I think we should move on from this point before we lengthen the debate into something that we do not want.

As I was saying, a transparency regime enabling us to see promptly what is being paid to whom and for what reason, and what the expected outcomes are, is of key importance. I agree with what my hon. Friend was saying earlier: a regime in which we have to wait six months for a disclosure, and then only of amounts over half a million pounds, has the wrong balance. I think that is where we end up with concern over subsidies, and scandals brewing, and then a lurch back towards more of a clearance regime. I urge the Government to rethink those points.

We are not expecting public authorities to be handing out huge numbers of subsidies after half an hour’s consideration. The rules that we are introducing are fairly strict. There will have to be some careful consideration of any proposed subsidies to ensure that those rules have been met, and there are processes for checking that the person who is being paid has not already exceeded a certain threshold. It is not a half-hour, quick and dirty process; there is plenty of time to gather the information that is needed to declare the subsidy, which can then, pretty promptly, be put on to what I suspect will be a simple database form that the CMA, or whoever, will put in place. I do not think it is an intrusive burden to have to say, “Here is what we gave to whom and why.”

I should add that I would like it to be possible to see the identity of the beneficial owner of the entity that has received the subsidy on the database, so that we can see who is really benefiting, rather than seeing some obscure, lower-down subsidiary name, which would make it not very easy to trace by going through the whole system who has been getting what from different public authorities.

Let me suggest as a comparison the furlough scheme, which is essentially a subsidy being given to businesses to pay their employees’ wages. We have published the names, in a range of bands starting with £1 to £10,000, of employers who have received that subsidy during the pandemic. I think that if we can publicise the details of employers who have received up to £10,000, we can justify publishing the name of anyone who has received a subsidy that has gone through a due process, down to a much lower level than £500,000, without its being unduly damaging to their commercial confidential interests. I think that someone involved in the process of asking for money from the taxpayer should accept and welcome that transparency. There should be nothing to be ashamed of, nothing to hide: if that money is needed for a good purpose, there is no reason why we should not know about it. I urge the Government to make some changes in that regard.

I was intrigued by the remarks about the way in which taxation policy can elide with the subsidy regime. There are quite a few cut-outs for taxation situations which I guess make sense, but I think there could be a role here. If we are giving individual taxpayers very generous tax deals, letting them off liabilities that they may owe for reasons that may not necessarily be entirely technically robust—as people have feared before—I see no reason why those should not count as subsidies and therefore be published through this regime, in order to get around that horrible situation in which we know that deals are being done but we do not know who the beneficiaries are. I think that it would be an interesting legal challenge to establish whether they are caught by these rules.

My final remark—I think—concerns the exclusion of subsidies for purposes of national security. I have absolutely no objection in principle to our being unable to publish everything that is spent in relation to national security, but those words—

“for the purpose of safeguarding national security”—

constitute a very broad definition. We have hit a problem with the freedom of information rules in this regard. Some authorities have an incredibly broad interpretation of what that means. I think it was the West Yorkshire fire and rescue service that would not publish a response to an FOI request about the vehicles it had bought in case someone could somehow clone them and thus get into its premises. I hope that the Government are not expecting to have such a ridiculously broad definition of national security that we cannot in any circumstances see the subsidy given to any defence company, or police authority, or fire and rescue authority. Given that energy security is probably a national security issue, presumably no energy subsidy could be published. I suspect that some creative people around the country could find all manner of ways of making the broad definition “for the purposes of national security” exempt almost anything from these rules. I hope that we can be clear in Committee about the sort of things we think we should not publish, and about where the line should be drawn as to what we can see. If we have too many exemptions from these rules, we will end up weakening confidence in the system. We could end up with scandals that could lurch us away from the fast-moving, flexible system that the Government want in order to get aid where it is needed fast. We could end up back in a cumbersome, slow and bureaucratic system to try to avoid the scandals that we could see from a lack of transparency.