Subsidy Control Bill

Kirsty Blackman Excerpts

2nd reading
Wednesday 22nd September 2021 Commons Chamber

[Stephen Flynn]

I admire the hon. Member’s optimism, but I am not quite sure where he has read that, because, of course, the Bill does not have that detail. He is hoping that the Secretary of State will subsequently provide that detail, but the Bill does not make that clear.

Another extremely important point that the Bill does not make clear is in relation to relocation subsidies. Essentially, the Government are saying that they will not relocate subsidies to areas with a more significant problem. They might want to level up—to use their term—but that is not going to happen under the terms of the Bill.

[Kirsty Blackman (Aberdeen North) (SNP)]

Does my hon. Friend agree that, in fact, the Bill does the opposite of levelling up, in that it refuses to allow anything to happen in disadvantaged areas that will disadvantage rich areas? That is how the Bill is written—it is in schedule 1F.

[Stephen Flynn]

My hon. Friend could not have put it better. It is a pity that there are not more Tory Back Benchers present to hear her and understand the damage that they are going to do to their own communities.

The Bill’s key objectives also include net zero. Again, there is no detail on net zero or how the Government intend to subsidise its delivery. We are being told to just believe—to hope on a whim and a prayer—that the Government will do this, that they will deliver. Let us look at that from a Scottish perspective. Let us look at the Government’s record. As the Minister and, indeed, others in this Chamber know only too well, Scottish renewables projects, which are key and fundamental to reaching net zero, pay the highest grid charges in the entirety of Europe. In the UK—on these islands—renewables projects in the south-east of England get paid to access the national grid, whereas renewables projects in Scotland have to pay to do so.

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[Kirsty Blackman (Aberdeen North) (SNP)]

It is great to hear the thoughtful contributions from that Tory Bench, although not from the Treasury Bench, I hasten to add. The hon. Member for Amber Valley (Nigel Mills) and I have spoken in many debates together, and I always appreciate his forensic assessments of the details in the Bills before us. I hope that he will be on the Committee, and I hope that I will be too.

First off, I want to ask a couple of questions about what the Secretary of State said, because I am immensely confused by a couple of the things that he said. First, he said that the devolved Administrations were broadly happy with the Bill. If they are broadly happy, why have the Welsh Government said that they object to five of the six parts of the Bill? One out of six does not equate to “broadly happy”. In fact, I get the impression that they really do not like it and are not happy about it.

We have not seen what the Scottish Government are saying about the legislative consent motion, but I cannot imagine that they will be terribly happy with the power grab that is occurring as a result of the Bill. So I am quite confused by what the Secretary of State said. Does he mean that the devolved Administrations are broadly happy with having a state aid regime? Does he mean that they are broadly happy with the detail of the Subsidy Control Bill? I do not know. I do not understand what he is saying, because it does not seem to be coherent with what the Welsh Government have said in public about this.

The other thing that I am really confused about is what the Secretary of State said about the EU state aid provisions no longer applying to Northern Ireland. I thought he said something about article 21 of the Northern Ireland protocol, but maybe he meant article 16. I am not sure what he meant. In terms of the planned changes to state aid application in Northern Ireland, he seemed to be saying that the new subsidy control regime would apply there and that the UK Government were seeking some sort of change to an article in order to ensure that that happened. I am not aware of any publicity around the UK Government asking the EU for a change, but if that has happened, why have we not heard about it?

Could we please have a bit more information on this? We have the trade and co-operation agreement and we have the Northern Ireland protocol, but how do the UK Government expect these measures to apply in Northern Ireland without us breaking either the agreement or the protocol? That does not make sense. If the Secretary of State was making that important an announcement, you would think he would do it in a ministerial statement rather than as an aside during the Second Reading of this Bill. I would be really keen to hear a bit more information about what this actually means.

[Seema Malhotra]

The hon. Lady is absolutely right about the confusion that has been raised. Does she agree that it is important that the Government clarify what they are suggesting has changed in relation to article 10 of the Northern Ireland protocol and whether it has been dropped on the basis of this Bill? Should they not also tell us whether their proposal has been negotiated with the EU, and what the status of those discussions and any agreement might be?

[Kirsty Blackman]

Absolutely. If we as a country can suddenly renege on our international obligations and agreements, why cannot Scotland hold an independence referendum next week? The UK has agreed to these agreements and it would be great, when the Minister speaks at the end of the debate, if he could explain exactly what is going on. This is serious enough for a Minister to be making a separate statement to the House, because it is such an important matter for the people of the UK and particularly for the people of Northern Ireland.

My hon. Friend the Member for Aberdeen South (Stephen Flynn) spoke eloquently about the levelling-up agenda, and I agree that the red wall Tories elected in the north of England should be jumping up and down about this—we are jumping up and down about it, as the right hon. Member for South Northamptonshire (Dame Andrea Leadsom) suggested—because it explicitly excludes us from doing anything that may disadvantage any other area of the UK. In schedule 1, principle F says:

“Subsidies should be designed to achieve their specific policy objective while minimising any negative effects on competition or investment within the United Kingdom.”

And principle G says:

“Subsidies’ beneficial effects…should outweigh any negative effects, including in particular negative effects on competition or investment within the United Kingdom; international trade or investment.”

That reference to international trade or investment confuses me.

The principles try to level the playing field across the UK, so there can be a subsidy in Manchester only if a person in the south of England would not move their company as a result.

[Sammy Wilson]

For balance, does the hon. Lady accept that principle A says:

“Subsidies should pursue a specific policy objective in order to remedy an identified market failure”?

If there is market failure and certain regions of the United Kingdom are disadvantaged because of their distance, history, lack of skills, lack of resources or whatever it happens to be, principle A allows subsidies to be used for levelling up.

[Kirsty Blackman]

Principle F rejects that, so which one has primacy? Which one is the most important? If they directly disagree with each other, is it more important that we can do what is said in principle A or is it more important that we can do what is said in principle F?

I think the subsidy regime should be used in the same way as the EU state aid regime, which focuses on regions that need additional support. Whatever this Conservative Government say—we will not believe them anyway, given the amount of lies we have been told—it is not the case that this regime assists levelling up; it does the opposite. If they want to assist levelling up, they should design a regime that ensures different areas can have different subsidy regimes that benefit their local area even though they may disadvantage other areas.

[Kevin Hollinrake]

The hon. Lady may have identified this herself already, but freeports, for example, allow businesses to relocate and benefit from different taxation regimes. Such businesses are treated more beneficially in how they operate and in their cost of operation. Does she accept that freeports do exactly what she is setting out?

[Kirsty Blackman]

Freeports are not covered by the subsidy regime we are talking about today. They are a separate thing. I can say from the Back Benches that I am not particularly keen on freeports, but the idea is that there is a wall around the port—the guidance specifically says that there has to be a physical barrier around the area—and there is a different taxation regime within that wall. I am yet to be convinced of the economic benefits that will come as a result.

We hope to have green ports in Scotland, and the failure of the UK Government to agree that we can pay the real living wage and focus on net zero within those green ports means that the freeport system, as it stands, is not nearly as advantageous as it could or should be. Even though the freeport system is set up to encourage such things, I have not seen evidence that it will actually do so, particularly given the rejection of the key principles we want to put in place.

[Angus Brendan MacNeil]

It is unclear that the UK Government have a strategy to replace the EU’s successful regional structural funding for Wales, Northern Ireland and many parts of the highlands in Scotland. Such funding and state aid go hand in hand, and they are seen as different things. Indeed, the freeports are seen as a different thing. There needs to be something else to go with this for areas of the UK that are disadvantaged by policy set in the south-east of England for the south-east of England.

[Kirsty Blackman]

Absolutely. We need to replicate the good things we had in the EU, the things that supported different areas. A system has been put in place to ensure that different parliamentary constituencies can get money from the UK Government, but it is super-interesting that the constituencies the Government have chosen to put at the top of the list are those constituencies represented by Conservative MPs, rather than the constituencies with the highest levels of deprivation. The difference is dramatic.

It is hugely concerning that, if the UK Government are left to do so much in this Bill by guidance, as set out in clause 79, we are going to have a situation where the Secretary of State will have significant control and flexibility without even having to come through door of this House. The Bill says that the Secretary of State is going to issue guidance about

“the practical application of—

(a) the subsidy control principles;

(b) the energy and environment principles;

(c) the subsidy control requirements in Chapters 2 and 3”.

I am clear that there needs to be detailed guidance, but we should be at the stage where we are scrutinising it. When we come to the evidence sessions in Committee, the people before us should be able to talk about the guidance. I get that some of the regulations are going to be made by the affirmative resolution and some by the negative resolution, but my major concern is not those that are going to be made by resolutions in this House; it is those that are going to be made by guidance.

Let us we look in detail at some of the stuff in this Bill. Schedule 2 says:

“Subsidies in relation to energy and environment shall be aimed at and incentivise the beneficiary in—

(a) delivering a secure, affordable and sustainable energy system and a well-functioning and competitive energy market, or

(b) increasing the level of environmental protection compared to the level that would be achieved in the absence of the subsidy.”

I am keen to know what “environmental protection” means. What does it mean? It is not in there. We do not know what it means because we have not seen the guidance that the Secretary of State is going to be allowed to produce on their own without running it past this House.

The same applies in respect of

“a secure, affordable and sustainable energy system and a well-functioning and competitive energy market”.

Does that mean a well-functioning and competitive energy market for those people who buy and sell energy, or for the consumer? Does it mean for the person who is being hit by those higher fuel bills or for the people trading gas on a daily basis? I do not know what it means because we do not have that information. If the Government were willing to provide us with the guidance, and we had access to it and seen it, we would be able to ask questions and comment on the specificity of the guidance. When we have experts come before the Committee, we would be able to hear their expert opinion on it, but we cannot, because we do not have the guidance. It is really unfortunate that, on Second Reading, when we are deciding whether or not the Bill should go forward, we have not got the information we need in order to do that.

I want to make a couple more points about energy. One of my colleagues mentioned the transition charges. The subsidy regime that is being set up says, “We can’t have one part of the UK advantaged over another part of it.” However, it also says, “No subsidy can negatively affect interconnectors.” So we will still have a situation where energy from the EU is allowed to come into the UK—the companies are not paying any charges for using our network—yet people who have wind farms in Scotland are paying £5.50 per unit of energy. And those in Wales are being paid £2.80 per unit of energy. That system was created when fuel was driven around in vans and had to be driven to places that then used the power. One of my colleagues said that there is an incredible level of disinterest among those on the Government Benches about dealing with transmission charges. I appreciate that some of them have considered it, but a Minister has not stood up to say, “You are right. This is a travesty and we need to fix it.” We would really like a commitment on that, particularly if this Bill is going to give protection to interconnectors but no protection to those wind farms in the north of Scotland that are being charged an absolute fortune.

I want to talk about the Labour party’s position on the Bill, as I am really disappointed that it is not willing to vote against it. It is important for it to do that. We are going to vote against it. I am on the left. I appreciate all the things that the Labour party has done in the past, but I have spent six years getting increasingly frustrated by the failure of the Labour party to oppose this Tory Government and to stand up even for the Welsh Government at this point. This is really unfortunate. I do not understand at all why the Labour party is not voting against this tonight. We are voting against it. I am not going to support this Bill, as I do not think it should get its Second Reading. I say that for reasons of the power grab, the massive inadequacies in the Bill and the fact it is going to do the opposite of levelling up—it is going to entrench the inequality we already have.

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[Sammy Wilson (East Antrim) (DUP)]

In principle, we welcome this Bill. First, it represents an opportunity for us to introduce subsidy control regimes that are specific to the United Kingdom and are not influenced by Brussels and the wider European interest, hence sometimes actually detrimental to our own country. It is an important part of the whole Brexit process that we have this independence.

Secondly, it is important that we have a nationally controlled regime. As one who speaks from a region of the United Kingdom, of course I want an even playing field when it comes to the application of subsidies. Some regions are richer than others and will therefore have more money to be put into subsidies than others. Some areas may have more political influence. That is partly why I find some of the objections raised by Opposition Members very odd. For example, a Minister in central Government could introduce subsidies for constituencies in a way that is beneficial to the electoral interests of his own party—the governing party—and we need a control regime that enables that kind of decision to be challenged.

My only concern about the Bill—perhaps the Minister will clarify this later; it has been raised by Members already—is that the challenge function seems to be limited to either the Secretary of State or to interested persons. As far as I can see in any definitions that have been given in the Bill, interested persons would not include Ministers from any of the devolved Parliaments or Assemblies in the United Kingdom. In fact, the only such definition is in clause 8, which refers to businesses and enterprises. The Minister needs to clarify this. If he wants to argue that this is a robust control regime, then the ability to make referrals must not just rest with the Secretary of State. It must also rest with devolved Administrations, who have interests in how subsidies may be used, particularly by central Government Departments or Ministers. Others may want the challenge function so that they can make mischief. If the Minister is serious about saying that we want to have an effective UK-wide regime, it must be clear that the function is available to all interested parties across the UK.

I come specifically to the Northern Ireland issue. Of course, in Northern Ireland the control of subsidies will not be totally under the Competition and Markets Authority or the tribunals. We will operate a dual regime under the withdrawal agreement and the Northern Ireland protocol. On state aid and its controls, it is quite clear:

“The provisions of Union law listed in Annex 5”—

a whole list of EU rules is there—

“shall apply to the United Kingdom, including with regard to measures supporting the production of and trade in agricultural products…in respect of measures which affect that trade between Northern Ireland and the Union which is subject to this Protocol.”



The Secretary of State said in answer to the Opposition spokesperson and, I think, the Scottish National party representative that, as far as the Government are concerned, it is clear that Northern Ireland is covered by the Bill, but the only way in which Northern Ireland can be totally within its provisions is through the removal of article 10.

I know it is a lengthy Bill, but I have read through it and I do not find any reference to article 10 being altered, removed or changed. Perhaps the Minister can point that out to us later on. I would welcome that, by the way; in fact, I would be overjoyed, and people in Northern Ireland would be overjoyed if that is hidden somewhere in the Bill in words that I do not understand, have not spotted or whatever. If it is there, please point it out. There will be great rejoicing in Northern Ireland as a result.

[Kirsty Blackman]

Even if that were in the Bill, I am concerned that it is not in the competence of this place to change that unilaterally without having a discussion with the European Union.

[Sammy Wilson]

The hon. Member made that point, and I was not sure whether she was supportive of the withdrawal of article 10 or appalled at the prospect because the EU opposes it. The one thing I did notice, however, was that she was appalled that there should be any interference in the role of the Government in Scotland to make subsidy decisions. If that is the case, she should be equally appalled for policy makers in Northern Ireland and welcome any unilateral decision by the Government here at Westminster to give them the same freedom.

[Kirsty Blackman]

I honestly do not have a view on whether it is a good or bad thing. I am just utterly confused, because I do not think that the Government have the power to do it. I want to know what they mean so that I can work out whether I oppose it or not. I do not know what they are saying.

[Sammy Wilson]

Of course, the Government have the power to do it under article 16 where it is deemed that provisions in the withdrawal agreement are damaging economically to Northern Ireland. I cannot think of anything more damaging to Northern Ireland than a subsidy regime that applies in the rest of the United Kingdom but which can be stopped from applying in Northern Ireland.

Let me give some examples of how conflict between the dual systems could operate. One of the principles outlined in schedule 1 is that subsidies should be proportionate—there is no fixed percentage; it is simply that they be proportionate—but under the EEA-EU state aid regime, subsidies cannot be more than 50%. For example, if a subsidy is made available to a firm in Scotland that could equally be looking at Northern Ireland, Scotland would have the advantage of saying that it is so important to Scotland and fits in with its objectives that it will give it a subsidy equal to 70%—that may even be accepted under the control regime in the rest of the United Kingdom. However, Northern Ireland would be excluded from seeking to attract that firm on the basis that the EU state aid rules say it cannot go over 50%. That is one way in which the dual system is going to be a disadvantage.

Another example is that the EU refuses to allow state aid to be given where it is simply for expansion, but under the principles outlined in schedule 1, a subsidy of that nature could be given in the rest of the United Kingdom. We could find that a subsidy complies with the control regime in GB, but does not comply with EU state aid rules in Northern Ireland, so placing Northern Ireland at a disadvantage.

On the EU state rules—and the Secretary of State said it—one of the reasons for bringing forward our own control system is that it can be more flexible and quicker. In fact, I think he said that a decision could be made within 30 days, but under EU state aid rules, there has to be a standstill period that can last up to a year. The Secretary of State said that in the House today. Again, when it comes to attracting businesses by using subsidies in Northern Ireland—even if we could match the subsidy available in England, Scotland and Wales, or wherever else somebody is trying to attract the firm—the slowness of the process, imposed by the fact that we are subject not only to the control regime in the rest of the United Kingdom, but to EU state aid rules, could mean that we find that a firm simply says, “Well, we can get a decision quicker in England, Scotland or Wales, and that is where we are going”, and Northern Ireland would be disadvantaged.

That is one of the reasons why no fiddling about with regulations is going to make a difference here. If Northern Ireland still remains firmly under article 10 of the withdrawal agreement, state aid rules apply there and the dual system has to apply there, then this is not a case, as someone has said, of trying to control the subsidy race, because Northern Ireland cannot even enter the race. We will be spectators of the race, stopped from entering it by the provisions of article 10 and the requirement for Northern Ireland to remain under the state aid rules.

Lest people think that this is just an issue for Northern Ireland—they may say, “Well, tough! That was what happened with Brexit.”—let me say that this is the elephant in the room and the issue has not been addressed in this Bill. Those state aid rules apply to trade between Northern Ireland and the Union, but any subsidies to a firm that operates through Northern Ireland into the EU, even though it is based in England, Scotland or Wales—or might even trade into the EU through Northern Ireland—will also be caught up in this.

The issue of the reach of the state aid rules has not been addressed in this Bill, and it is not just an academic argument. It is not even just for subsidies that may be given to firms in England, Scotland or Wales; this can also affect the international trade deals that the Government do with the rest of the world.

For example, British Sugar has challenged the deal made by the Secretary of State that allows 250,000 tonnes of sugar cane into the United Kingdom tariff free. That has been challenged by British Sugar on the basis that it represents unfair competition in the European market. British Sugar sells on the European market. It uses sugar beet, and tariff-free sugar cane would give Tate & Lyle an advantage. That is being challenged in the courts, and article 10 has been cited. If we are to ensure that a subsidy control regime does not disadvantage one part of the United Kingdom, or catch some of the subsidies that may be made available to firms located in other parts of the United Kingdom, rather than in Northern Ireland, article 10 is all-important. It is important for the Minister to provide clarification on that.

I have spoken to officials in the Department for the Economy in Northern Ireland. They have said—it is quite clear why—that they are finding it difficult to get information about how this scheme will work. So much of the Bill depends on new regulations being made. The general headlines are there, but the regulations need to be made. For example, what is an interested party, and will the Minister regulate to widen the scope of that? What about guidance for the subsidy and the person of interest, or about subsidies of particular interest? We do not know which subsidies are likely to be of particular interest, but that will be made by regulation. The Bill is peppered throughout with indications that such things will be clarified by regulations from the Minister, and that is important when it comes to the operation of subsidy control. We are dealing with the Bill, yet we are blind to some of the issues that need to be addressed.

Another issue is the time allowed for appeal or challenge, which is 30 days. I do not want the same long drawn-out process that the EU has, but 30 days in which the subsidy is registered or placed on a database is particularly short. Why has that period been selected, especially since getting information together for such a challenge might be that much more difficult? Lastly, the tribunal has significant powers, but it is how those powers will be used that is important. When the Bill comes to Committee, it is important that many of these issues are addressed.

From a Northern Ireland perspective, I hope that the promise made from the Dispatch Box is correct. If it is, I would love to see where that is being delivered in the Bill. If not, I would say that the Bill does not deal with some of the factors that have caused the greatest distortion of trade when it comes to the application of subsidies, namely a dual regime in Northern Ireland—a regime that allows the European Court of Justice to make those decisions. The promise made by the Minister in his opening speech that the Bill represents the freedoms we have thanks to Brexit is not quite true. The Bill still leaves a significant foothold in the United Kingdom for Brussels and the European Court of Justice when making final decisions about subsidies that apply in Northern Ireland, or about subsidies that are given to firms in England, Scotland or Wales, but that may fall under the EU state aid regime because, through their trading in Northern Ireland, they impact on the European market.

Subsidy Control Bill

Kirsty Blackman Excerpts

Consideration of Lords amendments
Wednesday 20th April 2022 Commons Chamber

Well-designed, proportionate subsidies are a critical part of an effective industrial strategy to grow the sectors of the future and to invest in our transition to net zero. The Government now need to bring forward a plan to make that happen.

[Kirsty Blackman (Aberdeen North) (SNP)]

It is very good to be here to talk about the Subsidy Control Bill again. The Lords amendments that have been accepted and put forward by the Government do make the Bill better. The Bill is better as a result of almost all the amendments that have been introduced; I accept that that is the case. I feel sorry for the Minister because he had to argue against many of these amendments in Committee and on Report. Now they are in the Bill and he is arguing for them, which is great—I am glad he is arguing for them now—but I feel he has been put in a pretty unfortunate position.

Although the Lords amendments make the Bill better, it still falls far short of where the UK’s subsidy control regime should be. We still have major concerns about a number of significant issues. I recognise the improvements on transparency, particularly through Lords amendment 14, which I drafted in Committee, so I am pleased that the Government have put that forward and that it is now in the Bill. It reduces the threshold for subsidies to be included in the transparency database from £500,000 to £100,000. That is incredibly important.

The database will work, and we will know whether subsidies are working as the Government intend, only if we can see which subsidies have been made. The threshold of £500,000 was too high for us to have a good enough overview, and that is without mentioning people’s inability to challenge subsidies if they do not know they exist. Setting the threshold at £100,000 makes it much less likely that a company will be badly damaged by a harmful subsidy that it is unable to challenge because of the lack of transparency.

I am also pleased that the CMA will report on the regime after three years; the period has been reduced. Again, I moved an amendment on that in Committee. I proposed two years, but we can meet in the middle at three years. I am pleased that that reporting is going to happen. Particularly in the initial period, it is important that we know how the subsidy schemes, the database and the challenges are working. This legislation will work only if it is kept under review, and I am pleased that there is an amendment to that effect.

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[Kirsty Blackman]

I absolutely do. The Government cannot hide behind agricultural being in the trade and co-operation agreement, because the TCA specifically says that agricultural subsidies can and should be excluded from subsidy control regimes. The Government still have not given a good reason for including agriculture in the subsidy control regime. It works in the EU and in the state aid regime, so it is perfectly workable to exclude agriculture from the subsidy control regime. Including such subsidies will cause problems. The fact that NFUs across these islands have raised concerns shows that it is incredibly serious. I urge the Minister to think again about how the issue of agriculture is treated by the Bill.

The shadow Minister extensively addressed net zero. Granting authorities are required to consider the environmental and net zero impacts of energy-related subsidies, but that is not what net zero is about. This is not the only time we will be thinking about how to reduce our impact on climate change. If a granting authority decides to give a significant amount of money to a bus company, for example, it does not have to consider the climate impact. If it decides to scrap all the buses and replace them with diesel taxis, it does not have to consider the net zero impact, because it is not an energy-related subsidy. I am massively concerned that net zero is included only in schedule 2 and not in schedule 1. If the Government are serious about tackling climate change, they need to be looking at every piece of legislation that comes through this place and ensuring that it does not have a negative impact on our ability to meet net zero; and if it does, they should be ensuring that that is then balanced by further, more dramatic actions in order that we can meet net zero.

In summation, the Bill is better than it was, but it still falls far short. I am still concerned about transparency and massively concerned about agriculture. I am hugely concerned about the lack of importance this Government are giving to net zero—that should go through everything we do.

[Paul Scully]

I thank all hon. Members for their engagement throughout the passage of this Bill and for their contributions this afternoon. I am glad that there has been broad consensus, albeit with some questions, which I will try briefly to address. The importance of that new independent subsidy control regime has been clear throughout the passage of the Bill and it was evident again today, so I thank hon. Members for their broad support.

Let me respond to the question from the hon. Member for Feltham and Heston (Seema Malhotra) about P&O and that kind of example. Clearly, we are shocked by the action of P&O Ferries and angered by the lack of empathy and consideration it has demonstrated towards its employees. The Government are continuing to work to establish whether P&O Ferries or DP World are in breach of any requirements of them as partners in the Thames and Solent freeports. Speaking more generally, I can confirm that the Bill ensures that public authorities can recover a subsidy where it has been misused, but it is important to note that the purpose of a subsidy is to achieve specific change in behaviour to facilitate a specific policy objective; it is not to give the Government ongoing leverage over how a company conducts its affairs. It is for other areas of law to set out the limits of what is acceptable corporate behaviour. None the less, because the subsidy is there to have that specific policy objective, we will make sure that that policy objective is met as best we can. However, it is difficult to enforce—

[Paul Scully]

It is difficult to come up with the examples, but in essence a subsidy is there to determine a particular policy objective. We would want to partner with businesses and companies that are most likely to deliver those policy objectives: reliable partners. Clearly, ones that are in breach of the kind of examples that the hon. Lady mentions are less likely to be those reliable partners. Technically, she is correct, but this is about how we enforce something, probably after the event; similarly, had we given P&O Ferries a subsidy last year, we probably would not have been able to get that subsidy back. That is the difficulty with enforcement after the event. None the less, the sentiment is absolutely there: we do not want to be partnering with unreliable companies to achieve our policy objectives.

[Kirsty Blackman]

The issue with that is that if a company is given money to run a freeport and it runs a freeport with that money, it can sack all the staff it likes at P&O and still be eligible for the subsidy. The issue is that there is a gap, which has been well highlighted by the shadow Minister.

[Paul Scully]

We will work out how the subsidy control regime is working; it is part of what I will come back to in a moment about the CMA’s approach to reporting back how the regime is working. We have to make sure that this is watertight—excuse the pun—if we are going to go down the road of making sure that we can recover any subsidies. I suspect that other areas of law will be better suited to approaching that, rather than specifically dealing with it within this framework Bill.

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[Paul Scully]

Again, that is up to the public authorities. The whole point about this regime is that it is a loose, permissive framework, rather than something more onerous which adds layer upon layer to recreate the EU state aid system. None the less, I would expect that, again, because of value for money and good governance, any public authority, whether national Government, local government or another public body, would expect to have exactly that kind of criteria—

[Kirsty Blackman]

The Scottish Government asked that the freeports that were going to be in Scotland had green stuff in them and fair work rules, but the UK Government said no. Now the Minister is saying, “Yes, we can totally do that. That definitely should be in it.” The UK Government refused to let us have that in the freeports planned for Scotland.

[Paul Scully]

I am not going to get involved in a wider discussion about freeports; I am talking about a framework Bill, which is exactly why I said that other areas of legislation and of governance will better frame this area, as opposed to having it within this framework Bill. I am going well over time on this issue, because I wanted to cover some of the other areas.

Net zero has been mentioned. Schedule 2 contains a lot of common-sense principles already, which support the UK’s priorities on net zero and protecting the environment. They require subsidies in relation to energy and the environment to meet one of the specified aims, such as increasing the level of environmental protection, and to ensure that subsidies do not undermine the polluter pays principle. We talked about the tax subsidies and the timings. Clearly, within the timings of the tax subsidies a longer period is still necessitated, because of the fact that tax returns and such things take longer to go through the process—as opposed to having the immediacy of sponsorship through a subsidy or more immediate cash assistance.

The hon. Member for Feltham and Heston talked about CMA thresholds and limitations, but ultimately that is what the CMA will be looking at in any case as part of its reporting back on the regime and its overall effectiveness. So we will always be able to look at how those thresholds and limitations are working in practice; we want to make sure that that can be put in place.

I wish to conclude by reaffirming what I set out in my opening remarks: this Bill creates a domestic subsidy control regime that will work for people and communities across the UK, creating a robust yet agile system that allows public authorities to provide subsidies where they are needed most. The rigorous debates in both Houses have resulted in the improved Bill we have before us, so I commend it to the House.

Lords amendment 1 agreed to.

Lords amendments 2 to 51 agreed to.

Building Safety Bill (Programme) (No. 3)

Motion made, and Question put forthwith (Standing Order No. 83A(7)),

That the following provisions shall apply to the Building Safety Bill for the purpose of supplementing the Order of 21 July 2021 (Building Safety Bill (Programme)), as varied by the Order of 19 January 2022 (Building Safety Bill (Programme) (No. 2)):

Consideration of Lords Amendments

(1) Proceedings on consideration of Lords Amendments shall (so far as not previously concluded) be brought to a conclusion three hours after their commencement.

(2) The Lords Amendments shall be considered in the following order, namely: 93, 94, 98, 107 to 109, 145, 184, 6, 1 to 5, 7 to 92, 95 to 97, 99 to 106, 110 to 144, 146 to 183, 185 to 191.

Subsequent stages

(3) Any further Message from the Lords may be considered forthwith without any Question being put.

(4) The proceedings on any further Message from the Lords shall (so far as not previously concluded) be brought to a conclusion one hour after their commencement.—(Alan Mak.)

Question agreed to.