Subsidy Control Bill (First sitting)

Debate between Kevin Hollinrake and Andrew Bowie

Tuesday 26th October 2021 Public Bill Committees

[Andrew Bowie]

Q Why do other countries around the world choose not to do it?

Thomas Pope: That is a very good question. I think there are various benefits, and in our research we have outlined them. I think there is a particular case, in a system where competing jurisdictions can offer subsidies, for worrying about subsidy races. Actually, that is effectively a co-ordination problem, and a subsidy control regime is effectively that co-ordination.

I also think that, in general, there are benefits to setting out very clearly what the principles are by which you are going to offer subsidies. An interesting analogy—it is not quite the same—is fiscal rules; they are not legally binding in the same way, but these rules are set out by politicians to indicate what we think is sensible policy. They can sometimes help you to resist, for example, political pressure to save a business that is going under but that has no long-term prospects. Those rules can also be quite helpful.

In general, it is quite hard to hold the line on those things, and that probably explains why there are not domestic subsidy control regimes in general, because this is Governments tying their own hands. In general, it is quite hard to do that. It just so happens that we have an international obligation that requires us to do that, but I think that is actually a benefit rather than a cost. That would be my answer as to why there are not lots of subsidy control regimes elsewhere. Professor Rickard may know better than me on that.

Professor Rickard: No, Mr Pope is absolutely right. You are committing to saying that the regions within the United Kingdom will not compete with each other in trying to win business, jobs and investment by awarding subsidies. It is difficult to give up that ability, and say that we will not engage in that type of subsidy war, but we have seen the damage that competitive subsidy provisions have caused. Estimates suggest that in the United States $80 billion a year is spent by states competing for business with subsidies. If they agreed not to do it, and had their own subsidy control regime, real income in manufacturing alone would increase by 5%, so there are real economic gains to tying your hands and saying, “We’re not going to engage in subsidy races.”

Evidence suggests that subsidy races do not work in the long term. Even providing big subsidies does not necessarily guarantee that you will get businesses where you want them to be. For example, the US biotech industry is concentrated in five cities with world-leading universities and very deep and highly educated labour pools. Businesses locate there despite the fact that 41 out of 50 states have very generous subsidies to try to lure them to their regions, so evidence suggests that spending subsidies to try to attract jobs may not always work, and doing so is really a waste, in terms of spending a lot of money in a way that potentially hurts productivity and real income.

[Kevin Hollinrake]

Q Professor Rickard, Mr Pope said that he felt that the level for reporting should be lower than £500,000; it should be £175,000. You agreed, but you did not specify a level. What level do you think it should be?

Professor Rickard: I don’t have a strong feeling on the level. I am not sure where the £175,000 number came from. I heard Mr Pope mention it. I do not know the logic behind it.

Closures of RAF Scampton and RAF Linton-on-Ouse

Debate between Kevin Hollinrake and Andrew Bowie

Tuesday 16th October 2018 Westminster Hall

[Kevin Hollinrake]

The hon. Lady makes some excellent points. The international threat that she outlines—particularly from Russia—is greater now than it was for many years, so it is absolutely right that we have a military that is fit for purpose.

The Minister will acknowledge that we have corresponded many times over this closure, including with senior officers from the RAF, to challenge them on whether closing the base is the right thing to do, or if it is a false economy. I understand that it makes sense to aggregate all training needs in a single place—they are being moved to RAF Valley on Anglesey—but I have written to the Minister on a number of occasions about some concerns we have, which were first raised by the Public Accounts Committee during a session on military flying training in October 2015. The Committee raised concerns about the prospect of all training being moved from Linton to RAF Valley, and it noted in its December 2015 report that the full implementation of the new training system for military air crew had been delayed by a number of years and that only 151 students had graduated, at a cost of £143 million to the taxpayer—that shows how expensive it is to train pilots—when we were aiming for an annual figure of around 320 students.

On top of this, part of our capacity will be used to train other nations. The RAF is a world leader in its field, so many nations come to it for training, which we should be very proud of. However, there are concerns about how those providing the training will manage with only one simulator when there are currently three at Linton-on-Ouse. It is calculated that the number of flying hours required to make sure that we have the extra capacity has increased by 20 to 25%.

I have a number of concerns—I know the Minister has addressed them before and given me every assurance—along the same lines as those expressed by the hon. Member for Bridgend (Mrs Moon). Is this going to mean that we have the capacity when needed in the future, particularly in extra training needs both for our nation and for services that we provide to other nations?

[Andrew Bowie (West Aberdeenshire and Kincardine) (Con)]

On that point, I was lucky enough to visit Linton-on-Ouse with some colleagues in the armed forces parliamentary scheme just a couple of weeks ago. There is a problem with capacity: at the minute, wannabe pilots are joining the RAF and spending up to 18 months to two years in holding, as they await the training to become fighter jet pilots. Does he agree that moving the training to Anglesey will only exacerbate that problem; that young men and women joining up now to fly fast jets will be prevented from doing so; and that this is doing nothing to encourage people to join the armed forces to do the job that they want to do?

[Kevin Hollinrake]

My hon. Friend makes a very good point, which was also made to me by one of the training officers at RAF Linton who is retiring and has no axe to grind. He made exactly the same point about making sure that we have the capacity to train people on the base. I would like the Minister to make sure that we have got that capacity and that the airbase will not be needed, and to consider the points that we have raised. If he decides ultimately that the base will be closed, I ask him to support us in the planning work that we will have to carry out to find the best possible future uses for the base—yes, housing is one potential use, but there could be many employment uses as well. We want to make sure, if the closure goes ahead, that on that sad day, the employment prospects created as a result at least make up for some of the jobs lost in the locality, and that we provide opportunities for local people who have such a long connection with and have relied so much on that base for their community and for jobs both at the base and in the local supply chain.

I know that the Minister will address those points either now or on a later occasion, and I am grateful for the opportunity to speak.