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.

--- Later in debate ---

[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.