Draft State Aid (EU Exit) Regulations 2019

Debate between Kelly Tolhurst and Martin Whitfield

Wednesday 10th April 2019 General Committees

[Kelly Tolhurst]

The hon. Gentleman may be referring to the commitment, made by my noble Friend in the other place, to write to the Committee. He still plans to do so. The Government’s position is that state aid is a reserved matter.

[Martin Whitfield (East Lothian) (Lab)]

The Minister referred to the regulations being UK-wide and mentioned the devolved Administrations in Scotland, Wales and Northern Ireland. In the light of the Government’s contention that state aid is a reserved matter, can she share with the Committee the Scottish and Welsh Governments’ responses to the draft regulations?

[Kelly Tolhurst]

I thank the hon. Gentleman for his intervention requesting further clarity. We consulted the devolved Administrations before laying the draft regulations. It is true that there is a lack of agreement with the devolved Administrations on whether state aid is a reserved matter. We maintain that it is. The statutory instrument will bring over EU regulations so that they work in a domestic setting. We are not proposing any changes.

The European Commission’s powers will be transferred to the CMA. That will not result in fewer powers or less involvement for the devolved Administrations. Under the domestic regulations, they will still be responsible for submitting their own state aid requirements directly to the CMA. They will not lose any powers that they have at the moment.

[Martin Whitfield]

I am grateful for that clarification. It is therefore the case that, in essence, the devolved Administrations have the responsibility but not the authority, and they run the risk of having punitive damages found against them should it be decided that they are exercising state aid.

[Kelly Tolhurst]

No, I am afraid I disagree. Currently, the devolved Administrations are responsible for aid givers, and they will potentially be aid givers. Under current EU regulations, the devolved Administrations have to notify the Commission of the giver of that aid. The SI will not change that. In a no-deal situation, the CMA will act as the notified body. There is no change. I disagree with the hon. Gentleman’s statement, but I respect his attempt to push that point and get further clarification.

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[Martin Whitfield]

I wonder whether the Minister will address the exemptions. With respect to Horizon 2020, with an uncertain no-deal departure date—or, we hope, no no-deal departure—what will happen where people have submitted applications but have not heard or are in the process of appealing decisions? With respect to the specified EU projects in schedule 2, what is the position on our contribution to CERN? CERN has always stood outside the EU, but our contribution is a Government-funded payment within the EU. How would the state aid rules apply to that?

[Kelly Tolhurst]

The draft regulations are not intended to stop any existing schemes in a no-deal situation, which is why we have the exemption list. The Treasury has been clear that all the projects that were committed to prior to EU exit will be honoured. I cannot go into detail about the specific project the hon. Gentleman mentions, because I do not have all the details to hand, but I am happy to give him further clarification on that.

I emphasise that the intention of the draft regulations, and the reason for including those projects in schedule 2, is to ensure that there are no unintended consequences of transposing the EU regulations and that state aid recipients have clarity and understand what will not be subject to state aid. I point out that in 2017, under the current state aid regime, 97% of state aid issued in the UK was pre-exempt. I commend the draft regulations to the Committee.