Fairness at Work and Power in Communities

Kirsty Blackman Excerpts

Thursday 12th May 2022 Commons Chamber

[Kirsty Blackman (Aberdeen North) (SNP)]

In giving some thought to what I might say today, I thought that the best way I could say, “Where is the employment Bill in this Queen’s Speech?”, would be to quote the Scottish TUC, which absolutely got it right:

“20 times the Tory UK Government promised to bring forward an employment bill. Absolute silence in today’s State Opening of Parliament. True to form, Tories have shafted workers and armed bad bosses. Devolve it already.”

I could not say it better than that. The Minister has given us all sorts of promises about an employment Bill, as he has been doing all year, like many other Ministers. We cannot believe anything that he says in relation to the employment Bill, because it has not been forthcoming. He promises and promises and clearly cannot convince the UK Government to actually deliver—if he even believes it should come through at all. There are so many reasons why we need an employment Bill—why it is absolutely vital and more so today even than it was when it was in the Conservative manifesto back in 2019 or when the Taylor review was published more than five years ago. It is desperately needed because of the cost of living crisis that we are seeing and the absolute pain that our constituents are going through. The Conservatives might want to try to rebrand it as a cost of living crunch, but it is an absolute crisis that people are struggling with every single day.

The first thing that we would like to see in the employment Bill is a proper living wage and the removal of the age discrimination within it. The living wage is not actually enough money for people to live on. The UK Government have continued to call it a living wage, but it is a minimum wage rebranded as a pretendy living wage, because people cannot afford to live on it. We can see that from the fact that the Child Poverty Action Group has said that 72% of families with children where at least one parent works are struggling to afford food. If this Government were committed to making work pay, those people would not be going to food banks. They would not be in poverty while working. They would not have to have so many jobs, including zero-hours contracts. Because they have so many jobs that are so low-paid, they do not meet the thresholds for things like auto-enrolment or statutory sick pay. They do not get any of the benefits that people should get with work because the work is not paying. We see the level of stress, pain and mental health suffering that this is causing people. If the UK Government decide that they want to put employers first, ahead of employees, then surely they should recognise that employees having no money and living with that level of stress makes them worse employees. If that is the key thing for the UK Government, they should be trying their best to improve lives for employees by making sure that work actually pays.

We would like to see flexible working requests available from day one. The UK Government have promised to look at that. Some 29 months ago, they said they would look at neonatal leave and pay. Where is it? They said they would look at making flexible working the default 29 months ago. After 29 months, nothing has happened. There is nothing in the Queen’s Speech about that. They said 43 months ago that they would like tips to go to workers in full. Where is the legislation? They said 54 months ago that they would evaluate shared parental leave. We have been waiting 54 months for UK Government action on that, and they have failed and failed again, and they failed this week in the Queen’s Speech.

The Government have said that they want to look at redundancy protections for women. That was mentioned by the deputy leader of the Labour party, the right hon. Member for Ashton-under-Lyne (Angela Rayner), who made a very good speech that I agreed with the vast majority of. We need to see new mums being given that protection. Having been made redundant when I was pregnant, I know how painful and difficult that situation is. We need to see those protections in place for new mums.

The reality is that the lack of action by this Government has enshrined inequalities and means that the gender pay gap and the gender pension gap will continue to grow, because women are more likely to be on low pay and low hours, working a number of different jobs and not being put into auto-enrolment. The UK Government are making things worse for this generation of workers and future generations of pensioners, as well as for current generations of pensioners.

We saw some action in the Queen’s Speech on fire and rehire specifically for seafarers—it is not actually in relation to fire and rehire, but the P&O issues that there have been. Although I welcome the Bill, and I am glad that action is being taken on low pay for seafarers, it is not for all seafarers; it is for ferry seafarers. It covers only people who work on ferries, and it is not any broader than that. Representing a port in my constituency, I am keen to hear the Government explain how they will indemnify ports having to take action against large boats and large companies. How will the Government ensure that those ports are not put at risk by the action they should be taking? I agree that action should be taken, but I do not want this to land in the lap of the ports and for them to be left holding all the responsibility. The UK Government should be taking action to press for changes in maritime law to ensure that everybody who is in a boat or ship within our seas is being paid a living wage, not just those on UK-flagged boats.

We are five years on from the Taylor review. Why did the Government bother doing the Taylor review? What was the point in all the money, time and hard work that went into it? Nothing has happened and nothing has come of it. Nothing has changed for people working in the gig economy or for people working in companies where they are pretending to be self-employed. Those changes have not been made. People are still living with the level of uncertainty that the deputy leader of the Labour party mentioned, getting texts the night before saying, “Your shift is being cancelled”, or suddenly being given an extra shift that they somehow have to find childcare to cover. They are still living without the benefits of having a pension, sick pay and all those things that workers should have to be able to live lives and not just live to work. We all should be aspiring for our constituents to be able to live, to enjoy living and to have fair work that they can go to.

I want to mention the Brexit freedoms Bill, which has a hilarious name. It is about taking back control—which is ironic—to the UK Government. It is about taking back control away from Parliament and taking back control from having things in primary legislation and moving it to secondary legislation, ensuring that the UK Government can do what they want to remove the protections put in place by EU law. The only reason why we have the level of workers’ rights that we have, and the only reason why we have been saved from the Tories’ untrammelled reductions in workers’ rights, is EU law. The Brexit freedoms Bill will undo that. It will allow them the absolute power to do what they like with our workers’ rights and to ensure that employers are put first rather than employees at every possible opportunity. The Government must absolutely commit not to roll back workers’ rights—not that it will mean anything if they do say it, but it would be useful for us to be able to repeat it back to them—and to increase the protections in place for workers. The promises that they have made need to come through.

We have been asking for years for employment law to be devolved. I would love for the Labour party to back us in that call. If it did not back us on this, it would feel a bit like it was willing just to let us sink with the rest of Britain. It would be very nice for the Scottish Parliament to have control of this area, because we could make a positive difference to workers in Scotland, even though we have a Tory Government and even though the Labour party is letting down workers in Scotland by failing to call for employment law to be devolved. We have made these cases on behalf of our constituents and the people of Scotland: we want employment law to be devolved.

The longer that this Tory Government continue to refuse to devolve employment law; the longer they continue dismantling the protections in place for workers; the longer they keep coming on television saying things like, “People are using food banks because they can’t budget”, or, “People should just work a few more hours and that will be great; that will reduce the need for them to have the £20 universal credit uplift”; the longer they continue to refuse to increase benefits by anything close to inflation—the Scottish Government have increased benefits by almost double what the UK Government have increased them by this year, and the Scottish Government have a child poverty action plan in place—the stronger the case they are making for independence. They are making that case stronger for the Scottish people, who can see the two Governments working on their behalf. They can see the Scottish Government enshrining fair work and principles in every single thing we do and putting the wellbeing of the population first in every single thing we do, and they can see the Tories doing everything they can to dismantle those protections, to reduce social security in real terms and to ensure that people do not have enough money to live on, and they can see them to step up to solve the energy crisis. The case for independence is getting ever stronger, and the Conservatives’ continued failure is bringing the reality of independence much closer every single day.

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[Sir Christopher Chope (Christchurch) (Con)]

It is a pleasure to follow the hon. Member for Sheffield South East (Mr Betts). I agree with him about one thing, which is that the Government need to show a lot more conviction in expressing their opposition to windfall taxes. They are a simplistic solution that always end up hurting hardest the ordinary people who work in this population. I am against windfall taxes, and if I have time I will say a little bit more about that later.

Who would dare to criticise the content of the Gracious Speech delivered in Her Majesty’s platinum jubilee year? I am certainly not going to criticise it, but I would like to begin by drawing attention to some omissions from it. I referred to one of them in an article carried in today’s “ConservativeHome”, headed “Harm from Covid vaccinations. Don’t leave victims behind.” That is a reference to the need for changes to be made to the vaccine damage payment scheme. Currently, the maximum payment under that scheme is £120,000, which has not been increased since 2007. By way of comparison, as my hon. Friend the Minister on the Front Bench will know, industrial injuries disablement benefit has in the same period gone up by 39%. When I discussed this with my hon. Friend the Member for Erewash (Maggie Throup), the Minister for vaccines and public health, she indicated that she took the point and understood that something needed to be done. I hope that in responding, the Minister will be able to say what is going to be done and why the Government believe it is fair that this level of £120,000 should continue to remain unchanged since 2007.

The newly formed vaccine injured bereaved UK organisation, vib.uk, which has been established in the last few days is also calling for much wider changes to the vaccine damage payment scheme. I think they are absolutely correct and in the article to which I have referred I explain why I support its suggestions for fundamental reform of the scheme to make it more flexible and relevant to the plight of those who have suffered as a result of doing the right thing by getting vaccinated.

[Kirsty Blackman]

Unfortunately, I missed the article this morning but I will be sure to read it. Does the hon. Gentleman agree that one of the biggest issues with this scheme is the length of time it takes for decisions to be made? People are waiting a significant length of time even to get an initial contact with the vaccine damage payment scheme. Does he agree that that is one of the key things that needs to be fixed?

[Sir Christopher Chope]

Absolutely, and I have been campaigning for changes since I first raised this issue in the House last September. In the article I refer to the fact that at the meeting I had with the vaccines Minister on 21 April she told me that, at last, an organisation has been appointed to carry out the administrative job of assessing the claims. There are now over 1,300 claims and the first assessments have not even begun, but I am told they will now begin on 16 May. The new organisation that has got the contract is committed to dealing with 1,800 such assessments each year, which is an indication of the extent of this problem. As the hon. Member for Aberdeen North (Kirsty Blackman) rightly says, it is appalling that we have had to wait for so long, and only last autumn the Prime Minister was assuring a correspondent that people who have suffered vaccine damage should not be ignored and left to suffer in silence. So I very much agree with the hon. Lady on that point and again commend the article to her.

Another significant omission from the Gracious Speech is any reference to the promised changes from RPI to CPI as the measure for calculating the maximum annual increase in charges for pitch fees for park home residents. This issue is dear to my heart; I have been chairman of the all-party group on park homes for many years, and the Government have outstanding, overdue business not just on that aspect but on dealing with the issue of rogue operators in that field.

When I was first elected in Christchurch—25 years ago, Madam Deputy Speaker—I would never have been able to contemplate that we would have a Conservative Government presiding over the highest levels of taxation in a generation and with inflation raging at 10%. I note from the Gracious Speech that the

“Government will drive economic growth to improve living standards”—[Official Report, 10 May 2022; Vol. 714, c. 4.]

and I hope I am right in concluding from that that the Government are not going to introduce any further tax increases. Yet there is talk, even from some of my Conservative colleagues, about new tax increases: so-called windfall taxes. Describing a tax as a windfall tax does not make it any less of a tax and I am concerned that the Government still seem to be flirting with the idea of ever higher taxes despite all the evidence showing that windfall taxes would be a further disaster.

--- Later in debate ---

[Kemi Badenoch]

I am not giving way, because Opposition Members do not want me to list these things. We are protecting the vulnerable, including pensioners, with winter fuel payments of up to £300 and cold weather payments of £25 a week. We delivered a record cash increase in the national living wage, meaning a £1,000 salary boost for full-time workers. We raised the national insurance threshold from July, saving an average worker £330 a year. We cut fuel duty by 5p for 12 months. As I mentioned, we cut the universal credit taper rate.

[Kirsty Blackman]

Wil the Minister give way?

[Kemi Badenoch]

No, I am not giving way because the selective amnesia of Opposition Members never ceases to amaze me. They refuse to acknowledge the policies that they know we have carried out and they agree with. They pretend money is not being spent when we have spent it—and not just spent, but spent in unprecedented amounts. So there is no use giving way, just for them to repeat the same arguments they have been making over and over during the course of the debate.

I will move on to the comments made by the hon. Member for Barnsley Central (Dan Jarvis). He talked about levelling-up funds and money for local government. He knows that, as the Minister with responsibility for local government, this is something I care about very passionately. I know he is no longer a Mayor, but I will be working with local government leaders across the country. We have boosted funding to councils by £3.7 billion this year, an increase of over 4.5% in real terms, which will ensure councils have the resources they need to deliver key services. The poorest areas will receive 14% more per household than the least deprived areas. On who got levelling up funding, the truth is that all of this is based on the quality of the bids. We cannot guarantee that we can fund every bid, when they are compared with what is being presented by others.

The other thing Opposition Members say is that we have done absolutely nothing for the last 12 years. Just to remind them, in the last three years alone we have tackled the greatest public health emergency in a generation, delivered a historic funding boost to the NHS, ended the cruel lottery of social care costs with our £36 billion health and social care plan, led the world in the fight against climate change with our COP26 presidency, and tackled crime, closing over 1,500 county lines. We have delivered for the whole of the United Kingdom, securing vaccines for all four nations and agreeing the largest funding settlements since devolution.

[Kirsty Blackman]

If the Conservative Government have done all those wonderful things, how come my constituents cannot afford to eat?

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.

--- Later in debate ---

[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.

Taylor Review of Modern Working Practices

Kirsty Blackman Excerpts

Wednesday 19th January 2022 Westminster Hall

[Kirsty Blackman (Aberdeen North) (SNP)]

Thank you for chairing the debate today, Mrs Cummins. We hugely appreciate it. I would like to congratulate the hon. Member for Slough (Mr Dhesi) on bringing this debate.

This debate is really important and timely, given that we are five years on from the Taylor review. We need to see progress; there has not been enough. There is no point in commissioning a review if it is just going to be ignored. What is the point in doing all that work and coming up with these excellent recommendations that are going to make a real difference to people’s lives to then put the report on a shelf and do nothing about it? It seems like a bizarre waste of effort for everybody.

The consistent call that we are making is not a high bar. We are asking for an employment Bill. The Conservatives have promised an employment Bill, and we are asking for it. We do not have very high hopes for what a Conservative employment Bill will contain, but once it comes we have the opportunity to amend it and make cases on behalf of our constituents and all those in insecure and low-paid work, so we can try to improve that work. Surely that is what the Taylor review was about. If the Conservatives want to put the views of employers ahead of the views of employees, they should note that employees work better if they are in secure employment. We know that they are more productive and less likely to be stressed.

The Taylor review said:

“Individuals can be paid above the National Living Wage, but if they have no guarantee of work from week to week or even day to day, this not only affects their immediate ability to pay the bills but can have further, long-lasting effects, increasing stress levels and putting a strain on family life.”

If the Conservatives do not step up and bring in an employment Bill, workers are more likely to be off sick. They are more likely to struggle to pay bills. Therefore, presumably, the amount the Government have to shell out on universal credit—which they so resent—will increase. Bringing forward an employment Bill is a win-win situation for the Government.

I want to highlight a few issues—some of which have been mentioned today. The Government brought forward their national living wage. It is a pretendy living wage that does not meet the bar of a real living wage. The Child Poverty Action Group has said that, in 72% of families, with children, struggling to afford food, at least one parent works. That should not happen. The Government keep talking about hard-working families, but what they really mean are people who work and do not get benefits. Actually, there are so many hard-working families and people in low-paid jobs who rely on social security because the jobs are not paying them enough. The jobs are inflexible and insecure, and those people are not getting the hours they need.

The Prime Minister said:

“My strong preference is for people to see their wages rise through their efforts rather than through taxation of other people put into their pay packets and rather than welfare”.

The Prime Minister somehow thinks that people who are on low wages and zero-hour contracts are not putting in any effort. I think he will find that actually all of those people we have relied on the most during the pandemic—carers, hospital porters and cleaners—are likely to fall below the real living wage, because they are getting the Government’s national living wage, if that. Those folk are incredibly hard-working and are having to rely on universal credit in order to get even the most basic living standards.

So many people on universal credit, whether or not they are in work, are actually living below poverty lines. It is a devastating situation. I get that the Government have had other priorities, such as Brexit and covid, but, as has been said, this is the most important issue. In Scotland, we are doing everything we can to put it first. We had a discussion with the Government about freeports. When freeports were being created in Scotland, the Scottish Government wanted two things: to prioritise green jobs and fair work. The UK Government disagreed and said, “No. You cannot prioritise those two things in freeports. You cannot prioritise tackling climate change and fair work.” As was said, those should be the most important things. This Government have got their priorities all wrong. There is a timing issue, but it is still possible to prioritise workers’ rights, when we have seen our constituents’ savings fall. There has been some increase in savings, but that has been for those people who were already earning plenty of money. There has been a massive hit on the finances of those earning the least.

I want to highlight a couple of other matters. In 2021, the median hourly earnings gap between men and women grew. Something is going wrong if the Government are putting measures in place to fix the gender pay gap and it continues to widen. There needs to be immediate, urgent action to ensure that the gender pay gap does not continue to widen.

We need to see flexible work requests from day one. People who are pregnant, carers or disabled need to be able to make a flexible working request to their employers on day one of their employment. We know that many of those are refused anyway. The employer does not have to concede to the flexible working request, but the person needs the right to make that request, at the barest minimum.

We need the employment Bill and we need the Trade Union Act 2016 to be rolled back. We need a proper real living wage that is not discriminatory on the basis of age. We are doing what we can in Scotland with the fair work action plan. We have had that argument with the Government about freeports. We have a higher level of people paid the real living wage than elsewhere in the UK. That is mostly due to the action we have taken, particularly the requirement that people working in adult social care are paid the real living wage, not the national living wage. We have taken a lot of action in that space.

The Government are refusing to bring forward the employment Bill. It would be great if the Minister could tell us when it is coming. In the absence of that, devolve employment rights and workers’ rights. We will do a much better job of it than the UK Government. We will do it properly. We will ensure that we put workers at the heart of the decisions that we take on employees’ rights. We are showing that within the limited powers that we have. Imagine how much more we could do if we devolved those rights.

If the Minister is unwilling to concede that devolving those powers would ensure that the Scottish Government could provide a better service for the Scottish people than the UK Government, then he is strengthening the case, once again, for independence. He is strengthening the case for the people of Scotland to vote for independence, because they do not want to see that gender pay gap widen; they do not want to see insecure employment continue; they do not want to see the age discriminatory national living wage; and they do not want a Prime Minister suggesting that they are not working hard enough, which is why their wages are not growing. Independence is the way for us to solve that, because the Conservatives continue to refuse to take action that will make a real difference to our constituents.

Subsidy Control Bill

Kirsty Blackman Excerpts

3rd reading
Monday 13th December 2021 Commons Chamber

[Kirsty Blackman (Aberdeen North) (SNP)]

I beg to move, That the clause be read a Second time.

[Madam Deputy Speaker (Dame Rosie Winterton)]

With this it will be convenient to discuss the following:

New clause 2—Annual report on climate change impacts—

‘(1) The Secretary of State must once every 12 months lay a report before Parliament setting out the impact of subsidies granted in the preceding 12 months on the environment and climate change.

(2) Any report under subsection (1) must include an assessment of the impact of subsidies granted in the preceding 12 months on the UK’s ability to achieve net-zero emissions by 2050.

(3) The first report must be laid before Parliament within 12 months of this Act being passed.’

This new clause would require the Secretary of State to lay an annual report before parliament detailing the climate change impacts of subsidies granted that year.

New clause 3—Post-award investigations—

‘(1) The CMA may conduct an investigation in relation to a subsidy that has been granted or a subsidy scheme that has been made.

(2) A decision under subsection (1) may be made in relation to any subsidy or subsidy scheme in respect of which the CMA considers—

(a) that there has or may have been a failure to comply with the requirements of Chapters 1 and 2 of Part 2, or

(b) that there has or may have been a failure to comply with the transparency obligations set out in Chapter 3 of Part 2.

(3) Where the CMA makes a decision to investigate a subsidy or scheme under subsection (1), it must direct the public authority to provide it with—

(a) any assessment carried out by the public authority as to whether the financial assistance fell within the meaning of “subsidy” or “subsidy scheme” for the purposes of this Act, and the reasons for that conclusion,

(b) any assessment carried out by the public authority as to whether the financial assistance if assessed to constitute a subsidy or subsidy scheme would comply with the requirements of Chapter 1 and 2 of Part 2 and the reasons for that conclusion,

(c) any evidence relevant to those assessments,

(d) in a case where such assessments were not provided, the reasons for the assessments not being provided,

(e) any information that the public authority failed to enter in the subsidy database in accordance with Chapter 3 of Part 2, and

(f) such other information as is specified in regulations under section 60(8)(a).

(4) Where the CMA decides to conduct an investigation under subsection (1), the direction given under subsection (3) must be made before the end of 20 working days beginning with the day on which the subsidy is given or the scheme is made.

(5) The CMA must send a copy of the direction given under subsection (3) to the public authority and the Secretary of State.

(6) The public authority must provide to the CMA the information required under subsection (3) before the end of the information period as defined in section 60(7).’

This new clause provides the CMA with the power to conduct a post-award investigation where the public authority has or may have failed to comply with its requirements.

Amendment 10, in clause 10, page 6, line 31, leave out paragraph (a) and insert—

‘(a) is made by—

(i) a Minister of the Crown,

(ii) the Welsh Ministers,

(iii) the Scottish Ministers, or

(iv) a Northern Ireland department; and’.

This amendment allows devolved administrations to make streamlined subsidy schemes.

Amendment 18, page 6, line 33, at end insert—

‘(4A) A streamlined subsidy scheme may be made, in particular, to support areas of relative economic deprivation.’

This amendment would allow for streamlined subsidy schemes to be made for the purposes of supporting areas of deprivation.

Amendment 19, in clause 11, page 7, line 9, at end insert—

‘(4) Before making regulations under this section, the Secretary of State must seek the consent of the Scottish Ministers, the Welsh Ministers and the Department for the Economy in Northern Ireland.

(5) If consent to the making of the regulations is not given by any of those authorities within the period of one month beginning with the day on which it is sought from that authority, the Secretary of State may make the regulations without consent.

(6) If regulations are made in reliance on subsection (5), the Secretary of State must make a statement to the House of Commons explaining why the Secretary of State decided to make the regulations without the consent of the authority or authorities concerned.’

This amendment would require the Secretary of State to seek the consent of the Devolved Administrations before making regulations under this section. Where such consent is not given within one month, the Secretary of State may make the regulations without that consent, but must make a statement to the House of Commons explaining their decision.

Amendment 20, in clause 32, page 17, line 10, at end insert—

‘(c) the subsidy database is subject to routine audit to verify the accuracy and completeness of entries.’

This amendment requires the Secretary of State to ensure that the database is subject to routine audit.

Amendment 1, in clause 33, page 17, line 21, leave out “£500,000” and insert “£500”.

This amendment would reduce the threshold for entering subsidies into the subsidy database from £500,000 to £500.

Amendment 2, page 17, line 24, leave out “one year” and insert “one month”.

This amendment would require subsidies or schemes to be entered in the database within one month of being made, rather than one year, if given in the form of a tax measure.

Amendment 13, page 17, line 24, leave out paragraph (a) and insert—

‘(a) if given in the form of a tax measure, an entry with a provisional tax deduction value must be entered within one month, and a final value entered within one month of the date of the tax declaration, or’.

This ensures that tax measure subsidies are entered in the subsidy database within one month.

Amendment 3, page 17, line 26, leave out “six months” and insert “one month”.

This amendment would require subsidies or schemes to be entered in the database within one month of being made, rather than six months, if given in any form other than a tax measure.

Amendment 4, page 17, line 33, leave out “one year” and insert “one month”.

See explanatory statement for Amendment 2.

Amendment 5, page 17, line 35, leave out “six months” and insert “one month”.

See explanatory statement for Amendment 3.

Amendment 6, in clause 34, page 18, line 27, at end insert—

“(j) the date the subsidy or scheme was entered onto the database.”

This amendment would require the date a subsidy or scheme was entered onto the database to be included in the information public authorities are required to enter into the database.

Amendment 14, in clause 36, page 19, line 17, after “requirements” insert

“with the exception of duties under section 33,”.

This amendment requires that subsidies under the minimal financial assistance threshold are entered in the subsidy control database.

Amendment 7, page 20, line 4, at end insert—

‘(7) In this section, the reference to the subsidy control requirements does not include the requirements as to transparency in Chapter 3 of Part 2.’

This amendment requires that “minimal financial assistance” subsidies are not exempt from the database transparency requirements, while remaining exempt from other subsidy control requirements.

Amendment 21, in clause 41, page 23, line 15, leave out “£14,500,000” and insert “£500”.

This amendment would make section 33 applicable to SPEI subsidies worth more than £500.

Amendment 22, page 23, line 16, leave out subsection (b).

This amendment would make section 33 applicable to SPEI subsidies worth more than £500.

Amendment 23, in clause 55, page 30, line 40, after “State” insert

‘, the Scottish Ministers, the Welsh Ministers and the Department for the Economy in Northern Ireland’.

This amendment extends the call-in powers under this section to the Devolved Administrations.

Amendment 24, page 31, line 2, after “State” insert

‘, the Scottish Ministers, the Welsh Ministers and the Department for the Economy in Northern Ireland’.

This amendment relates to Amendment 23.

Amendment 25, page 31, line 7, after “State” insert

‘, the Scottish Ministers, the Welsh Ministers and the Department for the Economy in Northern Ireland’.

This amendment relates to Amendment 23.

Amendment 9, in clause 66, page 37, line 39, leave out paragraphs (a), (b) and (c) and insert—

‘(a) all subsidies and subsidy schemes granted in the past 12 months, and

(b) an assessment of the extent to which they satisfy the subsidy control principles and the energy and environment principles.

(2) Any report made under this section must be formally laid before parliament by the Secretary of State.

(3) The Secretary of State must make an oral statement to the House of Commons when any report under this section is laid.’

This amendment ensures that the annual report prepared by the CMA includes all subsidies along with its assessment of the extent to which they fulfil the 7 principles set out in the Bill. The report also places a requirement for the Secretary of State to report to Parliament when a report is laid.

Amendment 26, in clause 68, page 39, line 1, at end insert—

‘(3A) The Chair of the CMA Board may appoint up to three non-executive members to the Subsidy Advice Unit established under subsection (1) in order to ensure that the Unit includes at least one person with relevant experience in relation to each of Wales, Scotland and Northern Ireland.’

This amendment would allow the CMA Chair to appoint up to three non-executive members to ensure that the Unit includes at least one person with experience in relation to each of Wales, Scotland and Northern Ireland.

Amendment 8, in clause 70, page 39, line 35, leave out subsection (2).

This amendment intends to allow individual subsidies given under a subsidy scheme to be reviewed, without the requirement for the broader subsidy scheme to be reviewed too.

Amendment 12, page 40, line 16, at end insert—

‘(c) the Welsh Ministers,

(d) the Scottish Ministers, or

(e) a Northern Ireland department;’.

This amendment includes the devolved administrations in the list of those who can apply to the Competition Appeal Tribunal for a review of a subsidy decision.

Amendment 27, in clause 79, page 46, line 3, at end insert—

‘(5A) Before issuing guidance under this section, the Secretary of State must seek the consent of the Scottish Ministers, the Welsh Ministers and the Department for the Economy in Northern Ireland.

(5B) If consent to the making of the regulations is not given by any of those authorities within the period of one month beginning with the day on which it is sought from that authority, the Secretary of State may make the regulations without that consent.

(5C) If regulations are made in reliance on subsection (5B), the Secretary of State must publish a statement explaining why the Secretary of State decided to make the regulations without the consent of the authority or authorities concerned.’

This amendment would require the Secretary of State to gain the consent of the Devolved Administrations before issuing guidance under Clause 79.

Amendment 15, in schedule 1, page 51, line 8, after “concerns” insert

‘and areas of relative economic deprivation’.

This amendment includes areas of relative economic deprivation as an example of the equity rationales that subsidies should address.

Amendment 16, page 52, line 6, at end insert—

‘(c) consistency with the United Kingdom achieving its net-zero commitments established under the Climate Change Act 2008.’

This amendment adds consistency with the UK’s net-zero commitments as a particular consideration for public authorities before deciding whether to give a subsidy.

Amendment 11, page 52, line 6, at end insert—

‘Net Zero

H Subsidies should not normally encourage behaviour which will have a negative effect on the achievement of the UK’s net-zero commitments.’

This amendment adds a subsidy control principle relating to the UK’s net zero commitments.

Amendment 17, in schedule 2, page 52, line 15, at end insert—

‘(c) delivering the UK’s net-zero commitments established under the Climate Change Act 2008.’

This amendment would ensure that subsidies related to energy and the environment incentivise the beneficiary to help deliver the UK’s net-zero commitments.

[Kirsty Blackman]

Thank you for calling me to speak in this important debate, Madam Deputy Speaker. It is a delight to be present in this incubation Chamber, where viruses from all around these islands—every corner of them—can come to mix freely, so that we can return this toxic cocktail to our constituents, constituencies and families. I am delighted to be able to be physically present at this time.

I will speak briefly to new clause 1, which is in my name and those of my colleagues, as well as the other amendments that stand in my name. My hon. Friend the Member for Edinburgh North and Leith (Deidre Brock) will fill in the rest of the details and explain more about our rationale for the new clause.

The logic behind new clause 1 is that agricultural subsidies do not fit neatly into subsidy control regimes. That has been recognised by the World Trade Organisation, which is the reason for its agreement on agriculture; it has been recognised by the European Union, which is the reason for the common agricultural policy; indeed, it has been recognised across the world. We, and the Scottish Government, still have no idea why the UK Government decided to go against the flow and include agricultural subsidies in the Bill, rather than providing a separate arrangement for them.

The new clause simply removes agriculture from the consideration. It does not mean that we should not have a control regime of some sort for agriculture, and it does not mean that we should not have rules relating to agriculture. It means that agriculture does not fit neatly here, and should not form part of the main subsidy control regime in the Bill.

Amendment 10 relates to streamlined subsidy schemes. The change for which we are asking would allow devolved Administrations to make such schemes. Given that those Administrations have devolved competences by law, it makes no sense that the schemes can only be made by the Secretary of State in the UK Government. Obviously we would like Scottish independence, but in the absence of a vote on that, we are not asking for devolved Administrations to be able to overstep their devolved competences. We are merely asking for parity—for the ability of devolved Administrations to create streamlined subsidy schemes. They would still only be able to do that within their areas of devolved competence, and they would still only be able to do it within their limited financial envelopes. We are not asking for anything strange or unusual; we are not seeking some sort of power grab; it is simply to do with parity.

[Jim Shannon (Strangford) (DUP)]

I understood from discussions I have had with the Minister in the past that the intention was to give the regional Administrations a say in this process so that their views could be taken on board if necessary, but the hon. Lady seems to be saying that that will not happen. Have I got it wrong, or have I got it right?

[Kirsty Blackman]

Some parts of the Bill give the devolved Administrations a say, but many others do not. The key part concerns the issue of interested parties, which I will explain in some detail later.

Streamlined subsidy schemes can go through a “streamlined” process rather than being made by, for instance, a local authority in order to benefit organisations. We are not asking for all granting authorities to have access to that process; we are simply asking for parity of esteem for the devolved Administrations, specifically on streamlined subsidy schemes.

[Jim Shannon]

The point that I was trying to make relates to farmers’ subsidies and environmental schemes, which are critically important to Northern Ireland, as they are to Scotland.

[Kirsty Blackman]

The hon. Gentleman is absolutely correct. We are asking for the agricultural references to be removed from the Bill because we do not think that this gives us, or any of the devolved Administrations, the flexibility we need. The Welsh Government have raised concerns similar to those raised by the Scottish Government, particularly in relation to legislative consent. As I said earlier, my hon. Friend the Member for Edinburgh North and Leith will speak in more detail about agriculture in particular, so it may be worth questioning her at that stage.

Let me now turn to the issue of tax declarations and the transparency database. There is already a subsidy control database, which is rubbish. There is very little on it because a huge amount of information is missing. The Minister has made it clear that this is a preliminary database, an interim measure, and not the final database. We have had a degree of reassurance from him that the new database will be better, but the way in which the legislation is drafted—the number of exemptions, and the length of time that authorities have to upload information—causes us great concern. and was raised a number of times in Committee.

Amendment 13 would amend clause 33 in respect of a local authority or granting authority giving a subsidy in the form of a tax measure—a tax rebate or tax reduction. To give a theoretical example, if an authority says in April 2022, “We’re going to subsidise this company by not having them pay a certain kind of tax,” it does not have to put that on the database until the year after it appears on a tax declaration. It can be made in April 2022, it can appear on the tax declaration first in April 2023, and there would be no requirement to upload it to the database until April 2024, which is almost two years after the subsidy was made. By that time, an organisation that had been egregiously damaged by the subsidy would have sunk—it would have gone under.

--- Later in debate ---

[Kevin Hollinrake (Thirsk and Malton) (Con)]

The hon. Lady makes some very fair points, but to be fair to the Government there are requirements under clause 37(6) for the business to keep records of the subsidies received and report them. That is probably in many ways more practical. That subsidy might be given to all kinds of different subsidiaries of that particular enterprise and therefore, even if she wanted local authorities to determine what they had received in the past, it would potentially be difficult to do so by checking against the database. It makes sense to give the business some responsibility for recording that.

[Kirsty Blackman]

Actually, what the legislation does is to give the business a responsibility to keep the letter. It does not give the business much more responsibility, in my mind, although I will go back and have a look at the clause the hon. Gentleman points me to. I think having the subsidy on the subsidy control database would make all the difference, but if he wishes to come back in, he can.

[Kevin Hollinrake]

Clause 37(6) states:

“The enterprise must keep a written record detailing—

(a) that it has received a subsidy,

and

(b) the date on which it was given, and

(c) the gross value amount of the assistance.”

That to me indicates that it must keep a full record of what it has received.

[Kirsty Blackman]

Once again, yes, it has to keep a full record, but it does not have to show Aberdeen City Council that record. There is no requirement on the company to be transparent about that record; there is a requirement to keep it, but not to share it. Having it on the database or adding the requirement to share that record, should a granting authority ask in advance of granting a subsequent subsidy, would make the difference we are asking for.

However, that does not fix the issue in relation to transparency of data and ensuring that the database and the scheme are working properly. This was mentioned in the witness sessions. We need to know whether this is working, and we will only know if it is working if we have an idea of the subsidies being granted, even if they are below the MFA threshold.

I said I would come on to the definition of interested parties. Amendment 12 adds devolved Administrations to the list of interested parties. Again, we discussed this at some length in Committee and the Minister gave some assurances. I shall quote a couple of questions that I asked and the response that the Minister gave. I said:

“Does a devolved Administration’s interests include indirect interests?”

I also asked:

“What if a number of organisations in their jurisdiction are potentially affected by a subsidy given?”

The Minister answered:

“Yes. I would say that is a direct interest rather than an indirect interest. Public authorities, including devolved Administrations, may be interested parties.”––[Official Report, Subsidy Control Public Bill Committee, 16 November 2021; c.308-309.]

I am glad that he gave some clarity. It is sort of because of the way the questions were asked that the Minister’s response was slightly woolly. I would very much appreciate it if, when he responds to the debate, he could make it absolutely clear from the Dispatch Box that, in cases of indirect interests, devolved Administrations are considered as interested parties.

Let us say that a subsidy was given somewhere else in the UK, or even in Scotland, and that subsidy negatively affected the chances of seven businesses in Scotland. I think that the Scottish Government should be able to bring a request to the tribunal to say that that needs to be looked at and that they believe that that is an issue. Under the definition of interested parties, it is only those people whose interests have been affected. The Scottish Government’s interests would not have been directly affected by that, but they would have been indirectly affected. I was trying to tease out from the Minister that he believed that, definitely, the Scottish Government or any of the other devolved Administrations could bring a challenge on behalf of organisations within their area. I am quite happy for that to be limited to devolved competences even. However, if they are not in the Bill as interested parties, we very much need that commitment from the Minister. If they are not in the Bill as interested parties, why is the Secretary of State included in the Bill as an interested party? If the definition is wide enough to cover all those areas—

[Kevin Hollinrake]

The Secretary of State is not necessarily an interested party, which is why he needs to be named in here; he might not be affected. The hon. Lady’s point about being directly or indirectly affected is covered under clause 70(7), which says that an interested party means

“a person whose interests may be affected”.

That could be directly or indirectly, surely.

[Kirsty Blackman]

We discussed this at length, with a lot of banter, in Committee. But I have a concern that the provision does not say “directly” or “indirectly”. It does not make that as clear as it could. A clear statement from the Minister at the Dispatch Box would give me a level of comfort. I do not think that it is the intention of the Government to exclude the Scottish Government, the Welsh Government, or the Northern Ireland Assembly from making these challenges, but I think that the Bill is written in a woolly enough way that it potentially accidentally excludes them.

[Jim Shannon]

The hon. Lady has outlined the issue very well on behalf of the Northern Ireland Assembly. This has to be an equality issue. If it should happen that some other part of the United Kingdom affects businesses in my constituency or in Northern Ireland, equality is part of that. Should not the Minister and the Government address the issue of equality for all those reasons as well?

[Kirsty Blackman]

I completely agree that there is not a level of parity here. There should be because the Government recognise that the Scottish Parliament has responsibility for some things—the Government recognise that most days. They recognise that in relation to the other devolved Assemblies, too. This is not about any of those Administrations having a veto; it is simply about the right to refer this to the Competition Appeal Tribunal in order for it to be looked at. It is not about any of those authorities being able to cancel subsidies, or to veto them in any way. It is simply about being able to raise that challenge. It is something that was raised by the witnesses in the Bill’s evidence sessions, so it is not something that I have just somehow invented, or that the Welsh Government have invented, or that the Scottish Government have invented. It is a real worry for people, so the more the Minister could say on this the better.

I will not speak for too much longer. I have just one more amendment—amendment 11—to cover. There are two schedules—schedules 1 and 2—in relation to the subsidy control principles. The subsidy control principles are set in the Bill, and it is clear that they are the principles that authorities need to look to in guiding the decision making about giving subsidies. There are two schedules: one for the general principles and one for the environmental principles, which relate specifically to subsidies around energy and environmental matters.

--- Later in debate ---

[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.

[Kirsty Blackman]

Specifically on the issue of uploading subsidies to databases and challenging such subsidies, the only way in which a subsidy will be overturned anyway is if the subsidy was given incorrectly—if it was against subsidy principles or was distortive in some way—so surely this has no effect on the vast majority of subsidies, except that it means they will be uploaded much more quickly. However, in the case of subsidies that are wrong, bad and going to cause problems, surely the quickest possible time is better so that we would be able to see them.

[John Penrose]

That is absolutely right. It is not just about whether a particular subsidy breaches those principles, but as the hon. Member rightly points out, it is also a question of whether we can then spot that a pattern of cronyism is emerging. If a particular local council was giving out grants to its mates, we could see that much faster. That may not be breaching the subsidy control principle, but you can bet your bottom dollar that people would want to know about that and that the most almighty stink would be created.

That brings me on to the final group of my three groups of amendments, which is about the ability to challenge and check individual items or individual examples of a subsidy within a broader subsidy scheme. At the moment, if someone registers a subsidy scheme under the terms of the Bill, dishes out subsidies under that subsidy scheme and then basically ignores the terms of the subsidy scheme or misapplies them in some terrible way—because of cronyism, because they are just doing a bad job, or even fraudulently—nobody, under the terms of the Bill, can challenge the individual decisions being made. That cannot be right, and it seems daft. All I am saying is that we need to be able to challenge individual examples within a broader scheme, otherwise this transparency mechanism or challenge mechanism will be fundamentally flawed.

That is the modest proposal. So far, I have not heard a single argument that unpicks the logic of that. As far as I can see, there are three Departments of Government with a dog in this fight. There is Lord Frost, who is in charge of the Brexit dividend, and he ought to be thoroughly in favour of this because of the opportunity it offers. There is the Secretary of State for Business, Energy and Industrial Strategy—he was here briefly just now, and I hope he will be back later—who is of course a good free marketeer and is thoroughly committed to improving productivity, so he should be in favour of this, too. Finally, there is the Chancellor of the Exchequer, who is the guardian of taxpayers’ money. As I have said, we should be taking pride in the fact that we are one of the least heavily subsidising economies in the developed world, and we certainly were when we were part of the EU, so I cannot see that he is going to be objecting to it either.

As I sit down, I therefore just ask the Minister to please explain the logic behind opposing any of the arguments that not just I but others have been advancing. Will please explain who on earth thinks this is a bad idea, because I cannot find them or see them and I do not think anybody knows who they are?

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[Kirsty Blackman]

I want to start with a few thanks. I thank staff member Dr Jonathan Kiehlmann and my hon. Friend the Member for Aberdeen South (Stephen Flynn) for their assistance on the Bill. I also thank—this shows the seriousness with which Scotland treats this—Cabinet Secretaries Kate Forbes, Ivan McKee and Mairi Gougeon, who have all taken an interest in the Bill and in trying to improve it. We recognise that it is an incredibly important regime and we have significant concerns about it. I wish briefly to comment on amendment 19, which we voted for. We did so not because it was perfect but because it would have made the Bill marginally better than it is currently. So the amendment is not something we would necessarily back wholeheartedly, but it is better than the current Bill as drafted. I thought it would be best to make that clear.

The three major concerns we continue to have about the Bill relate to the inclusion of agriculture. Agriculture is not included in subsidy control regimes elsewhere and I do not believe we have heard enough justification from the Minister or the Secretary of State to understand why they have chosen to include agriculture in this scheme. We believe that the scheme is not transparent enough. Indeed, the hon. Member for Weston-super-Mare (John Penrose) tabled a number of amendments to that effect, as did a number of other colleagues across the House. There are significant concerns about the transparency of the subsidy control database in particular, but that also applies to the subsidy regime more widely. I hope that the Government will take these things into account and will consider them as the Bill moves on to further consideration in the other place.

The last issue we have is about climate change, which should form part of the key principles. I know that the principles can be updated, including by future Governments, but, for the Bill to stand the test of time, reaching our net zero targets should have been put at its front and centre. I appreciate the Opposition tabling an amendment to that effect. The Liberal Democrats did the same, as did we. This is so important and we feel that the Minister and the Secretary of State are abdicating some responsibility on that.

Lastly, I wish to thank the Minister for his clarification in relation to interested parties. I very much appreciate him saying what he said at the Dispatch Box on the role of devolved Administrations when it comes to interested parties. That will make a difference to the operation of the Bill and I appreciate that he did that.

Nuclear Energy (Financing) Bill (Fifth sitting)

Kirsty Blackman Excerpts

Committee stage
Tuesday 23rd November 2021 Public Bill Committees

[Dr Whitehead]

I am not sure that the Minister quite gets this. The warm home discount was introduced in 2011 and has been at the level of £140 since then, so the Government suggesting that it should be increased to £150 is not an action of unparalleled generosity: it actually just catches up with inflation over the period that the warm home discount has been in place. That discount has been decreasing in value in real terms over the years, so increasing it is simply a matter of reasonable housekeeping, rather than innate generosity.

[Kirsty Blackman (Aberdeen North) (SNP)]

I thank the hon. Gentleman for giving way; apologies to my hon. Friend the Member for Kilmarnock and Loudoun for getting in first. Does the hon. Gentleman agree that, given the massive increases in energy prices that we have seen—way outstripping inflation—this increase does not touch the sides of what is needed?

[Dr Whitehead]

The hon. Member is absolutely right. I am sure that we could do some back-of-a-fag-packet calculations about what we are going to need from the warm home discount, given the rises that are likely to occur under the fuel price cap in the coming spring and over the next six months, but it will certainly be rather more than £10.

--- Later in debate ---

[Greg Hands]

The protection in the Bill is through the regulation of the process and the oversight, for example by the authority, in this case Ofgem, which will ensure that any amounts paid to the generation company are reasonable. The hon. Gentleman is right to ask who will set the parameters, the Secretary of State or the regulator. The Secretary of State sets the initial licence conditions; however, it is the authority, in this case Ofgem or its equivalent, that will ensure that any amounts are reasonable and in the interests of existing and future consumers. That is very much in the Bill.

[Kirsty Blackman]

Could the Minister provide more information on that, in the form of a letter perhaps? We have raised concerns on how companies, and therefore consumers, will be protected. I appreciate what he says, but that was not obvious to us, so a response in writing would be hugely helpful.

[Greg Hands]

That is a reasonable request. I am saying that this is a tried-and-tested process that has been there throughout the contract for difference regime. Paying in collateral, and the way that collateral operates, is something that has been around for decades, but if it is helpful I am happy to write to the hon. Lady and copy in members of the Committee to explain in more detail how it works in the CfD regime and the Energy Act 2013. I should also make it clear that the Bill provides a framework for the RAB revenue stream and requires that the detail of suppliers’ payment obligations is set out in the secondary regulations that will need approval from both Houses. Ahead of that, and as required by the Bill, we will publish and consult on the draft regulations. We will include British energy suppliers within the consultation, so they will have the opportunity to feed in any views from an energy supplier perspective.

In the context of protecting our most vulnerable energy consumers, which was the subject of the previous amendment, I refer Members to my comments in that debate setting out the numerous actions that the Government are taking to help low-income households, including the warm home discount, cold weather payments and the household support fund. I hope that I have assured the hon. Member for Kilmarnock and Loudoun that the design of the RAB revenue stream will ensure that the interests of consumers are protected and that mechanisms are in place to protect suppliers from disproportionate requirements that would affect their ability to operate. As such, I believe that the amendment is unnecessary, and I hope that he will withdraw it.

Subsidy Control Bill (Eleventh sitting)

Kirsty Blackman Excerpts

Thursday 18th November 2021 Public Bill Committees

[Kirsty Blackman (Aberdeen North) (SNP)]

As has been common throughout, I agree with almost everything that the hon. Lady has said, and I agree that we lack information on what this will look like. I get all the arguments that the Government have made about the structure being permissive, but we could do with more information on several of these things. That is why I have tabled amendment 24, which is a probing amendment to try to find out how the Government intend the guidance to be drafted.

Clause 79(5) states:

“Before issuing guidance under this section, the Secretary of State must consult such persons as the Secretary of State considers appropriate.”

It would have been helpful to have more information on that, and it would be useful to have that from the Minister. With subsection (1)(a), (b), (c) and (e), will the Secretary of State consider the devolved Administrations to be reasonable organisations to contact before issuing guidance around the subsidy control principles, the energy and environment principles, the subsidy control requirements and, crucially, the criteria for determining whether something is of interest or particular interest? That is a really important part of the Bill, and we do not have enough information on what interest and particular interest will mean.

The shadow Minister is absolutely correct that there is a hierarchy. In some areas, the Secretary of State must issue guidance because otherwise the scheme will not work, but in others it is more flexible. I probably would have included subsection (1)(e) among the areas on which the Secretary of State must issue guidance, because I do not think the scheme works if people do not know what interest and particular interest will mean. The Minister has spoken an awful lot about certainty for granting authorities and for organisations that will be receiving subsidies, and about trying to cut down the length of the period of uncertainty. In the absence of proper guidance that we have been able to scrutinise in any way, that uncertainty becomes much higher—definitely at this point, and I hope that will not be the case when the Act comes into force and begins to work.

I have one other question for the Minister. Clause 79 says that

“the Secretary of State must consult such persons as the Secretary of State considers appropriate.”

I have asked before—I have been reasonably happy with the answers—about how long in advance of the Act coming into play the guidance will be published. I think it is hugely important that the consultation period is long enough to ensure that that guidance is right, not just in lining up with the principles that have been set out and achieving the Government’s intentions, but in covering all the gaps that organisations foresee and answering the questions that granting authorities or enterprises might have. That length of time is needed to provide the right level of certainty and enable people to study what is a very big change.

We have had state aid rules in place for a long time, and that is why, in practice, an awful lot of the decisions that are being taken just now are based not on the interim regime but on state aid itself. A lot of people who are going to lawyers for advice are being told, “We will apply the state aid principles to this, because that is the easiest course of action just now.” We want to make sure that that does not continue to happen. For the new regime that the Government intend to be in force, we need to make sure that legal experts have the time to get up to speed on how they should advise people, because it is technical, and it is important that people get it right. It is important that subsidies are allowed to be made—that is the point of the Bill—but that regulation is in place to ensure that public money is spent wisely and properly, and that inappropriate distortion of competition is removed so far as possible.

Amendment 24 asks for that guidance to be made by the affirmative procedure, because I do not think that enough scrutiny will be brought to bear on the guidance that will be issued. If the Minister feels that there will be scrutiny, it will be helpful if he lays out how parliamentarians might interact with that guidance, either before or after—preferably before—it is issued. It is obvious that we have an interest, and it is obvious that we have concerns, but we also have ideas; a number of the amendments that we have tabled have been constructive and intended to improve the Bill. None of us suggests that there should not be a subsidy control regime. We are trying to make it the best subsidy control regime, in order that it works for our constituencies and the countries and people that we represent. Any information that the Minister could give on that would be incredibly useful.

[Paul Scully]

The power to issue statutory guidance, as is currently provided for in clause 79, will allow the Government to offer greater colour and detail to public authorities in how to comply with the subsidy control requirements. We plan to provide extensive guidance on the new regime, set out in clear, plain language and including useful explanatory material, case studies, practical explanations and additional matters that public authorities may wish to consider. For instance, it might be used to explain how subsidies could be given to support disadvantaged areas in a way that is consistent with the principles; among other things, it could describe characteristics or criteria that a public authority could use to identify a disadvantaged area, which would help to ensure that the subsidy is addressing an equity objective and is consistent with principle A.

The Secretary of State will consult such persons as appropriate before issuing the guidance. This may well include the devolved Administrations, businesses and public authorities. This will allow public authorities plenty of time to consider the guidance before the new regime comes into force. The hon. Member for Aberdeen North talked about the devolved Administrations. Clearly, the Government cannot do this in isolation. It is incumbent on us to make sure that we speak to the people who will use the guidance, to make sure that it is fit for purpose. I cannot give a precise list of stakeholders that we will engage and consult, but it is in our best interest to ensure that we have the widest, broadest range of stakeholders to make sure that guidance is useful, rigorous and fit for purpose.

On timing, I said earlier that, depending on parliamentary time, the commencement of the Bill will be next autumn, which gives us plenty of time. We have already started the process of engaging with officials, and we will make sure to continue our engagement with officials in the devolved Administrations, as well other public authorities, to make sure that we can publish this guidance in time for the Bill’s coming into force.

[Kirsty Blackman]

Will the Minister confirm that, should there be a requirement to update the guidance in the future, which there is likely to be, a consultation process will be undertaken in advance of that updating, and that there will be a reasonable length of time before changes are made to the guidance so that authorities can comply with it?

[Paul Scully]

It is incumbent on us to engage on any changes. How we engage and the timing of that will depend on the circumstances. However, if we are going to do this and make it work, clearly we need to engage as widely as possible to make sure that those changes are fit for purpose.

Amendment 24 would effectively remove the power to issue statutory guidance and replace it with one for the Secretary of State to make binding delegated legislation on the practical application of key elements of the domestic subsidy control regime. We do not believe that regulations are a suitable vehicle for setting out information and advice on the practical application of parts of the subsidy control regime. Regulations are restrictive in their content and must be drafted in a specific, technical way. Guidance, on the other hand, serves the purpose of explaining and clarifying the regime, in ordinary language, for the benefit of those who will need to use and understand the practical effect of the legislation. It can also be quickly updated should circumstances change.

I know that the right hon. Member for Aberdeen North—sorry, the hon. Member; that was another promotion for a colleague. I am sharing the love. I know that she wants to scrutinise future regulations made under the Bill, and it is right that there be additional parliamentary scrutiny of those regulations, as they impose new legal obligations that are additional to those in the Bill, but that is not true of any guidance that will need to be issued under clause 79. The guidance will need to be consistent with, and cannot change, the law to which it relates.

Amendments 80 and 81 would compel the Secretary of State to issue guidance under subsection 1(a) to (c)— that is, on the subsidy control requirements. I understand the intent behind the amendments, but in practice they are unnecessary. While the Secretary of State “may” issue such guidance, in practice he must do so for the regime to function effectively.

Going back to the Government response to the subsidy control public consultation, as we have consistently said, the foundation of the new regime is a clear, proportionate and transparent set of principles, supported by guidance that will ensure that public authorities fully understand their legal obligations and embed strong value-for-money and competition principles. The guidance will show how the assessment of compliance with the principles should be carried out, and how different benefits and distortive impacts should be assessed for different kinds of subsidies. I assure hon. Members that the Secretary of State certainly does not propose to commence the regime without first issuing clear guidance on the subsidy control requirements.

--- Later in debate ---

[Seema Malhotra]

This is again about devolution. There is some overlap with the debate we just had. I would have hoped that we were in a position where by the end of this Committee we were not having debates similar to the ones that I feel we had at the start. However, it is important to keep coming back to where engagement with the devolved Administrations matters in particular parts of the Bill, and to say why.

Devolution gives all nations of the UK the chance to make more decisions locally. We have respect for our devolved Administrations and their respective powers, and their input into our economic and social development and our UK-wide democracy. That is why we feel that, if there are ways in which that very important role in our constitutional settlement may be diminished by the way this legislation is crafted and then implemented, it is important for us to consider that issue and also what should be made more explicit in the Bill.

I believe, and I am sure that the Minister believes it too, that all four nations of the UK are stronger together. This Bill is an example of post-Brexit legislation and we are looking at elements of how what was done previously via our membership of the EU will be implemented in a way that will stand the test of time and retain the confidence of all the devolved Administrations. So we must consider how we act in line with those intentions to ensure the importance of devolution and the framework that we have, and how inevitably there will need to be some adjustment, as what happened through the EU is absorbed within our constitution. We must consider some of those roles, responsibilities and judgments about where there needs to be some tweaking of the way our constitution works, with the main principles of devolution—as they have been established and how they are working effectively—and the importance of ensuring that the voices of Scotland, Wales and Northern Ireland are put into legislation that affects all of our nations, and the UK as a whole.

The devolved Administrations will have perspectives that are closer to their own nations. As we have seen, perspectives is a theme running through this legislation, which will be an integral part of how the UK works as a whole, and it will be a more effective regime if those voices are loudly heard.

We agree that Westminster is primary in the way that the legislation is implemented. However, we call on the Minister to consider amendments 82 and 86 seriously. Amendment 82 would mandate the Secretary of State to seek the consent of the devolved Administrations, with a fair backstop, before issuing guidance under clause 79. Amendment 86 stipulates that the Secretary of State must also seek the consent of the devolved Administrations before making the regulations under clause 87.

We have said throughout the debates on the Bill that we want to ensure that there is a settlement that will stand the test of time, that will be flexible in terms of how we all work together, and will be successful for the UK as a whole. It is not just the Labour party or indeed the SNP that thinks along those lines; we have heard evidence from a number of our witnesses alluding to it. I quote Dr Pazos-Vidal, who is head of the Brussels office at the Convention of Scottish Local Authorities, who outlined that the Bill currently is,

“too general and not reflective of the territorial constitution of the UK as it stands. There should be a provision that the Secretary of State must consult the devolved Administrations in a dedicated system that should also involve local law. There should be a duty to make sure that different parts of the UK have full ownership of the final outcome—it is true that the Secretary of State will issue the guidance—but also the intelligence and the local know-how about these ideas.”––[Official Report, Subsidy Control Public Bill Committee, 26 October 2021; c. 8, Q4.]

I ask the Minister, for the final time, to support amendments 82 and 86, which in our view give the devolved Administrations the role they should have and that is appropriate in the Bill. The guidance that the Secretary of State issues on the new regime and the regulations that will be put in place will have just as large an effect on Wales, Scotland and Northern Ireland as on England. Therefore, guaranteeing that the devolved Administrations are involved in the decisions that affect them too will only improve the way in which the guidance is developed and confidence in how it will be implemented.

[Kirsty Blackman]

As I have said, I largely agree with everything the hon. Member for Feltham and Heston has said and I would be happy to back these amendments, should they be pushed to a vote, but I want to make it clear that I do not agree that the four nations are stronger together, and I look forward to the day—not that far off—when we will prove how much more successful we can be when we are out of this political Union.

--- Later in debate ---

[Paul Scully]

The clause gives the Secretary of State the power to issue and update guidance on the practical application of the provisions in the Bill. It places a duty on public authorities to have regard to the guidance when designing a subsidy scheme or giving an individual subsidy. The Secretary of State is also required to publish the guidance and keep it under regular review, and may revise or replace that guidance. The Secretary of State must also consult persons they deem appropriate before issuing guidance.

[Kirsty Blackman]

I wonder whether the Minister would commit to ensuring that there are links to the guidance on the subsidy control database. People who are interested in the database are likely to be interested in the guidance, particularly if they are considering making a challenge. Will he ensure that the links are on the website, so that people can find them more easily? That would be helpful.

[Seema Malhotra]

The Minister has outlined the details of the clause. Notwithstanding the points we have already made, we support clause stand part.

--- Later in debate ---

[Paul Scully]

Clause 81 allows for limited amendments to be made to subsidies or schemes. A permitted modification will not be treated as a new subsidy or scheme as long as it meets the parameters set out in the clause. First, let me cover amendments 83 and 85. These amendments would remove from the list of permitted modifications an increase of up to 25% of the original budget of a subsidy or scheme. Instead, increases only up to the rate of inflation would be treated as permitted modifications. In doing so, the amendments would greatly reduce the flexibility afforded to public authorities to moderately increase the budget of a subsidy or scheme without facing additional administrative burdens.

The Government have committed to reducing administrative burdens on public authorities wherever possible. That includes giving them the flexibility to make limited amendments to a subsidy or scheme without having to jump through additional procedural hoops. An increase of up to 25% is appropriate, as this level of uplift is unlikely to greatly change the distortionary effects of a subsidy or scheme, which is what we are measuring.

[Kirsty Blackman]

Will the Minister write to me in advance of Report setting out what would happen if the increase of 25% takes the subsidy above a certain threshold, whether that is the de minimis threshold or the threshold for reporting? It strikes me that it would be possible to use the provision in a negative way to get round the system. I am sure that it is not the Government’s intention, so it would be useful to have advice on what might happen should that subsidy hit the threshold.

[Paul Scully]

To avoid the bureaucratic burden I talked about, the clause allows for a limited degree of modification without reassessment. That creates the right balance, and public authorities would need to determine whether the change is just administrative or not.

Permitted modifications do not have to be reassessed, and therefore it would not need to be considered whether they bump into subsidies of interest or subsidies of particular interest, for example, because those criteria apply only to new schemes. The public authority will have already carried out an assessment of compliance with the principles and other requirements for all the subsidies and schemes, so the increase in value is unlikely to meaningfully alter that. Clearly, if a public authority was attempting to mislead or exploit that as a loophole, it could be subject to judicial review on general public law grounds.

--- Later in debate ---

[Paul Scully]

Other tools exist to provide the transparency in public authority spending, such as the data published by local authorities under the local government transparency code. The regime is not intended to replace other mechanisms for ensuring that we have transparency and good management of public money.

I do not want to compare and contrast every single element of the regime against the EU, but on timescales, the Committee may find it useful to know that the EU state aid regime also allows for prolongation of an existing scheme by up to six years. The amendment would therefore make the UK’s rules around the modification of subsidies and schemes much stricter than those under the EU without bringing any corresponding benefit. I therefore request that the amendment be withdrawn.

[Kirsty Blackman]

I appreciate the Minister’s attempt to explain the 25% and what would happen should the subsidy increase above a certain threshold. However, I would very much appreciate it if he would write to us about what is likely to happen should that threshold be hit.

Subsection (3)(g) specifically relates to the length of time for subsidy scheme extensions. An enterprise could conceivably not have existed during the original term of the subsidy scheme but be later affected by the extension of the scheme, with no ability to challenge that scheme because the extension gives no opportunity for it to be challenged. This is not only about the length of time. We discussed the way in which individual subsidies made within a scheme cannot be challenged. It is distinctly possible that that could inadvertently distort competition for new enterprises that pop up during the period of a scheme and so have no ability to challenge it and no recourse to make their concerns known, because a system just does not exist for them to do so if they are outwith the period of being able to challenge the original scheme. If a scheme is not classed as new but extended, there is a bit of a problem.

I understand what the Minister says about the EU, and I assume—although he did not say this—that six years was likely chosen because that is analogous with the length of time the EU gives. However, because of the differences between this scheme and the EU state aid scheme, lifting the same number of years does not work as well as it could, because individual subsidies cannot be challenged. Only the scheme can be challenged, and there will be no ability for new enterprises to challenge the schemes, even though they may have a major distortive effect on competition.

[Seema Malhotra]

I thank the hon. Lady for her comments. We are extremely concerned about the Government’s lines on this. I do not think there has been any clear explanation, nor any proper assessment of what this could mean and how it could create quite a significant loophole. We will push amendment 83 to a vote.

Question put, That the amendment be made.

--- Later in debate ---

[Seema Malhotra]

We broadly support clause 91, which sets out which parts of the Bill will come into effect and when. We recognise the need to establish when and how various parts of the Bill will come into force. However, at the same time, we want to ensure that this important new regime is not implemented unnecessarily slowly, because the implementation of legislation can sometimes get delayed when it is not at the forefront of Parliament’s attention. The Bill is fundamental to supporting the levelling-up agenda, which is of great concern to us all, and net zero implementation. That is still a disappointment—I am sure we will come back to the need for net zero to be more explicit in the principles. It is important that we move forward as quickly as possible to ensure certainty in the subsidy control regime, and that we support research and investment. All of those measures are necessary. In this low-growth environment, it is important to get investment, and the necessary incentives for it, as soon as possible.

An interim subsidy regime is in now place, but it does not provide the guidance or reassurance necessary for the long-term effectiveness of subsidies, nor does it take advantage of the potential opportunities provided by designing and scoping a new regime now that we have left the European Union. Amendment 87 would mandate that the Bill comes into force no later than six months following Royal Assent, reflecting the important need to make quick progress on introducing the regime, the guidance and the regulations. There should be no avoidable delays. It is important that the guidance is introduced in good time so as to ensure that the Bill receives proper scrutiny as it continues its passage through Parliament.

I expect that the hon. Member for Aberdeen North will speak to amendment 25. We want to make sure that the process moves more quickly, and there is a discussion to be had about the best way to make that happen. I would be grateful if the Minister could outline the Government’s planned timetable for bringing the Bill into force and the important and necessary steps they will take as part of that road map.

[Kirsty Blackman]

Very unusually, although we are discussing two Opposition amendments, we disagree with one of them. I cannot support amendment 87. As I have said on a number of occasions, I am concerned about ensuring compliance with the regime. There will be compliance only if people have a good understanding of the regime before it kicks in. I do not have a problem with the period following Royal Assent being more than six months, because I would rather that organisations such as public authorities had the time to digest the guidance and regulations in order to be able to adequately comply. We do not want people to accidentally not comply.

I understand the Opposition’s desire to push forward, given the current interim regime, but it is important to get this right. I do not think any of us are comforted that we will be able to judge whether there is a high level of compliance with the regime. The Minister expects that that will be the case, but the lack of transparency data means that it will not be terribly easy to judge the situation.

Under amendment 25, which we have tabled, the Secretary of State would not be able to make regulations to bring the rest of the Bill into force until regulations under clauses 34 and 52 had been made and been in force for at least three months. Those clauses relate to mandatory Competition and Markets Authority referrals and the operation of the subsidy database. It is really important that both those measures are well understood in advance of the rest of the provisions coming into force, which is why the amendment seeks a three-month time period, so that everyone is able to comply.

The second condition that the amendment would require, where I am asking that guidance be in place for three months, is about guidance under clause 79. We spoke at some length during the debate on clause 79 about our concerns. It was useful to have the Minister confirm that the Secretary of State will be making guidance on a number of those things, despite the fact that the word “may” is in there. That is a helpful clarification for us, but it is important that that guidance is published.

I am pleased that the Minister plans to ensure that there is significant consultation and that the asks that come forward are considered. If somebody asks for specific guidance about a specific area because they know it is something they are likely to be dealing with on a regular basis and they are a regular granter, or likely to be a regular granter, of subsidies under this regime, I would like the Minister to have the opportunity to consider that. However, I would also like to ensure that there is a period of time, in advance of people being expected to comply with the regulations and guidance put forward, for them to digest them.

That is particularly important when we look at the operation of the subsidy control database and the method of challenging things on that database. People have only a short period of time—one month—to make those challenges and ask for pre-action information to be brought forward. The Minister’s stated aim is to reduce the length of the period of uncertainty, but the likelihood of there being uncertainty or challenges is increased if organisations do not properly understand the guidance. We all know that lawyers take a significant amount of time to digest things and to give the necessary advice to organisations.

As was stated during the witness sessions, the legal profession will have to do a huge amount of work to ensure that they are giving appropriate advice to organisations that are looking either to grant or to challenge subsidies. I do not think it would be appropriate for the regime to begin in the autumn, as the Minister has stated that the Government hope it will, without there being that period of time in advance.

All the indications the Minister has given are that it is likely that there will be a period of time in advance—that he is hoping that there will be and that consultation will happen. I tabled this amendment to try to ensure that that will definitely happen in the specific areas that are important for organisations to be able to properly understand the guidance in advance. I am not trying to cause us problems or to make the Bill take longer to come into force; I am just trying to ensure that people are able to act in the way the Government would like them to act with this Bill and that anybody whose interests are affected by the giving of a subsidy is able and understands how to adequately challenge those subsidies.

[Paul Scully]

Rightly, the hon. Member for Aberdeen North does not want to extend the Bill—she has extended the Committee, but that is fair enough—

[Kirsty Blackman]

Oh!

[Paul Scully]

She has raised some really important points and it is important that she gets them on the record, because we have a shared aim to ensure that we get this right and make it work for the entire UK.

Amendment 25 would amend clause 91 to require the regulations to have been made and been in force for at least three months ahead of commencement of the new regime. I thank the hon. Lady for the amendment and I recognise her desire to ensure that the guidance on the new regime alongside regulations on the subsidy database and mandatory referrals are in place in good time for public authorities to familiarise themselves with the content.

I share that desire for those regulations to be in place in good time, alongside the clear guidance for public authorities, but I do not agree that it is necessary to restrict when the regime can commence based on those regulations having been in place for a three-month period. Of course we will continue to support and advise public authorities after regulations are made, but we will also ensure that when the Act is commenced, public authorities have a clear understanding of what is required of them under the new regime. That will include having robust guidance and regulation in place.

Amendment 87 would require that the Act comes into force no later than six months following Royal Assent. We recognise the importance of ensuring that the regime is fully operational in a timely fashion, so that public authorities have certainty about how the regime operates and are appropriately supported in interpretating the regime with sufficient guidance. It is not in the interest of Government or public authorities to delay commencement of the regime unnecessarily.

We will ensure that the subsidy control regime is in place as soon as is feasible, while allowing sufficient time for regulations to be made with a proportionate amount of lead-in time for public authorities. Establishing a specific deadline for implementation would remove the flexibility to modify the commencement date if it were in everyone’s interest to do so—for example, if there were an emergency that significantly diverted Government resources or if the deadline fell during the Christmas or summer holidays.

Although seeking to place different restrictions on commencement of the new regime, these amendments serve to highlight the complexity of implementing the Bill and how important it is that the Government get it right. We will ensure that the regime is introduced in good time and that those who need to use it have time to prepare. However, placing these additional restrictions on when commencement can occur would be disproportionate and unnecessary. Therefore, I request that the hon. Member for Feltham and Heston withdraw amendment 87.

--- Later in debate ---

[Kirsty Blackman]

I beg to move, That the clause be read a Second time.

This new clause is not unlike ones I have tabled in previous Committees, including the customs Bill Committee. The idea behind the new clause is to ensure that there is more accountability from Governments at the opening of Parliament in the event that they will intend to make changes to the subsidy control principles.

We have been clear about the way in which the regime works. The principles are fundamental. Should there be changes to the subsidy control principles, that would be pretty significant and would fundamentally alter the operation of the regime. Should the Government or a future Government be keen to make changes to the principles contained in the Bill, it would be reasonable for as much notice as possible to be given to Parliament and those who are likely to be operating within the Act.

New clause 1 states:

“Within six months of the opening of a new Parliament, the Secretary of State must make a written statement to Parliament on the subsidy control principles.”

It must include details of:

“(a) any legislation the Government intends to bring forward to change the Subsidy Control Principles; and

(b) any changes the Government intends to make to guidance under section 79 of this Act.”

I would expect that if the Government were making drastic changes to subsidy control principles, they would want to give as much notice as possible. There is no doubt that if it was at the start of a new Parliament, any change would likely have been a manifesto commitment that they stood for in election, so it would be uppermost in their minds any way. I cannot imagine somebody wanting to alter drastically the operation of the subsidy control regime without mentioning it during an election campaign. That is not to suggest that people will necessarily want to make changes to the subsidy control principles; I do not know that they will want to. But we will not have this Government for ever—thank goodness—and different Governments will potentially make different decisions on subsidy control.

Chair, just before I end my remarks, I will just say thank you to everybody who has supported us through our consideration of the Bill and everybody who has spoken during our debates. Despite the fact that only three of us have dominated proceedings and spoken at length—as well, Chair, as your colleague, Mr Sharma; so, four of us perhaps—we are about to wrap up early and not go to the end of this day, which is surely testament to the excellent chairing.

[Paul Scully]

The subsidy control principles sit at the heart of the domestic regime. They will be underpinned by statutory guidance issued by the Government ahead of the regime’s commencement. I agree that there is no notion that this Government or indeed any Government in the foreseeable future would wish to modify the subsidy control principles; the principles should endure with Governments of any stripe or colour. They are common sense, they ensure good value for money and they help to protect the UK internal market, so I am confident that they will stand the test of time.

However, in the unlikely event that the Secretary of State wished to modify the principles, I do not believe that this amendment would strengthen the scrutiny function of the House. The provisions of the Bill do not confer delegated powers that would enable the Secretary of State to modify and/or remove any of the principles, so any future changes would require the Government to introduce amending legislation and to conform with the necessary parliamentary processes and scrutiny that that would entail.

Guidance issued under clause 79 may of course be updated and revised, and that guidance may need to change in the future to reflect different future practices, or additional information for public authorities, and it is also necessary that that guidance is quickly updated should circumstances change. I do not believe that a statement at the beginning of each new Parliament would necessarily be the right time to announce those changes.

For the reasons that I have set out, I ask the hon. Lady to withdraw the new clause.

[Kirsty Blackman]

I thank the Minister. I will not push the new clause to a vote, but I will just point out that there are problems with the ability to scrutinise delegated legislation; it is not the most robust procedure in Parliament, as anybody who has sat through Delegated Legislation Committees will know. It is very different from being on the Floor of the House, and something like a written statement would mean that all parliamentarians would have the ability to scrutinise, understand and consider any changes that are likely to come through.

Nevertheless, I appreciate the point that the Minister has made that it is unlikely that there will be changes to the subsidy control principles and that any currently foreseeable or potential future Governments are unlikely to make changes to those principles. So, as I say, I will not push the amendment to a vote.

I beg to ask leave to withdraw the motion.

Clause, by leave, withdrawn.

[The Chair]

Does Seema Malhotra wish to move new clause 3?

Nuclear Energy (Financing) Bill (Fourth sitting)

Kirsty Blackman Excerpts

Committee stage
Thursday 18th November 2021 Public Bill Committees

[Dr Whitehead]

I beg to move amendment 4, in clause 3, page 2, line 37, at end insert—

“(5) Prior to consulting persons under subsection (3)(g), the Secretary of State must publish a statement setting out why it is relevant to consult those persons.”

This amendment requires the Secretary of State to indicate the relevance of the people he is consulting on the designation of a nuclear company.

The amendment, and another couple that relate to clauses further down the order paper, need not detain us for long. They essentially seek to improve the effect of the text of the Bill and are not controversial.

Amendment 4 applies to clause 3, on page 2 and requires the Secretary of State to

“publish a statement setting out why it is relevant to consult those persons.”

That refers to the list of those people who are to be consulted upon the designation of a nuclear company. At the bottom of that list is the phrase

“such other persons as the Secretary of State considers appropriate.”

I appreciate that is often seen in Bills and I am sure hon. Members have seen it in their time in other Committees, but I suggest that it is rather loose arrangement if we want to have a Bill that will stand the test of time. While it is a catch-all arrangement, one could almost ask why the other categories are listed. One might as well just put, “Those persons who the Secretary of State considers appropriate.”

Surely, where the Secretary of State is considering consulting other people, in addition to those listed, those people ought to be relevant to the designation of the nuclear company. As the Bill stands, it is just people

“the Secretary of State considers appropriate.”

[Kirsty Blackman (Aberdeen North) (SNP)]

I am slightly confused about why the hon. Member seems to be suggesting that it is a bad thing for the Secretary of State to undertake more consultation. Surely more consultation is a good thing. Generally, the Opposition call for more transparency. If the Secretary of State feels that it is necessary to consult more people, I am not hugely convinced that there is a point to making him justify that.

[Dr Whitehead]

I hope that the hon. Member will forgive me if I have not made myself clear. I am certainly not saying that consultation is a bad thing or that there should be less of it; I am saying that the Bill appears to provide for consultation with all the people named in it and anybody else the Secretary of State feels like including. One may think that that is a good thing, but I would have thought that anyone else the Secretary of State feels like including ought to be relevant to the designation of the nuclear company. All the amendment asks is that, when and if the Secretary of State decides that people other than those who were already on the list be consulted, he publish a statement to say why the people he has selected for additional consultation are relevant to the issue in hand. Otherwise in principle it would be possible for the Secretary of State simply to choose a random number of people off the street and consult them. That would not serve the cause of further consultation and transparency.

[Kirsty Blackman]

May I check that an alternative amendment could have been to change the last word in subsection (3)(g) to “relevant” rather than “appropriate”, which would mean that the Secretary of State would be able to consult all the other people he considered to be relevant, rather than appropriate? Is that the direction in which the hon. Member is trying to go with his amendment?

[Dr Whitehead]

Indeed. The hon. Member has drafted her own, perhaps more succinct, amendment on the fly. I would welcome hon. Members tabling amendments if they feel that they can do it better, or more succinctly, than we can. She is right that it is a test of the relevance of the consultation process. Her suggestion does not quite cover the point because I would like the Secretary of State to say why those people are being consulted. Essentially, the amendment requires the Secretary of State to not just think that people are relevant but tell us why. It is not a big point, but I think that would improve the Bill a little were it to be accepted.

--- Later in debate ---

[Alan Brown]

The Minister spoke about transparency, but as I touched on earlier, it seems to me that clauses 2 and 3 still do not provide transparency. Clause 3(1) gives the Secretary of State the power, in effect, to make things up as they go along. Under paragraph (a), the Secretary of State sets out the procedure that they will follow, so they are setting the rules, and then paragraph (b) allows the Secretary of State to confirm whether the designation criteria that they have already set in clause 2 have been achieved. The criteria in clause 2 are simply these: does the Secretary of State think that the project is advanced enough to be designated and is it value for money?

Effectively, by my logic, the Secretary of State states that the project is advanced enough and is value for money. Then, under clause 3(1), the Secretary of State affirms what rules will be applied to confirm what has already been confirmed—that the project is value for money and suitably advanced. It is a kind of circular argument. If the Secretary of State is determined to sign off on a new nuclear project, which they are, and they are setting the rules that they are going to apply and then they will publish the rationale as to why it has been signed off, that, to me, does not provide proper transparency. It is not things that can be challenged; it is actually just the Secretary of State giving their reasons for why they have signed off.

As I touched on earlier, paragraph 50 of the explanatory notes still does not give enough information, either. It actually gives too much wriggle room for a Secretary of State to be able to sign off, so that is also not robust enough. The Minister challenged me to table amendments, and I can table a new clause at a later date, or we can challenge further, but it is really hard to table amendments to clauses that are so fundamentally flawed. It is hard to actually improve them.

Turning to value for money, the cost to consumers is one of the items that has been suggested, but the Government are also good at saying that a new nuclear power station will add only £x a year to a consumer’s electricity bill and therefore it will have minimal impact on bills. That is a very neat way of trying to argue that a new nuclear station involves minimal cost to consumers, but of course we are talking about a 60-year contract.

In the same vein, the letter from the Minister to all MPs on 26 October stated that a nuclear project starting construction in 2023 will add only a few pounds to bills during the lifetime of the Parliament and only £1 per month during full construction. I will leave to one side the fact that 2023 is a fanciful construction date, but let me break down what the cost of £1 per month per consumer means. According to the Office for National Statistics, there are now 27 million households in Great Britain. According to the Bill’s impact assessment, the construction period for unit 1 is estimated to be between 13 and 17 years, plus another year for unit 2, so let us call it a 15-year construction period. That £1 a month per household is circa £5 billion up front. It can be argued that £1 a month is a low cost for consumers, but something like £5 billion is actually being committed. That is why we need more robust ways to evaluate what is the actual cost to consumers and what is value for money.

Let us work backwards from some of the figures in the impact assessment. It is suggested that, under RAB, the capital cost and associated financing for a new nuclear power station could be £63 billion. If we work backwards over a 60-year period, that is still only a few pounds a month, but it is actually £63 billion that we are talking about. That is a huge sum, which could be invested much better elsewhere in other forms of renewable energy. I hope that demonstrates how much wriggle room the Minister and Secretary of State have given themselves with the Bill. In fact, looking at the cost and impact assessment that the Government have quoted, it almost undermines their argument about the justification for new nuclear.

I turn now to subsection (2). Truthfully, it adds little more in the way of transparency. The Secretary of State must provide

“draft reasons for the designation”

and consult stakeholders, but the subsection does not detail how the statutory consultation will be undertaken, the timescales applied to it or, more importantly, what happens to the consultation feedback from the stakeholders whom the Secretary of State consults. Paragraph 54 of the explanatory notes states that a final reasons determination must be published as part of the designation notice, and subsection (5) covers that too. With the way the Bill is currently framed, however, this has the potential to simply be a tick-box consultation exercise. The Secretary of State can consult and stakeholders respond, then the consultation is dismissed out of hand and the final reasons are printed.

Subsection (3)(f) states that the Secretary of State may consult the Scottish Ministers and the Scottish Environment Protection Agency for Scottish projects, so what protection is there for the Scottish Government if they say no? We are implacably opposed to new nuclear, as is current SNP policy and the policy of the Government who have been elected by voters in Scotland since 2007. At the moment, the Scottish Government rely on the national planning policy framework to block new nuclear, but will the Minister confirm that, despite market failure, if somehow a proposal came for a new nuclear project in Scotland, the Bill, along with the United Kingdom Internal Market Act 2020, will not be a way for the UK Government to ram it through? How valid would the consultation with the Scottish Government be? It is not clear in the Bill.

Again, clauses 2 and 3 do not do enough to provide transparency and hold the Government to account. As I say, I would like to amend the clauses and be helpful to the Government, but given that I am opposed to the Bill and that I do not think the clauses are robust enough, it is very difficult to do so.

[Kirsty Blackman]

It is a pleasure to be able to take part in this Committee. Thank you very much for your excellent work in chairing today’s sitting, Ms Fovargue.

I have just been on the Subsidy Control Bill Committee, and the Subsidy Control Bill has an incredible lack of information. We spend a huge amount of time asking for more transparency in that Bill, but this Bill is significantly worse than the Subsidy Control Bill in the lack of information that has been provided. To be honest, I cannot believe that the Bill is actually considered appropriate for primary legislation, because there is a totally stunning lack of info and an absolute lack of transparency.

The Secretary of State has to publish the reasons for the designation. What does that mean? What does the Secretary of State actually have to say in their reasons for the designation? Do they just write, “I think it’s a good idea. Let’s go for it.”? There is not enough information. As my hon. Friend the Member for Kilmarnock and Loudoun asked earlier, does the Secretary of State have to take into account whether there is planning permission in place? Does the Secretary of State have to take into account the licences that have been put in place? It is totally unclear how this is likely to work.

I have a specific question for the Minister in addition to my general dismay at the clause. Subsection (3) talks about the people who have to be consulted. It says that if part of a site is in Scotland, the Scottish Ministers and SEPA have to be consulted. It also says something similar in relation to Wales and England. We know that if something is to be built in a border area, it will likely have cross-border environmental effects, so two environmental agencies could be involved should a project be fairly close to a border.

I would like the Minister to give me some comfort by saying that he would consider consulting more than one environmental agency, because if a project were to be on the border between England and Wales but slightly more on the English side, it might still have environmental impacts in Wales. It would be relevant, therefore, for the Minister to ensure that the consultations are slightly broader than simply where the footprint of the site is, because we know that any large thing that is built—whether it is something as potentially likely to cause massive environmental problems as nuclear or something much less of a potential environmental risk—has wider environmental issues than simply its footprint. It would be useful if the Minister could confirm that he would give consideration to that happening in the event that it is really pretty close to a border.

[Greg Hands]

I thank the hon. Members for Kilmarnock and Loudoun and for Aberdeen North for their contributions on clause 3. I will try to deal with their points.

It is important to understand the different parts of the process and the transparency involved in the process. The rules are published first; then comes the rationale for the designation, which is consulted on. It is standard practice in a consultation, of course, to take into account the results or the responses made to the consultation. Perhaps the hon. Member for Kilmarnock and Loudoun was trying to characterise it as superfluous or part of a process that would not add any additional information, but a Government consultation is there specifically to seek out and find more information. We then publish the final rationale for the designation. I hope that is helpful in setting out a little of the process involved.

The question about stating the length of the consultation is one that would be appropriate to the project itself. Let us not forget that we are trying to design a process here that would take into account a number of different possible future nuclear power stations. It would be difficult for us today to be prescriptive about the length of time that a consultation should take. We have set out those who we think must be consulted, and we have also left it open for the Secretary of State to consult other interested parties, which is quite reasonable considering that this legislation is supposed to encompass various forms of future nuclear power plants. We would be in danger of becoming too prescriptive about things such as the length of the consultation and the earlier amendment about stating reasons for particular people to be consulted.

--- Later in debate ---

[Greg Hands]

The hon. Gentleman is inviting me to go down a hypothetical road. The devolved Administrations have powers in other areas, and if the devolved Administration was strongly minded about having a nuclear power plant in that particular part of the UK, it is difficult to envisage circumstances in which the UK Government would proceed to do that. I hope that gives him enough reassurance.

I will deal with the point made by the hon. Member for Aberdeen North. On the question of a project near a border, it is reasonable then that the UK Government would consider the appropriateness of consulting with the devolved Administration. I return to my earlier point about specifying those who must be consulted and those who the Secretary of State would think it reasonable to consult. That would be within the scope of who the Secretary of State would think it reasonable to consult.

[Kirsty Blackman]

I appreciate that really helpful clarification.

A couple of points about the lack of transparency in the clause have not been covered. Subsection (2)(a) states that the Secretary of State has to “prepare draft reasons”. Subsection (5)(b) states the Secretary of State must provide the reasons “amended as appropriate”. We have not heard what those reasons look like. Do they say something along the lines of, “The Secretary of State gives designated status because he feels like it”? I presume not, but there is no information about what those reasons would include. Could we have something in writing about what could be in those reasons? There is no framework here at all—the Bill seems to be quite lacking.

[Greg Hands]

I thank the hon. Lady for that intervention. The point strikes at the heart of what a Government Minister is doing. I think she is asking what happens if a Government Minister behaves entirely unreasonably. The way our constitutional settlement works is that if a Minister is behaving entirely unreasonably, he or she is answerable to Parliament. If Parliament believed the Secretary of State to be unreasonable or acting in a way contrary to the intention of the Act, people would find ways of getting the Secretary of State to explain. I think the hon. Lady was trying to suggest that the Secretary of State might arbitrarily decide to go through with something—

[Kirsty Blackman]

rose—

[Greg Hands]

I am not going to give way again, because I have set out clearly that the Secretary of State is ultimately accountable to Parliament, and Parliament would find a way of examining the reasons that he or she laid out under this clause.

Question put and agreed to.

Clause 3 accordingly ordered to stand part of the Bill.

Clause 4

Expiry of designation

--- Later in debate ---

The legislation already captures the need to ensure that consumers will benefit from an operational plant in return for their funding. As we have already discussed on amendment 3, the existing checks, consultation requirements and non-legislative approvals provide sufficient assurance that a project will successfully complete construction.

[Kirsty Blackman]

It is not low-cost energy. It may be slightly lower than more expensive nuclear, but it is still way more expensive than offshore wind, onshore wind, solar and such. Characterising it as low cost is simply wrong.

[Greg Hands]

That is a wider debate around nuclear, which I would contest. Obviously, it is an active debate: first, how expensive is nuclear, and secondly, how expensive is it relative to other forms of power generation? Those are active parts of political debate.

--- Later in debate ---

[Kirsty Blackman]

rose—

[Greg Hands]

Can I just deal with the hon. Lady’s first intervention? We are seeking to give effect to Government policy, which is to support the roll-out of more nuclear power. How do we do that in a financially reasonable and more cost-effective way for both consumers and the taxpayer? That is the purpose of the Bill within the confines of having already agreed as a Government that nuclear power is going to be the way forward in providing a large part of Britain’s electricity.

[Kirsty Blackman]

I was not aware that there was a political debate about the cost. The Department for Business, Energy and Industrial Strategy’s figures say that offshore wind costs £47 per megawatt-hour; nuclear is £93, onshore is £45 and large-scale solar is £39. Those are BEIS figures, so I did not think there was any debate. I am concerned that the Minister is inadvertently misleading us by using the term “low-cost”. He can use “low-carbon”, but to say “low-cost” is simply not true, even by BEIS figures.

[Greg Hands]

Again, I thank the hon. Member for that intervention. The cost of different forms of power generation is a very interesting part of the energy debate. Obviously those costs move around and will be based on any number of factors, including global market prices and the cost of extracting and producing particular forms of energy. Nuclear’s advantage is its ability to provide a steady, constant baseload, which is not always the case with some of the other technologies the hon. Lady is comparing it with.

I hope I am not digressing too far, but when it comes to offshore wind, the UK has had enormous success. We have the world’s largest capacity. None the less, when the wind is not blowing and the sun is not shining, we have to have something else to provide that baseload. That is the purpose of nuclear power. The Bill is about making it more cost-effective and reasonable for consumers. That is the Government’s position.

I hope I have convinced hon. Members that this amendment would not achieve their goals of helping consumers. The concept of consumers investing in a plant and then recouping their money somehow is incompatible with the RAB model. There are mechanisms in place to give confidence that any RAB project will successfully lead to the means of delivering large amounts of stable, low-carbon energy to consumers. I hope the hon. Member will withdraw the amendment.

[Dr Whitehead]

This really worries me. What does the Minister think consumers are doing in contributing to a RAB process? If the Minister does not think that that is in any way a form of investment in the plant and that consumers are just completely passive recipients—that they are good for whatever money is required to get the system through and should have no interest in the proceedings, other than being a milch cow for the process—I am afraid that we differ.

[Kirsty Blackman]

On that, consumers are investing in the significant profits for private companies that are in many cases not based in the UK. That seems to be the essence of the hon. Gentleman’s concerns and the reason he moved the amendment. Is that correct?

Subsidy Control Bill (Tenth sitting)

Kirsty Blackman Excerpts

Tuesday 16th November 2021 Public Bill Committees

[Kirsty Blackman (Aberdeen North) (SNP)]

I beg to move amendment 23, in clause 70, page 40, line 12, at end insert—

“(c) the Welsh Ministers,

(d) the Scottish Ministers, or

(e) a Northern Ireland department;”.

This amendment intends that devolved administrations are included as interested parties regarding calling in of subsidy decisions.

[The Chair]

With this it will be convenient to discuss amendment 71, in clause 70, page 40, line 12, at end insert—

“(c) the Scottish Ministers,

(d) the Welsh Ministers, or

(e) the Department for the Economy in Northern Ireland.”

This amendment would include the Devolved Administrations within the definition of an interested party.

[Kirsty Blackman]

Thank you, Ms Nokes, for your forbearance in continuing to chair these sittings for us; we appreciate it.

It strikes me that there are three really important things in the Bill. The first question is this. What is a subsidy, and when can and cannot a subsidy be awarded? Actually, we have had not much disagreement across the Committee about what constitutes the answers to those points. The second question, which we have raised a number of concerns about, is this. How do we know what has been awarded? Specifically, we have raised a number of issues about transparency, how transparency will work and whether the transparency measures being suggested are adequate. The third question is how subsidy decisions can be challenged. The Bill and this system, the subsidy control regime, will not work if there is not a mechanism for a challenge to be made. That seems to me to be the third of those three important areas.

We have suggested amendment 23, which is specifically about the definition of interested parties. The Bill says that “interested party” means

“a person whose interests may be affected by the giving of the subsidy or the making of the subsidy scheme in respect of which the application under subsection (1) is made, or…the Secretary of State”.

The Minister has been clear a number of times that being too prescriptive about some things and including too many things risks suggesting that we are not including others. If the measure includes a, b and c, potentially an imaginary d would be excluded, because it explicitly says a, b and c.

The legislation talks about “interested parties” as those people who have been affected, but it also includes the Secretary of State, so presumably, in the Government’s eyes, the Secretary of State has a specific role whether or not he or she has an interest or the Government have an interest in whatever it is that has been subsidised. The Secretary of State has the ability to request a call-in whether or not they have an interest. The Minister has spoken at some length—indeed, a number of people have—about the asymmetry of the legislatures in the UK, and there is an asymmetry of legislatures. Westminster has reserved powers and, as we have seen in the United Kingdom Internal Market Act 2020 and various other power grabs, the ability to override some of the devolved competencies. We are not disagreeing that there is an asymmetry, but there is a requirement and a recognition that we have devolved legislatures that have a very important role to play in not just the economic development but the wellbeing of their citizens under whatever the devolved competencies are.

[Kevin Hollinrake (Thirsk and Malton) (Con)]

Is the hon. Lady not defining that exactly as the legislation is set out? The devolved legislatures have an important role to play. Therefore they are an interested party. That is the point; it does not need to be set out specifically.

[Kirsty Blackman]

In that case, it does not need to be set out specifically that the Secretary of State is an interested party. There would be no need to include the Secretary of State if the Bill applied equally to any of the devolved legislatures whether or not they had a direct interest or whether or not their interests would be affected. It may be the case that the Scottish Parliament’s or the Scottish Government’s interests are not affected by something but that the interests of a significant number of businesses in Scotland are affected, in which case it would be completely reasonable for the Scottish Government or Scottish Ministers to be included, as we have suggested in the amendment; we have also referred to Welsh Ministers and “a Northern Ireland department”. The aim is specifically to catch the issue that has just been made clear. Sometimes the devolved institutions will not have a direct interest that affects the operation of their Parliament, but they might have an interest on behalf of the wellbeing of their citizens or the economic development of the places they represent. Subsection (7)(a), which defines interested parties, does not go far enough to allow those institutions to raise concerns about potential issues. If the concern does not affect them directly, it seems they are excluded from raising it.

I understand the point made earlier by the Minister about the Competition Appeal Tribunal and how it may define interested parties, but there is a definition of interested parties in the Bill. I feel it is too narrow to include other interested parties such as Scottish Ministers, unless they are directly affected.

Legislatures need to be responsible. We need to take action on behalf of our citizens, and to be able to take that action. Given that these institutions are democratically elected and there have been votes that resulted in the creation of the institutions, we must recognise that the devolved legislatures have a stake and a responsibility—a place to fill in supporting their constituents. This is not about trying to say that the Scottish Government are better than the Westminster Government—I mean, they are, obviously, but the amendment is not about fighting to change the power structure of the UK. It would simply allow Scottish Ministers, Welsh Ministers and the relevant Northern Ireland Department to take their place and be able to exercise their right to protect the people, the businesses and the countries they are elected to represent.

If the term “interested parties” covers everybody, including those who have an indirect interest, then it does not make sense to include the Secretary of State in the definition. However, if the term “interested parties” does not include Scottish Ministers, the Welsh Ministers and the relevant Northern Ireland Department, we have a really big problem. This is not how devolution is intended to work; it is intended that those institutions can support their constituents.

I would appreciate it if the Minister will look at the issue. It is likely I will consider pressing the amendment, because it is such an important issue. As I said, this is one of the three most important parts of the Bill. The devolved legislatures absolutely should have the right to have subsidy decisions called in. This is not a power that is going to be used every five minutes. It is not like anybody is going to be challenging the decisions or looking for assessments on a regular basis—that is not how it is going to work. If the UK Government are committed to levelling up and the principles in the Bill of looking at competition throughout the United Kingdom and the effects of subsidies, it is really important that the three devolved Administrations have this power.

[Kevin Hollinrake]

Does the way that the amendment is drafted not mean that Scottish Ministers, Welsh Ministers and the relevant Northern Ireland Department could interfere or be an interested party even though they had no interest? For example, a Scottish Minister could intervene in something that was happening in Wales, which has no relevance—they would have no interest at all. Is that the intention—that a Scottish Minister can intervene in a subsidy scheme in any part of the United Kingdom, even though it does not directly affect Scotland?

[Kirsty Blackman]

Yes, because that is the point of the Bill. The point of the legislation is to make sure that we do not have those subsidy races. As was made clear on Second Reading, Members want a situation in which there are not subsidy races and in which they can ensure that the best decisions are being taken for their area. If the hon. Gentleman, the local authority in his constituency or the Secretary of State felt that something in his constituency was being affected negatively because of the actions of the Scottish Government or the Northern Ireland Department in granting a subsidy, I would expect the Secretary of State to consider calling that in. If the hon. Gentleman made representations to the Secretary of State on behalf of organisations in his constituency that might not want to go through the process of employing lawyers to get it called in, but are genuinely affected, surely that is one reason why the Secretary of State may be included.

[Kevin Hollinrake]

The hon. Lady makes my point for me. If something were affecting North Yorkshire, I would be an interested party already, because that is how it is defined.

--- Later in debate ---

[Kirsty Blackman]

No, the hon. Gentleman would not be an interested party, because the Bill states that an interested party is

“a person whose interests may be affected by the giving of the subsidy or the making of the subsidy scheme”.

The hon. Gentleman’s interests are themselves not affected. His constituents’ interests are affected—

[Kevin Hollinrake]

That is the same thing.

[Kirsty Blackman]

It is not the same thing, and that is the point that I am making. That is why either the definition of an interested party needs to change, or we specifically include those people whose direct interests may not be affected but whose indirect interests—whose responsibilities towards their constituents and their country—are affected as a result. In such circumstances, therefore, the hon. Gentleman would not be an interested party. I cannot see how his interests possibly could be affected, going on the reading of the legislation, although his constituents’ interests would be affected. If that is how we want the measure to operate—which is how I would like it to operate—I would very much like it to operate in the way that he is suggests.

[Kevin Hollinrake]

My interests are my constituents’ interests, and vice versa, so why would my interests not be affected if my constituents’ interests were affected?

[Kirsty Blackman]

The Bill states:

“a person whose interests may be affected by the giving of the subsidy”.

The hon. Member’s interests would not be affected by the giving of the subsidy, his constituents’ interests would be. If the Minister, when he speaks, confirms that a Member’s interests cover all the interests of his constituents, can define the interests of the Scottish Government, Welsh Ministers and the Northern Ireland Department or can say absolutely that, for example, a Northern Ireland Department’s interests cover the interests of businesses and constituents within its jurisdiction, I will be delighted that the hon. Member for Thirsk and Malton is correct. That is what I would like it to say but, as drafted, that is not what the Bill says.

There is therefore a gap, an issue with not enough people being able to make that challenge and in those democratic institutions not having that right. As the Minister said, it is not a foregone conclusion that such things would go through, that the CAT would look at the subsidy decision and say, “Oh, the Secretary of State has referred this, so they are definitely correct and the subsidy is definitely wrong.” That is not how it would work. The CAT is an independent organisation and it will be making those decisions.

On the specific point about people who have the ability to refer subsidy decisions, however, I think that those people with indirect interests on behalf of their constituents or the areas that they represent should have the right to make that referral—and for the CAT to make the decision after that. Again, that will not lead to a significant increase in the number of challenges to come forward, but if the Government are committed to levelling up and to the Subsidy Control Bill regime working as it is intended to work, changes have to be made to the clause. Amendment 23 was the best way that I could see of making the changes to ensure that those interested parties with indirect parties would be able to fulfil adequately their roles to work on behalf of the people who elected them.

[Seema Malhotra (Feltham and Heston) (Lab/Co-op)]

It is a pleasure to serve under your chairship, Ms Nokes. I thank the hon. Member for Aberdeen North, who laid out some very strong arguments for amendment 23. I will speak briefly to amendment 71, which is very similar.

--- Later in debate ---

[The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Paul Scully)]

It is a pleasure to serve under your chairmanship, Ms Nokes. I appreciate the contributions of the hon. Members for Aberdeen North and for Feltham and Heston. As we have heard, the amendments are almost identical in effect, so I will discuss them together.

Who has standing to challenge subsidy decisions is an important question that we considered carefully when drafting the Bill. The definition of an interested party, which covers any person whose interests may be affected by the subsidy or scheme in question, is intentionally broad and in many instances could capture the devolved Administrations. As I said in relation to the previous amendment, the rule on standing in the clause is not intended to exclude any party whose interests may genuinely be affected by a subsidy.

None the less, I hope that hon. Members will agree that it is necessary to have some limit on who can bring a challenge, so that the CAT can dismiss various challenges, whether they are vexatious or not. That is necessary to ensure that useful subsidies are not held up without good reason. The absence of a list or further explanation is not intended to exclude any party whose interests may genuinely be affected by a subsidy. On the contrary, the broad definition gives the CAT the maximum discretion so that, whatever the facts of the case may be, it can deem the right people to be interested parties. Depending on the case, that could certainly include one of the devolved Administrations.

Opposition Members have suggested that because the Secretary of State has default standing to bring a challenge there is an unequal situation that prejudices the interests of Scotland, Wales and Northern Ireland. That is simply not right. The Secretary of State has not been designated an interested party to act in the interests of one part of the UK. It is therefore not necessary that there should be some sort of balance, with other actors also having default standing. This is a reserved policy area and, as such, the Secretary of State’s responsibilities and interests are UK wide.

The Secretary of State is always deemed an interested party so that they can challenge any subsidiary they feel would be incompatible with the subsidiary control framework and because, as a member of the UK Government, they are responsible for the compliance of subsidies granted in all parts of the UK with our international obligations. The Government expects that the Secretary of State would use this ability only in exceptional circumstances where, in their view, a subsidy would threaten the integrity of the subsidy control framework, which protects competition and investment within the UK and helps to meet our international obligations. It is just as likely that the Secretary of State would challenge a subsidy given by an English local authority that prejudiced a Scottish business, as it is that they would challenge a Welsh subsidy that prejudiced an English business.

The intention of the clause is to allow a default right to stand as an interested party to challenge subsidies, while reserving a specific role for the Secretary of State to oversee the whole system and ensure compliance with international agreements. It is not appropriate or necessary for any other public authority to have the same standing. I have talked a lot about devolved Administrations, but to cover the point made in the exchange between the hon. Member for Aberdeen North and my hon. Friend the Member for Thirsk and Malton, an interested party could be any of those public authorities, including local councils or any awarding body. As we discussed in the previous group of amendments, that interest is wider than direct financial interest. For that reason, I ask the hon. Lady to withdraw her amendment.

[Kirsty Blackman]

The Minister has not really answered the key question that would be helpful in order to ensure that interested parties are as broad as the hon. Member for Thirsk and Malton and I think it should be. Does a devolved Administration’s interests include indirect interests? Let us say that the Scottish Parliament was to come forward to the CAT and ask for something to be reviewed on the basis that it would affect seven businesses throughout Scotland. Is that included in the definition of persons of interest who may be affected? What if a number of organisations in their jurisdiction are potentially affected by a subsidy given? That subsidy may be given in Scotland; this is not necessarily an inter-nation argument. It could be that a local authority in Scotland gives a subsidy and the Scottish Government are not happy about it because it could negatively affect seven different businesses. Is that included? Is that covered by the definition of interested parties?

[Paul Scully]

Yes. I would say that is a direct interest rather than an indirect interest. Public authorities, including devolved Administrations, may be interested parties. That is why we are keeping the definition wide—because it includes their responsibilities as well as a direct interest for the public authority or the devolved Administration itself.

[Kirsty Blackman]

The Minister has made the clarification to say that it includes responsibilities. Obviously, the devolved Administrations have responsibilities for lots of things in various areas. That is incredibly helpful. I still would like to see amendment 23 in the Bill and I would like to press it to a vote.

Question put, That the amendment be made.

--- Later in debate ---

[Seema Malhotra]

I thank the Minister for his comments. I was intending to press the amendment to a vote, but there is a wider question about how we improve the balance regarding how this amount of time is used within the framework of the Bill. Should public authorities be given a shorter time in which to upload, to allow more time for a challenge to be brought? The same amount of time would have elapsed, but that could be a far better framework for the regime.

In the light of the comments made and the consideration that we need to look at this as a whole, I will not press the amendment to a vote today, but we intend to return to this. It will be important for the certainty that we want to see and the transparency we need. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Kirsty Blackman]

I rise to speak to amendment 31 in clause 71, page 40, line 36, leave out ‘one month’ and insert ‘6 months’.

This amendment allows CAT referrals a longer period to be made.

This is a pretty similar amendment, as it is about extending the length of time in which a challenge can be brought before the CAT. I wholeheartedly agree with what the shadow Minister has just said. If the Minister’s greatest concern is ensuring that the period of uncertainty is not increased, there remains an issue about the balance. We could ensure that that level of uncertainty existed for the same length of time but the balance was correct, so public authorities could upload these things very quickly, making the total challenge period shorter. That balance needs to be changed.

On amendment 31, the Opposition have made pretty much all the arguments I was going to make, so I will not take up too much of the Committee’s time. More than one amendment has been tabled on the matter, as well as on the database and its timings, and a number of comments were made in the witness sessions about the balance in the Bill not being right. I hope that the Minister will take on board the strength of feeling and give consideration to changing that balance by reducing the amount of time available for people to put things on the database and increasing the amount of time allowed for organisations to challenge. I therefore have no wish to move the amendment.

--- Later in debate ---

[Paul Scully]

In addition to the ordinary judicial review remedies available under clauses 72 and 73, clause 74 gives the CAT the power to make a recovery order. It may order recovery of some or all of a subsidy if it finds that a subsidy or scheme was made in breach of the subsidy control principles, prohibitions and other requirements. The effect of the order will be to require the relevant public authority to recover the subsidy from the beneficiary. The method of recovery, the amount to be recovered and the timeframe for recovery will be for the CAT to determine.

As we have heard, amendment 76 would make it compulsory for the CMA’s annual report to include details of all recovery orders made in that year, including the names of the public authority, the beneficiary and the amount to be recovered. I support the objective of ensuring that the process of reporting and managing recovery orders is transparent and accountable; however, this intent is already met by the process as it stands in the Bill. Recovery orders, by their nature, will be made public, and enforcement mechanisms exist to ensure that they are followed. Accordingly, there is no need to give the CMA this additional reporting duty.

[Kirsty Blackman]

It would be useful if the Minister clarified how recovery orders are made public and how we can find that information.

[Paul Scully]

I will happily do so. Recovery orders are given during a hearing by the Competition Appeal Tribunal to a public authority if that public authority is found to have given a subsidy that breached the subsidy control principles, prohibitions and other requirements. The cases heard by the CAT are usually held in public, with any ruling later published on the tribunal website alongside a transcript of the hearing. The names of the public authority and the beneficiary, and the amount to be recovered, would ordinarily all be published within that for recovery orders.

I was at the CAT a couple of weeks ago, and I saw the virtual courtroom where a hearing about the takeover of Newcastle United was recently held. The hearing was viewed by 35,000 people—mainly Newcastle supporters, I suspect. According to the president of the CAT, more people watched it than attend, on average, the games of all but 15 of the premier league teams. There is a good degree of interest in the CAT’s decisions, which will be publicly available.

[Kirsty Blackman]

I am really glad that the CAT is so open and transparent. It should therefore not be that difficult for the CMA to put in its annual report the results of all the recovery orders that are published on the website.

--- Later in debate ---

[Seema Malhotra]

I thank the Minister for his comments. He is right that recovery orders are published alongside hearings, but they are not collated, and it is not possible to see them easily in one place in order to understand collectively what is going on. If we want to know where things are not going well and what is happening across the regime from an end-to-end point of view, it is important to have that information not just publicly available, but easily accessible.

[Kirsty Blackman]

Does the hon. Member agree that it is very difficult for us to know what is coming up in the CAT unless we are looking at its website on a regular basis, so the transparency that we need as parliamentarians to see that the Bill is working effectively is not adequately fulfilled by the CAT’s current reporting duties?

[Seema Malhotra]

I thank the hon. Member for her comment, and she is right. When we develop legislation and introduce a regime, it has to stand the test of time and last beyond the time we spend in our individual roles. In five or 10 years, the Minister might have become Prime Minister.

[Seema Malhotra]

Others are starting their campaigns, so perhaps the Minister also will do so.

We need to think about making such information more easily accessible. We thought about whether the CMA should publish it simply because if we have data on the regime as a whole, it should not be too onerous to find a way of reporting some of it, perhaps in partnership with the Competition Appeal Tribunal. To enable us to see what is going on and where there are recovery orders, that would be useful alongside other information that we talked about, such as geographical information, so that we have an end-to-end view.

[Kirsty Blackman]

I have just one more thing to add on this. Clause 65 covered monitoring and reporting on subsidy control, and the five-year report that will be published. Does the hon. Member agree that if the annual report will not cover instances of recovery orders because they are not the responsibility of the CMA, the CMA’s review of the efficacy of the subsidy control regime would be an appropriate alternative place to report on them?

--- Later in debate ---

[Paul Scully]

The clause confers on public authorities the right to recover a subsidy that has been used for a purpose that is different from the one for which it was given. Public authorities give subsidies with a specific purpose in mind. They will determine whether the subsidy complies with the subsidy control principles in the Bill. They will reference the purpose for which the subsidy has been given. Many public authorities award subsidies through a written contractual arrangement that sets out the terms and conditions under which the financial assistance is being given; this is likely to state the purpose for which the assistance is being given.

[Kirsty Blackman]

I am sorry to interrupt the prospective Secretary of State mid-flow, but I have a question. Does the clause apply to subsidies below the de minimis threshold?

[Paul Scully]

I will come to that in a second.

It is good practice for the contractual arrangements to contain a mechanism allowing public authorities to recover a subsidy if the terms and conditions are breached, including whether the subsidy is misused. However, not all subsidies are given through contractual arrangements, and those may not have a mechanism to recover the subsidy if it is used for a different purpose. Public authorities may have other private law rights that enable them to recover the subsidies in those circumstances. The clause is designed to avoid any uncertainty by conferring on public authorities a right to recover subsidies used for a purpose other than that for which they were given. The new right to recover is enforceable as if it were a contractual right and does not affect any other remedies that might be available to the public authority with respect to the award of the subsidy in question.

[Paul Scully]

May I write to the hon. Member for Aberdeen North on her question? I am not sure whether the clause will apply, but I will write to her.

[Kirsty Blackman]

Thank you.

Question put and agreed to.

Clause 77 accordingly ordered to stand part of the Bill.

Ordered, That further consideration be now adjourned.—(Michael Tomlinson.)

Subsidy Control Bill (Ninth sitting)

Kirsty Blackman Excerpts

Tuesday 16th November 2021 Public Bill Committees

[The Chair]

Before we begin, I have a few preliminary announcements. Members are expected to wear face coverings except when speaking, unless exempt, and to maintain distancing as far as possible. This is in line with current Government guidance and that of the House of Commons Commission. Please give each other and members of staff space when seated and when entering and leaving the room. Members should have a covid lateral flow test twice a week, which can be carried out either at the testing centre in Portcullis House or at home.

Members should send their speaking notes by email to [e-mail]. Officials in the Gallery should communicate electronically with Ministers. Please switch electronic devices to silent. Tea and coffee are not allowed during sittings.

Clause 65

Monitoring and reporting on subsidy control

[Kirsty Blackman (Aberdeen North) (SNP)]

I beg to move amendment 29, in clause 65, page 37, line 12, leave out “fifth” and insert “second”.

This amendment, and Amendment 30, together require that the CMA publish a report after two years, and annually thereafter.

[The Chair]

With this it will be convenient to discuss the following:

Amendment 61, in clause 65, page 37, line 12, leave out “fifth” and insert “third”.

This amendment would require the CMA to conduct its first review under the section in the third year after commencement.

Amendment 30, in clause 65, page 37, line 14, leave out “five years” and insert “one year”.

This amendment is linked to Amendment 29.

Amendment 62, in clause 65, page 37, line 14, leave out “five” and insert “three”.

This amendment would require the CMA to prepare a subsequent review every three years.

[Kirsty Blackman]

Thank you, Mr Sharma, for your dedication in chairing the Committee, no matter how much we talk. It is appreciated that you continue to show up.

Amendment 29 would work in conjunction with amendment 30 on Competition and Markets Authority monitoring. The measures on subsidy control are new, and we do not know how they are going to work. We do not know how well subsidy control is going to work. It is therefore really important that the CMA reports on a regular basis.

I have had various arguments with Treasury Ministers about tax measures. Treasury Ministers have generally made it clear to me that tax measures are reviewed on a regular basis. Unfortunately, it is impossible to find what “regular” means. It is impossible to pin it down. It is impossible to work out when tax measures are actually reviewed and to see, in any sensible way, any evidence of that. I have previously asked Ministers on Delegated Legislation Committees, for example, to commit to writing to the members of a Committee in the future, when the tax measure under discussion is reviewed, but the Government continue to fail to do so.

I am concerned that the Government’s ability to be transparent on subsidy control measures needs to be in the Bill. The amendment addresses the CMA monitoring report, rather than the Government report, but the CMA will deal with the monitoring and reporting of subsidy control. I hope that the Government will also be reviewing measures, in addition to the CMA’s monitoring and reporting, and will be checking to see how subsidy control is working and whether the Bill is working as intended. As we have previously said though, we have significant concerns about the lack of data that will be provided and the fact that we cannot effectively monitor all the subsidies that are given because of the lack of requirement for granting authorities to register all of those subsidies, or even subsidies over a sensible threshold—the threshold as set is too high.

Amendment 29 would ensure that the CMA’s first report occurs two years, rather than five years, after subsidy control begins. Given the newness of the regime—it is being created and implemented for the first time in autumn next year—we need to know how things are going and we need to know that more quickly than in two or even three Parliaments, depending on how quickly elections are called. Five years is about three parliamentary terms, if we go by recent times. Some people would even say that five years is a generation.

Five years is too long for the initial report. Following that, five years for the subsequent report is also too long. Amendment 30 suggests that the report should be pulled together annually, rather than every five years. That would greatly improve transparency. The Government have been clear that this is a permissive structure that will encourage people to act in the best interests of economic development and improving their areas. I do not think we can properly assess that if we get a report on this from the CMA only every five years rather than more regularly. The Opposition’s amendments to the clause would similarly reduce the length of time between reports; they have been slightly more flexible than I have, but I support the aim of their amendments—to reduce the term from five years.

[Seema Malhotra (Feltham and Heston) (Lab/Co-op)]

It is a pleasure to serve under your chairship, Mr Sharma. I thank you for continuing to turn up to our ongoing and extensive deliberations. I thank the hon. Member for Aberdeen North for her comments. She is right that we have tabled a coincidentally similar amendment to hers. I support all the arguments she made. She is right that the Opposition amendment suggested slightly greater flexibility than the SNP amendment, partly because of our thinking on how long it might take to actually get the information to be able to add more meaningful assessments and recommendations to the monitoring of and reporting on subsidy control.

The clause rightly requires the CMA to undertake a periodic review of the effectiveness of the Bill’s operation and its impact on competition and investment in the UK. The Secretary of State may also direct the CMA to prepare a report in respect of a specified period. I am not fully sure whether that allows for some flexibility if issues are identified; perhaps the Minister can respond to that point. However, the review is important because the new regime contains many significant differences from the EU state aid rules in the processes that we will follow. Those processes, which I think have the support of the House, require safeguards to be in place, because they are not in place in a system in which some of the review and scrutiny is done up front. We cannot embark on this without making sure that there are safeguards on the use of public funds, adequate scrutiny measures and a system for learning what works well and what may not. For example, there may be a learning curve for public authorities, businesses and the Government alike, so it is important that the regime is subject to this regular review. It is good practice and it is important for value for money, for accountability to the taxpayer and to assess the effectiveness of the regime and make any necessary changes.

It is important that the regime is subject to regular review. I think we are joined here in the view that five years is not regular enough, particularly given the very good example of having three elections in five years. Politics is not always certain, yet we want that certainty to be in place. We want the learning to be fast cycle; it is good practice to learn in a more fast-cycle way. Perhaps the Minister could clarify why this time period was selected. Five years would effectively provide for one report per Parliament, assuming that we have a five-year Parliament.

What is more, five years is a significant amount of time to have passed before the first review of the effectiveness of the operation of the regime. There could be significant inefficiencies that cause substantive negative effects within that timeframe, and Parliament would be none the wiser without that informed view and assessment from the CMA. Labour tabled amendments 61 and 62 to reduce the reporting period laid out in clause 65 to every three years, which would allow for enough data to come through and for a cycle of meaningful reports that could take into account recommendations for change and assess how effectively the intended outcomes had been delivered. As a minimum, that is a more appropriate timeframe for reviewing the new regime. I would be grateful to know whether deciding on five years followed discussions with the CMA. If those discussions did happen, what was the CMA’s feedback? Engaging with the CMA is important, and there may be the need for challenge if Parliament has a different view.

As well as giving Governments more opportunity to make changes to the regime, including legislative changes and process improvements, any problems with the regime would be resolved considerably earlier because, let’s face it, if we have five years to do something, it may be left until the last minute. We want to ensure that Parliament is also responsive to any changes and plays its part in ensuring that the regime, and any changes, can be reviewed effectively every three years.

I hope the Minister recognises why five years is too long a reporting period, takes on board the comments of the hon. Member for Aberdeen North and her party and those from Labour, and perhaps offers some feedback to the Committee on why five years was suggested. Does the Minister recognise our arguments, and would he be prepared to include a review in the later stages of the Bill?

--- Later in debate ---

Similarly, I do not believe that amendment 62 strikes the right balance, for the reasons I have set out, and it is not consistent with the CMA’s other reporting requirements. As I have noted, more frequent monitoring reports may not lead to improved scrutiny. Clause 66 already requires annual reports to Parliament on the cases that the subsidy advice unit has handled throughout the year, so we want to get the balance right in this area, making sure that, as my hon. Friend the Member for Thirsk and Malton has said, we are not dragging resource away but focusing the reviews on exactly when they are needed and making sure that the subjects they cover are very focused. I therefore request that the hon. Member for Aberdeen North withdraws her amendment.

[Kirsty Blackman]

I want to address a few things that have been mentioned. It is absolutely the case that clause 66 requires annual reporting, but that annual reporting is on a very limited number of things. It seems to me that only numbers need to be provided, and that that reporting does not include very much else. The requirement is, “How many post-award referrals have there been, and how has the CMA dealt with them?” rather than, “Have they been dealt with properly?” It is not as much of a deep dive as it could be.

The Minister could commit to a step in between those two approaches. Clause 65 gives the Secretary of State flexibility to direct a report to be made within a shorter period. The middle step would allow an annual report to address more than just the data while not going quite as far as the requirements under clause 65 for a review of the entire scheme’s efficacy and whether it is working as intended. It would be interesting to hear whether the Minister would consider that.

Turning to the various other things that have been said, the Brexit vote was only five and a half years ago—which is not much longer than the five-year period—and before that we had no idea that we would be creating our own subsidy control regime. We have moved so far, and so much has happened over that period of time, that I do not think a five-year period is short enough. I appreciate the Minister’s comments about the possibility of the Secretary of State directing a report for an earlier period, particularly initially, but clause 65(3)(a) could have said that the period should be three or two years. If that had been written in the Bill in the first place, we would have had fewer concerns like the ones we are raising today.

The hon. Member for Thirsk and Malton said that red tape costs money. He is right, but red tape also saves money, and the whole point of this Bill is that public money is going to be given to organisations. Public money is going to be spent, and we need to make sure that that money is spent effectively, but I do not think that the suggested review system is adequate enough to ensure that we spend that public money effectively. Yes, this review would cost money—I am not for a second trying to dodge that fact—but I think that the benefits outweigh the risks, in that this is such a new regime and it will be really important for us to carry out that review at a relatively early stage. I am not asking for it to be done in six months; I am suggesting two years for the initial review, and the Opposition are suggesting three years. Neither is as long as five years, which will give us the early comfort of knowing that the regime is acting in the way that we hope and expect it will do.

[Kevin Hollinrake]

The hon. Lady’s amendment does not say “two years”, though, does it? It says:

“two years, and annually thereafter.”

That sounds like a huge amount of bureaucracy. She said that it would be a lighter-touch report, but I do not see anything in the amendment that says it is a lighter-touch report. It talks about the effectiveness of the provisions, so how would it not end up being a deep dive into the workings of the scheme?

[Kirsty Blackman]

I apologise—I did not make myself clear. When I talk about a lighter-touch report, I am talking not specifically about the amendments but about the fact that there should be a third approach in the Bill. If the Government are not going to move from five years—if the five-year reporting period for this deep dive report is going to remain—and we have the annual reports suggested in clause 66, which are too light touch and are just about the numbers, there is a case to be made for a middle step: a report that contains a little bit more than just the numbers, but not quite as much as that potentially costly review. That is not covered by the amendments; I am simply suggesting that the Minister consider it.

[Paul Scully]

I think the middle way that the hon. Member is talking about is actually what clause 66 does. The clause notes the bare minimum of what that the annual report should include. There is plenty more that the CMA can and should include—we are giving it the bare minimum.

[Kirsty Blackman]

That is a hugely helpful clarification. If parliamentarians or anyone else do not believe that the data included in the annual report is transparent enough, the Minister is open to us writing to the Secretary of State to request that it include more information.

The Minister has been clear throughout the course of our deliberations that a number of the changes made by the Bill are about ensuring that things can be done at speed. The tax measures and other things that were put in place because of covid had to be done very quickly—nobody is disagreeing with that—but such an approach can result in unforeseen circumstances. As such, if something started and finished during the course of a five-year period, we would not know anything about its efficacy. We would not know whether it had made a difference in the way intended until significantly after it had ended.

The Secretary of State has the ability to require those additional things. If specific funding is going to be put in place for natural disasters, for example, or any other issue we have discussed, it would be helpful if the Minister would consider asking the CMA to do an additional report, asking: “Did this work as intended? Did the funding subsidy for natural disasters achieve its aims? Could it have been done through means other than subsidies? Was there a requirement for it to comply with everything in these provisions? Would it have been easier if they had not had to jump through certain hoops in order for the subsidy to be given more quickly?”

I think that this provision does not go far enough. The Minister’s clarification about clause 66 is really helpful, and I am sure that both the Opposition and my party will continue to suggest areas where transparency could and should be improved. We will take our opportunity as parliamentarians to lobby the Government, and if there are specific concerns or issues that we believe require a report, we will request that such a report be undertaken. I wish to press amendment 29 to a vote.

Question put, That the amendment be made.

--- Later in debate ---

[Seema Malhotra]

We return to a familiar theme, which is the absence of any clear role for the devolved Administrations and the failure to recognise the need for a truly four-nation approach. Yet again, the clause fails to provide a role for the devolved Administrations in the CMA consultations and report.

The Government seem not to have quite grasped the fact that the new subsidy regime will affect not just England, but Wales, Scotland and Northern Ireland. All nations should contribute to the review of the effectiveness of the regime and its impact on competition and investment within the UK, as all four nations will be affected. In fact, given that Scotland, Wales and Northern Ireland will have to implement not just what is in the Bill, but the many future regulations to be made by the Secretary of State, it is equally important that all voices are heard. Already, the devolved Administrations will not be included in defining many regulations; will not be able to call in subsidies or make post-award referrals; will not have automatic standing to challenge subsidies before the Competition Appeal Tribunal; and may not even be represented on the body that oversees the new regime—unless the Government are enlightened by discussion in Committee and the main Chamber, and with what is happening with the Office for the Internal Market.

Will the Minister explain what role he sees the devolved Administrations playing in the new regime and in the monitoring and review? Daniel Greenberg, Parliamentary Counsel for Domestic Legislation, said in the evidence session that

“when you are dealing with international obligations of the UK, that has to be dealt with by central Government but, again, doesn’t that have to be done in consultation with the devolved Administrations? Of course it does. With co-ordination with the devolved Administrations? Of course it does. With mechanisms for encoding that co-ordination and consultation into the way the Bill operates? Of course.”––[Official Report, Subsidy Control Public Bill Committee, 26 October 2021; c. 61, Q80.]

The Labour party agrees completely with that, which is why we have consistently sought to amend the Bill to increase the role and voice of the devolved Administrations.

There have been fewer occasions on which Labour has wanted to increase the voice of the Secretary of State under the legislation, but clause 65 is one place where we think that might be important. The amendment would therefore require the CMA to consult both the Secretary of State and the devolved Administrations before issuing a periodic review of the regime. In particular, the CMA would find the inclusion of their voices helpful as it deliberates the impact of the regime on competition and investment across the UK.

[Kirsty Blackman]

I thank the hon. Member for her indulgence. There is no need for me to speak to the amendments, but I wholeheartedly support them. The Scottish National party will back them should they be pressed to a vote.

[Seema Malhotra]

I thank the hon. Member for her support.

Speaking to amendment 64, once the CMA has prepared its report, clause 65(7) requires the CMA to arrange for a copy of it to be laid before Parliament. We welcome the opportunity that that will provide for the UK Parliament to scrutinise the reports. Given the impact of the regime on the devolved Administrations, however, why will the report not also be laid before the devolved Administrations of Scotland, Wales and Northern Ireland, thereby giving them the opportunity to undertake detailed scrutiny? There might be a technical reason for that, but certainly the feedback that we have received is that laying reports before the Administrations would enable more formal scrutiny of them. I would be grateful for the Minister’s comments on that.

Amendment 64 would require the CMA to put a copy of its report before the Scottish Parliament, the Welsh Senedd and the Northern Ireland Assembly, which would provide each of the legislatures with a clear ability to scrutinise the CMA report and therefore the effectiveness and impact of the regime.

[Paul Scully]

As we have already discussed, clause 65 sets out the requirement for the unit to produce a report on the overall effectiveness of the subsidy control regime and its impact on competition and investment. Outside the broad content of the report, the Bill provides that the unit can draw upon powers set out in sections 41 to 43 of the United Kingdom Internal Market Act 2020 to gather information from public authorities, businesses and other persons in the service of producing its monitoring report.

In addition to the information-gathering powers of the 2020 Act, the unit can draw on other existing provisions that the CMA has under the Enterprise Act 2002 to engage with a wide range of stakeholders, and even commission new research in order to meet its statutory duties. Outside of those specific provisions, it is intended that the subsidy advice unit will have discretion on how to approach its monitoring functions.

We have heard that amendment 63 would require the subsidy advice unit to specifically consult the Secretary of State, Scottish Ministers, Welsh Ministers and the Department for the Economy in Northern Ireland in preparing a report. In preparing its monitoring report, the subsidy advice unit will want to seek information from public authorities across the UK, both in their capacity as subsidy granters and in relation to their various policy-making roles. That will be necessary in order to develop a balanced view of the function of the regime and its impact on competition and investment.

Highlighting the role of the Secretary of State and their contemporaries in the Bill gives rise to the question why other parties have been omitted. Why not also specify, for example, that the subsidy advice unit should consult regulators, businesses or their representative groups, or any number of other specific persons? The reason we have not specified individuals with whom the subsidy advice unit must engage is so as to afford it the maximum flexibility to undertake its monitoring function appropriately and as it thinks fit. The unit can also draw on the wealth of institutional knowledge that the CMA has, specifically related to the protection of competition. It is therefore unnecessary to direct the unit’s subsidy monitoring functions in the way intended by the amendment.

Amendment 64 also concerns the subsidy advice unit’s relationship with devolved Administrations in the fulfilment of its duties, and would require that its regime monitoring reports be laid before the relevant legislatures in Northern Ireland, Scotland and Wales, in addition to the UK Parliament. Hon. Members will undoubtedly point to the example of the Office for the Internal Market’s reports on the functioning of the UK internal market, which are laid before all four UK Parliaments.

Although the Office for the Internal Market also falls under the umbrella of the CMA, it is a uniquely constituted body reflecting the specific role and relationships that it has with the Administrations in all four UK countries. We have consciously not followed the governance model established by the Office for the Internal Market for the subsidy advice unit. Subsidy control is and will remain a reserved policy matter. The subsidy advice unit will be formed as part of the CMA, a non-ministerial department that serves the whole of the UK. It is therefore appropriate that the CMA and, by extension, the subsidy advice unit reports to the whole UK Parliament.

[Kirsty Blackman]

May I ask the Minister—sorry if I missed it—to say explicitly whether he would expect the CMA to consult the devolved Administrations in the preparation of the five-year report?

[Paul Scully]

As an awarding body, I fully expect the CMA and subsidy advice unit to speak to all the devolved nations as well as public authorities. That does not specifically need to be in the Bill, for the reasons I have given about excluding others. Given that subsidy control is and will remain a reserved policy matter, it is right that the UK Parliament considers and scrutinises the report. I therefore request that the hon. Member for Feltham and Heston withdraw the amendment.

--- Later in debate ---

[Seema Malhotra]

I beg to move amendment 65, in clause 65, page 37, line 27, at end insert—

“(7A) Within 30 working days of a report being laid under subsection (7), the Secretary of State must make a statement to the House of Commons explaining what action will be taken to remedy any deficiencies in the effectiveness of the operation of the Act or impact of the operation of the Act on competition and investment within the United Kingdom identified by the CMA.”

This amendment would require the Secretary of State to make a statement to the House of Commons on the CMA’s findings and any remedial action required.

I will keep my comments brief. This amendment would require the Secretary of State to make a statement to the House of Commons on the CMA’s findings and any remedial action required. It does not take a genius to recognise that reviews alone are not enough; they need to be acted on. Yet there are no provisions in the Bill that we have seen that require the Secretary of State to act in response to the findings of the CMA’s reports, or even to consider whether action is necessary to remediate any deficiencies in the regime identified by the CMA. Does the Minister agree that this seems to be a significant gap?

If the report and reviews under clause 65 do not trigger at the very least an obligation for the Secretary of State to consider and have due regard to its findings, are we not missing quite an important step in the overall process of review and improvement of the regime? That is why we have tabled amendment 65, which states that within 30 days of the report being laid under clause 65, the Secretary of State must make a statement to the House explaining what their response is and what action may be taken to address any deficiencies highlighted in the report. That would ensure that any issues with the new regime were not only raised, but actively considered. As the regulation currently stands, problems identified by the CMA may continue undebated and unaddressed.

[Kirsty Blackman]

I have a couple of other comments and suggestions. The laying before Parliament is, as has been said, a limited way in which parliamentarians can interact with the report. It is great that it is being laid before Parliament, but a ministerial statement, whether written or oral, would help in not just raising the profile of the report published by the CMA, but making clear what the Government intend to do about any deficiencies that have been created. Alternatively, there could be a requirement in the legislation—I might think about this for Report—for the report to go before the Public Accounts Committee or the Business, Energy and Industrial Strategy Committee, whichever would be more relevant, in order that it could scrutinise the report and ensure that it was taking evidence and creating a report with recommendations to the Government on what needs to be changed.

If the reporting period is to be only every five years, I assume that there will not be immediate—as soon as the report comes through—change happening and that it is likely that there will be a mulling-over period once the report comes in, so that, as the Minister said, the medium-term changes and so on can be assessed and any changes can be made to the legislation. In that case, a written statement or an oral statement being made, whereby we could ask any questions that we needed to, or a more in-depth report by one of the parliamentary Select Committees, would mean that Parliament had a stake, Parliament was invested, and Parliament was assisting in making the changes that the CMA required or in suggesting how to make the changes.

I am sure that the Minister would be the first to admit that the Government do not have every one of the answers. They may have a lot of the answers, in his view, but they do not have every one of the answers, and that is why consultation is hugely important with external organisations but also with those of us who are elected to scrutinise legislation, to scrutinise what the Government are doing, and to try to make the most appropriate changes so that things work, in the interest of spending public money appropriately but also in the interests of our constituents and the people of the UK.

[Paul Scully]

The hon. Member for Aberdeen North is absolutely right to want to improve the system. That is exactly the incentive; we need to improve the system. A number of mechanisms are available already. The BEIS Committee and the Public Accounts Committee can indeed call the report in and consider it, and there are urgent questions and any number of other mechanisms. I understand and appreciate the suggestions. There are mechanisms there.

The main purpose of the function of reporting, as I have said, is to provide a measure of objective scrutiny for the regime. Parliamentarians can consider the report and feed into the process of monitoring and continuous improvement of the regime, as can Government themselves. That objective assessment, based on the information that has been gathered, will be a really valuable and transparent mechanism to demonstrate what is working and what may require improvement. It will of course fall to the Government to provide a suitable response to any issues identified by the report.

The amendment tabled by the hon. Member for Feltham and Heston would put in place an arbitrary and constraining time limit of 30 days within which the Secretary of State must assess the findings from the unit’s monitoring report and then provide details for addressing any potential issues. Without prejudicing what the content of any future monitoring report might be, it seems unlikely that this amendment would have the effect of promoting effective and well considered changes if they were required, because the amendment, by tying the Government’s hands in this way, would risk hurried and ineffective solutions to any issues identified by the SAU. The monitoring reports will represent the culmination of many months of work by the SAU, so it is right that the Government should respond appropriately. However, arbitrary, short deadlines are not likely to promote sensible changes, especially if there is a need for substantive change.

This amendment also offers little benefit in relation to improving the transparency of the regime. First, monitoring reports will already be published for all to see. Secondly, many of the tools provided by the Bill require further scrutiny by Parliament through the means of affirmative regulations, which require debate and, ultimately, the agreement of parliamentarians in both Houses before they can be enacted. Transparency is one of the cornerstones of the new subsidy regime, and continuous improvement is one of the essential principles of good governance. The amendment would do nothing to enhance either of those aims and may in fact prove detrimental to them by forcing an artificially rushed response to the SAU’s finding. I therefore request that the hon. Member for Feltham and Heston withdraw the amendment.

--- Later in debate ---

[Seema Malhotra]

I beg to move amendment 66, in clause 66, page 37, line 40, at end insert—

“(d) the proportion of subsidies and schemes in each of paragraphs (a), (b) and (c) in relation to which the CMA found that the public authority’s assessment under section 52(2)(d) or 56(2)(d) required improvement;

(e) the proportion of subsidies and schemes in each of paragraphs (a), (b) and (c) in relation to which the CMA identified a risk of negative effects on competition or investment within the United Kingdom;

(f) information on the geographical allocation of subsidies, including the total value of subsidies subject to mandatory and voluntary notification in the preceding 12 months that have been awarded to enterprises in each nation, region and local authority within the United Kingdom;

(g) the number of extensions to the reporting period made under section 53(6) at the request of the CMA and the average number of days of those extensions;

(h) the number of voluntary referrals made under section 56(1);and

(i) the number of those voluntary referrals in relation to which the CMA has given notice under section 57(2) that it has decided not to prepare a report.”.

This amendment would require the CMA to include the additional specified information in its annual report.

Clause 66 sets out the information that the CMA must include in its annual reports. It is connected in some regards to the debate that we have just had. Although we support the mandating of specific information to be included in the annual reports, the information required feels too high-level and not sufficiently detailed or useful. The clause envisages the CMA simply listing the subsidies and schemes in relation to which it has prepared reports. The Minister may explain what he expects in the annual report.

We believe that, first, the annual report should include information on the number of subsidies and schemes in relation to which the CMA found that public authority assessments required improvements. In doing so, the review would provide an assessment of how successfully public authorities are meeting their statutory obligations under the legislation.

Secondly, the report should include information on the subsidies and schemes that the CMA reviewed and found risked having a negative effect on competition and investment within the UK’s internal market. That would ensure that not only the House but the taxpayer and the devolved Administrations are made aware of what, where and how subsidies are putting pressure on the UK’s internal market, if that is happening.

Thirdly, the report should include information on the geographical spread of subsidies that the CMA considered in the last reporting period, as well as information on the value of subsidies that have been awarded to enterprises in each region, nation and local authority in the UK. We are used to statistics and information being available at a fairly granular level. This is important and significant, given that, despite our best attempts, the Bill currently provides no information or regulation on how subsidies and schemes will work to reduce economic inequality across the United Kingdom.

If the Government really believe in levelling up, they need to take action to match what they say. The new regime, and subsidies generally, can provide an important opportunity for channelling resources to deprived areas and reducing regional and intra-regional inequality. As the Bill currently stands, however, there are no regulations in place that actively allow for that. As Professor Fothergill, the national director of the Industrial Communities Alliance, explained:

“In certain places, if we really are serious about levelling up, we have to put more resources into that effort, and we have to use state aid as one of the tools for delivering new jobs.”––[Official Report, Subsidy Control Public Bill Committee, 26 October 2021; c. 11, Q7.]

Does the Minister recognise that the contents of the Bill do not currently match up with the levelling-up rhetoric? Does he agree that subsidies can be used and could make a significant impact by supporting and aiding deprived areas? Including information on the geographical spread of subsidies could be quite an effective and efficient way of providing some insight about whether the resources under the regime are working to reduce inequality, which would surely be of help to the Government in achieving their stated goals.

We believe that the CMA’s annual report should include information that would allow the CMA’s resourcing, capacity and effectiveness to be evaluated. We have proposed that the annual report should set out

“the number of extensions to the reporting period”

for mandatory notifications that the CMA has made, the duration of those extensions,

“the number of voluntary referrals made”,

and how many of those the CMA has and has not prepared a report on. The CMA has a key role in ensuring that subsidies and schemes meet the principles and do not distort the market. If it is unable to carry out its responsibilities effectively, there will be a real risk that damaging subsidies continue without challenge or review.

[Kirsty Blackman]

I have just a couple of points to make. We have already raised a number of concerns about the limitations of the transparency that will be provided, particularly on the subsidies that will be on the database and our inability to get any meaningful information from it, because so many of the subsidies that will be made will be excluded from being on the website by merit of their being below the de minimis threshold. We continue to have concerns about that.

The amendment simply asks for transparency data and for the CMA to produce in its annual report data that it has already. These are data that the CMA will have within its local key performance indicators—stuff that it will be considering anyway. It will know the number of extensions and voluntary referrals that have been made. This is not an additional piece of work that the CMA will need to do. It is simply ensuring that such information is added to the annual report, rather than putting an additional burden on the CMA. It is stuff that the CMA will be measuring anyway—if it is not doing so, it is not a public organisation that is working sensibly. This is basic, bread-and-butter stuff, and it means that we would be able to scrutinise properly and have an idea of what is happening.

The points made by the hon. Member for Feltham and Heston, particularly in relation to the resourcing of the CMA, are incredibly important. We want the CMA to be adequately resourced so that it can carry out its functions effectively, because the system does not work if the CMA is not adequately resourced. We will struggle to know whether the CMA has adequate resource if it is not producing data on the number of extensions that it has required. As I say, the amendment is eminently sensible, and I look forward to hearing what the Minister has to say in response to the speech made by the Opposition spokesperson.

[Paul Scully]

The Enterprise and Regulatory Reform Act 2013 requires the CMA to prepare an annual report of its activities and performance during the year. Clause 66 requires the CMA to include details within its annual report of any subsidies and schemes that have been referred to the subsidy advice unit in the previous year, including both mandatory and voluntary referrals. The purpose of including that information is to provide transparency on the number and types of cases being referred to the SAU each year.

Amendment 66 adds to the information that the CMA would be required to append to its annual report in ways that we believe are overly prescriptive. It would limit the CMA’s flexibility to determine what information to include in its annual report and the most effective way to deliver that. Some of the information that the amendment mandates would not be accessible or consistently available. For example, the requirement that the CMA publish the proportion of cases where the SAU found that a public authority’s assessment required improvement, or where it identified a risk to competition and investment, misunderstands the role of the SAU.

The SAU will evaluate the public authority’s assessment of whether the subsidy or scheme complies with the Bill’s requirements. It will also evaluate whether there are any effects of the subsidy or scheme on competition or investment in the UK. The SAU may include advice about how the public authority’s statement might be improved or modified to ensure compliance with the requirements of the Bill, but the SAU is not a regulator. It will not make its own independent assessment of potential risks to competition and investment, or make definitive judgements on the extent of them.

Other requirements of the amendment are similarly unnecessary, including the requirement to publish the number of requests made by the SAU under clause 53(6) to extend the reporting period for a mandatory referral. Clause 53(7) already requires that such requests are published. In addition, the low number of mandatory referrals that we estimate in any given year will mean that calculating the average number of days for extension is unlikely to offer much additional insight into the subsidy control regime. It therefore need not be mandated for inclusion in the annual report.

The amendment would also require the CMA to publish geographical allocations of all subsidies subject to mandatory and voluntary referrals. That would be a burdensome task for the CMA, and would be difficult to comply with consistently. First, the amendment asks for information to which the CMA would not have ready access, since not all subsidies eligible for voluntary referral will be referred to the SAU. Secondly, if a public authority referred a scheme instead of an individual subsidy to the SAU, it would not be possible for the CMA to determine the expected geographic allocation of subsidies not yet awarded under that scheme. The same issue may apply to the beneficiary of a single subsidy that operates in more than one location.

The right approach is to provide the CMA with a degree of flexibility to determine what information about subsidies and schemes referred to the SAU is presented in its annual report. For the reasons that I have provided, I request that the hon. Member for Feltham and Heston withdraw the amendment.

--- Later in debate ---

I will challenge the Minister slightly on this matter. The public and Parliament are the customers of that report. Reports are produced with the requirement to be accountable for what has been done in line with what might be expected, how efficiently and effectively it has been done, and to have metrics by which performance can be assessed and issues identified. We should not abdicate our responsibilities as good customers to say what we think is needed for Parliament to be able to review the effectiveness of the regime and the institutions involved in delivering it. I encourage the Minister to think about that and not just say he will leave it to the CMA to produce what it wants. We must also have in mind what needs to be produced to be able to make our decisions effectively.

[Kirsty Blackman]

I am a bit confused by the Minister’s comments on paragraph (d). He seemed to suggest that the CMA’s report may not talk about where local authorities’ assessments require improvement. That is slightly concerning because, if a local authority is making an assessment on a subsidy and the assessment requires improvement, who is going to tell it? Who is going to say the assessment requires improvement if the CMA does not have the ability to say, “Excuse me. You have done this a bit wrong. Could you do it better?”

It would be helpful if the Minister contacted us, by letter if possible, to say what he expects will be in the CMA’s reports. At the moment, I do not understand what will be in those reports, specifically in relation to the mandatory referrals. What will be in the CMA’s report on the mandatory referrals that come forward? What does the Minister expect will be in the report? It does not have to be prescriptive; it could be ideas of the kind of things that would be in there, because at the moment I do not understand what that report is going to be.

[Seema Malhotra]

It would be helpful, in the light of our conversation, if we could start with the Minister’s expectation. He may well have reflected on the discussion we have had today. That may a good and efficient way for us to come back with suggestions of what else might occur, or perhaps there will be full, total agreement on what we want to see in the CMA’s annual report; we do not know. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Question proposed, That the clause stand part of the Bill.

--- Later in debate ---

[Paul Scully]

The purpose of clause 68 is to require the Competition and Markets Authority to create the subsidy advice unit as a committee of its board, and to allow the SAU to carry out subsidy control functions under, or by virtue of, this Bill on behalf of the CMA. This type of governance has the advantage of not requiring large structural changes within the CMA, while providing appropriate administrative ring fencing to allow the subsidy advice unit to carry out the subsidy control functions, existing as a discrete unit with its own character and brand.

[Kirsty Blackman]

A couple of questions have been raised about this clause. I am not particularly happy with how it works: I think more could have been contained in it. The questions from the hon. Member for Feltham and Heston have shown that there is a lack of clarity on what the subsidy advice unit means and how it will differ from the Office for the Internal Market, for example. The Minister will probably laugh, but it would be incredibly helpful if we were provided with an organogram that explains the work of the CMA, the SAU sub-committee, and the Office for the Internal Market, so that we can understand how it all goes together.

The Minister has been clear that the SAU sub-committee of the CMA board is a different thing from the internal market one. I do not entirely understand how it all fits together. I know that the Enterprise and Regulatory Reform Act 2013 explains some of it, but all those pieces of legislation, in various different places, being mashed together still does not give a picture of how it will all work. If the Minister could agree to look at that, it would be incredibly helpful.

[Seema Malhotra]

I thank the Minister for his comments. Notwithstanding the debate we have had, the Labour party supports clause stand part, but some areas need to be reflected on, including how the Office for the Internal Market is working, and what we can learn for the CMA and this regime. Clarity ahead of Report would be very helpful to settle some of those questions.

--- Later in debate ---

[Paul Scully]

That is when the interested parties can approach the CAT on that basis.

[Kirsty Blackman]

rose—

[The Chair]

Is it related or on something else?

[Kirsty Blackman]

It is related, but I was not sure who was speaking.

[The Chair]

The Opposition spokesperson was asking for some clarifications from the Minister.

[Kirsty Blackman]

Can I ask the Minister a question?

[The Chair]

Yes.

[Kirsty Blackman]

If there is a subsidy that is given under a subsidy scheme, who decides that that subsidy was not eligible to be part of the subsidy scheme and is therefore applicable to challenge outside the scheme? I think that is part of the point that the Opposition spokesperson was getting at. There does not seem to be a mechanism for saying “That subsidy doesn’t fit within this scheme, and is therefore challengeable in its own right, rather than as part of the scheme”.

A subsidy is, by definition, one given under the scheme until somebody analyses that and decides that it is not applicable to be given under the scheme, but there does not seem to be a process for that subsidy to be categorised as something that should not have been given under the scheme. How does the challenge procedure work here?

[Paul Scully]

Essentially, if the public authority has wrongly given the subsidy as part of a scheme, it will be for the CAT to decide.

Subsidy Control Bill (Seventh sitting)

Kirsty Blackman Excerpts

Thursday 4th November 2021 Public Bill Committees

[The Chair]

Before we start, may I remind hon. Members about social distancing and mask wearing where appropriate, please? We will now continue line-by-line consideration of the Bill. The selection list for today’s sitting is available in the Committee Room and shows how the selected amendments have been grouped together for debate. Amendments grouped together are generally on the same or a similar issue.

Clause 52

Mandatory referral to CMA

[Kirsty Blackman (Aberdeen North) (SNP)]

I beg to move amendment 28, in clause 52, page 28, line 10, at end insert—

“(c) where the granting authority for a subsidy scheme is the Government department responsible for the operation of the subsidy control regime, or

(d) where the granting authority for a subsidy is the Government department responsible for the operation of the subsidy control regime and the subsidy value is over £2 million.”

This amendment makes provision for situations for mandatory referrals in cases where the department responsible for the operation of the subsidy control regime is a granter of subsidies or subsidy schemes.

Thank you for chairing the Committee today, Chair; we very much appreciate it. I am pleased that the hon. Member for Mid Dorset and North Poole is delighted to see me here. He made very clear this morning that he was worried that the debate might be truncated without my presence. I am here to oblige by standing up and making my first speech of the day.

The amendment is about mandatory referrals to the Competition and Markets Authority. Clause 52 specifically focuses on those mandatory referrals and the criteria under which a subsidy would mandatorily be referred and therefore given an additional level of scrutiny. The mandatory referral considerations in subsection (1) of the clause say that a public authority must request a report from the CMA if it is giving a subsidy or a subsidy scheme “of particular interest” or if it is

“directed to do so by the Secretary of State”.

It goes on to say in subsection (3) that the Secretary of State may

“specify further information that must be included in a request”,

and

“make provision as to the form of a request.”

That is all well and good, but it seems to me that every single criterion for mandatory referral to the CMA relies on the decisions being made by the Secretary of State. The Secretary of State will decide what is a subsidy or subsidy scheme of particular interest and what class it falls into. That is a decision that will be made, but those details are not in the Bill.

If a subsidy is only mandatorily referred if it is of particular interest, which is defined by the Secretary of State, or if the Secretary of State chooses to refer it, there is a gap in terms of a conflict of interest, where the subsidy may be given by the Secretary of State’s Department and, given the limited criteria we have for interested parties, for example, which have not yet been expanded on—we will discuss them later on in the Bill—it would make sense for large grants made by the Secretary of State’s Department to mandatorily be referred to the CMA for a report. That would not cause a huge amount of additional work for the CMA, but it will provide an additional check and balance to the system. We do not want the Government marking their own homework on that; we would rather there was an additional level of scrutiny here.

Amendment 28 says that

“where the granting authority for a subsidy scheme is the Government department responsible for the operation of the subsidy control regime, or”—

that should be “and”, not “or”—

“where the granting authority for a subsidy is the Government department responsible for the operation of the subsidy control regime and the subsidy value is over £2 million.”

Once again, I do not feel I am being unreasonable. I am not asking for a mandatory referral every time. Sorry—I just reread the amendment, and it is right, it should be “or”. It is about a subsidy scheme that is made by the Secretary of State’s Department, so scrutinising all the subsidy schemes made by the Secretary of State’s Department, or the scrutiny of an individual subsidy where that is more than £2 million. I apologise to the Clerks for doubting them; this is how I intended the amendment to be.

This is not an unreasonable ask, but it is an extra check and balance, ensuring that the Government are appropriately scrutinised and that there is a look at all those subsidies. It is just an additional look; it will not delay the granting of the subsidy or mean that it will take longer. The subsidy will still be able to be granted fairly quickly and subsidy schemes will be able to be set up fairly quickly. However, it means that the CMA will look at those with an inherent conflict of interest because the Secretary of State’s Department is granting or setting up the subsidy scheme.

Later in the clause is a provision for the Secretary of State to make changes by regulations, but that specifically relates to the form of the request and the further information that may be included in the request. It does not relate to further criteria as to which public authorities must request a report from the CMA. If there were such a provision, I would push for the Secretary of State to make regulations and ensure that the criteria were widened. As that has not been included in the clause, I feel that I have to move the amendment.

If the Minister could give me some level of comfort, that would be very helpful. I think that that check and balance needs to be there to get rid of the inherent conflict of interest.

[Seema Malhotra (Feltham and Heston) (Lab/Co-op)]

It is a pleasure to serve under your chairship, Ms Nokes. I thank the hon. Member for Aberdeen North for her remarks. She raises a number of important and pertinent issues around scrutiny, in particular about subsidies introduced by the Secretary of State.

The clause deals with the mandatory pre-award referrals to the CMA. It outlines that:

“A public authority must request a report from the CMA…before giving a subsidy, or making a subsidy scheme, of particular interest, or…where directed to do so by the Secretary of State”.

We have highlighted our concerns about the definitions of subsidies “of particular interest”. It is a glaring gap in our debates on the detail of the legislation. We think that the definition should be included in primary legislation, and I hope the Minister has listened to our concerns. I am sure that the issue will come back at future stages and, at the very least, our expectation will be that the definition is published very soon after the Bill receives Royal Assent. Things that we could be dealing with now should not end up delaying the ability to make decisions and implement the regime.

Although we are concerned about the definition, we support the overall importance of the measures outlined in the clause and the function of mandatory referral to the CMA, in the interests of checking compliance with the principles, bringing assurance on value for money and confirming that there will be no distortion or harm to the economy.

On amendment 28, the hon. Member for Aberdeen North makes an important continuing reference to the Government marking their own homework. Although we recognise the intention and some of the arguments behind the amendment, we do not think that producing a report on a subsidy every time one is given by the Department for Business, Energy and Industrial Strategy—as a sort of blunt tool—would necessarily be the most effective use of the CMA’s time.

Rather, we have argued very strongly for all subsidies, regardless of whether they are below a particular amount or given to a certain recipient, to be posted on the database to ensure sufficient transparency. We will also seek to ensure that there are greater rights on call-in powers or that the CMA can investigate itself, if it deems that there a reason to do so. We think that any assurances, which are, in part, the intention behind the amendment, could be better delivered through the Bill in other ways. On that basis, we will abstain on amendment 28. We support clause 52 standing part of the Bill.

[The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Paul Scully)]

As always, it is a pleasure to serve under your chairmanship, Ms Nokes. Before I begin, I would like to make a general point about today’s debate and address a question raised during our discussions on Tuesday. Throughout the discussion of clauses in part 4 of the Bill, Members will hear me refer to the subsidy advice unit, which will be a new sub unit of the Competition and Markets Authority established by this Bill. Technically speaking, the provisions in part 4 confer various responsibilities on the CMA, and it is for the CMA to decide which of its responsibilities it will delegate to the SAU. The mechanics of that process will be discussed later when the Committee considers clause 67. While the decision on how to organise its work rests with the CMA, in practice it is likely that most if not all of the responsibilities under part 4 will be delegated to the SAU. Therefore, for consistency and ease, I will be referring to the SAU throughout these debates.

Clause 52 sets out that two categories of subsidy and scheme will be subject to referral to the CMA. The first is subsidies and schemes of particular interest, which we discussed in the context of clause 11 on Thursday 28 October, and the second is the subsidies and schemes that are referred by the Secretary of State under the provisions that we will shortly discuss under clause 55. Amendment 28, as we have heard, would add to that list of subsidies subject to mandatory referrals, requiring the Department responsible for the subsidy control regime to refer individual subsidies above £2 million and all subsidy schemes to the SAU. In practice, the BESI, my Department, is the Department with responsibility for subsidy control. I can reassure hon. Members that BEIS takes its subsidy control commitments very seriously. BEIS subsidies, like those of all other public authorities in the UK, will be subject to the “subsidies of particular interest” regime. There is no special treatment in this regime for my Department: indeed, BEIS can already ask advice of the CMA where necessary, using the powers in the Enterprise Act 2002.

The Bill establishes the two categories that we have talked about: subsidies and subsidy schemes of interest, which can be voluntarily referred to the SAU, and subsidies and schemes of particular interest, which must be referred to the SAU. The Government will set out in regulations definitions for both of those categories, and those regulations will be subject to the affirmative procedure, so there will be opportunity for parliamentary scrutiny of them. Those definitions will capture subsidies that are more likely to give rise to trade disputes, as well as subsidies that are more likely to distort UK competition and investment. BEIS subsidies and subsidy schemes will be subject to the same requirements and procedures as all other subsidies. I assure hon. Members that my Department really will not get any special treatment on this issue.

However, routinely requiring BEIS to be referred to the SAU when it offers subsidies and subsidy schemes would be a disproportionate approach to managing the risk of those highly distortive subsidies. It is important for the SAU to focus its attention and casework on genuinely distortive subsidies, not to focus unduly on subsidies and schemes made by BEIS in particular. The Government fully agree that subsidies and schemes of particular interest merit a proportionately higher level of scrutiny than other less distortive subsidies and subsidy schemes, but those subsidies are, in principle, better captured through a robust and well-evidenced set of thresholds and criteria. Those criteria will be set out in regulations defining the subsidies and schemes of particular interest, rather than placing a discrete requirement on a single public authority on the face of the Bill.

[Kirsty Blackman]

Specifically regarding the process, and what might happen in terms of subsidies of interest and subsidies of particular interest, does the Minister agree that this is going to be a movable feast? The regulations will be subject to the affirmative procedure, but things may change, and therefore there will need to be a change to the interests and particular interests. I am just asking the Minister to give me comfort that if the Government agree there is a particular issue with something, and it needs to be added to the group of “interest” or of “particular interest”, it will be added.

[Paul Scully]

Yes, I can give the hon. Lady that assurance. Those schemes will be set out rigidly and subject to the affirmative procedure, so we can have parliamentary scrutiny, but none the less—as she rightly says—we need to retain flexibility, which is exactly why those definitions are in regulations in the first place, rather than on the face of the Bill. Of course, we look to provide as much parliamentary scrutiny of those regulations as possible. I ask the hon. Lady to withdraw her amendment.

[Kirsty Blackman]

I will not press this amendment to a vote at this stage, but I might bring it back at a later stage. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Question proposed, That the clause stand part of the Bill.

[Paul Scully]

The clause requires that public authorities refer certain subsidies and subsidy schemes to the subsidy advice unit before they are given or made. Two types of subsidies or schemes must be referred: those defined as being of particular interest in clause 11 and those that are called in by the Secretary of State under clause 55.

[Seema Malhotra]

We support clause 52. I am not concerned about the detail of the clause, but how it will be effective as part of the regime. This comes back to why the rules around what can be referred under the definition of a subsidy of particular interest and who has what call-in powers will be a fundamental question to come back to. It would be a shame to have a good clause and not use it to best effect to support the best outcomes of the regime.

[Kirsty Blackman]

I agree with the hon. Lady. My concern, which I mentioned briefly when talking about the amendment, is that subsection (1) is not flexible enough. It mentions particular interests and

“where directed to do so by the Secretary of State”,

but I would prefer to see an additional category that says, “other reasons”, with regulation to follow if that is what the Minister suggests. There are probably more reasons why things could be referred mandatorily to the CMA without having to go through the affirmative process of changing the particular interest subsidy section in clause 11. There could have been a little more flexibility in that clause, and it would be useful if the Minister agreed to think about that.

[Paul Scully]

I am always happy to think about flexibility.

Question put and agreed to.

Clause 52 accordingly ordered to stand part of the Bill.

Clause 53

CMA reporting period for mandatory referral

Question proposed, That the clause stand part of the Bill.

--- Later in debate ---

[Kirsty Blackman]

I have spent years looking at education reports and care inspectorate reports. There are criteria for giving marks and a particular language is used—something is good, poor or dreadful. Is the Minister expecting that “serious deficiencies” will be used by the CMA in the report? Will it say, “We consider there to be serious deficiencies”, which the Secretary of State would consider to be a red flag, resulting in the potential extension of the cooling-off period? Does the Minister think the CMA will do that explicitly, or will the Secretary of State have to read between the lines and try to work out how bad things are? We do not know how the reports will be structured, so it would be helpful if the Minister could make clear whether the Secretary of State is going to understand the meaning of the reports and whether the SAU would seek an extension to the cooling-off period because it believed there were serious deficiencies.

[Paul Scully]

There is not going to be a rating, because the SAU is not a regulator or enforcer, but it is responsible for making sure that the situation is made as clear as possible so that people, not least the Secretary of State, can understand it. That is why we have left this matter to the CMA—its staff are experts and have great experience of doing exactly that.

--- Later in debate ---

[Paul Scully]

One of the problems is that, if we define it in the way I think the hon. Lady is after, we then lose some of the flexibility. I was just about to say that the exact situation will vary on a case-by-case basis. A serious deficiency could arise, for example, if the subsidy advice unit identified that the proposed subsidy or scheme might have significant negative effects on UK competition and investment but the public authority had not considered any of the options for mitigating those effects. Another example might be if the SAU identified significant technical flaws in or omissions from the public authority’s assessments of compliance with the requirements of chapters 1 and 2 of part 2, such as the analysis of how the subsidy incentivised a change in the beneficiary’s behaviour or the impact on international trade.

[Kirsty Blackman]

Does the Minister agree that it is likely that the SAU will have internal working definitions of what is “acceptable” or “deficient”, and that it is likely to say that to the Secretary of State in giving its recommendations and possibly asking for any extensions?

[Paul Scully]

Absolutely—that is exactly what I was going to come on to. The hon. Lady has obviously seen the next paragraph I was going to read. The Secretary of State would not be taking that view on his own. It would not be an arbitrary judgment; it would be acting on the basis of a published report by the SAU, which is obviously independent.

As the hon. Member for Feltham and Heston said on Second Reading and has reiterated this week,

“the new system will work only if it provides transparency, oversight and scrutiny”.—[Official Report, 22 September 2021; Vol. 701, c. 341.]

This amendment only serves to undermine those aims slightly—unintentionally, I am sure—by limiting the circumstances in which the Secretary of State can act to extend the cooling-off period and ensure that a public authority has more time to consider the SAU’s comments. I therefore request that she withdraw her amendment.

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[Kirsty Blackman]

I stand as a proud representative of the nation of Scotland to make a brief speech on amendment 52. The powers that are suggested under clause 55 are limited powers. They are not unlimited powers to call in anything on a whim of the Secretary of State or of anybody else. They can only be called in in relation to subsidies or subsidy schemes of interest, or subsidies or subsidy schemes in which the Secretary of State considers there is a failure to comply with chapters 1 and 2 of part 2, or there is a risk of negative effects on competition or investment within the United Kingdom.

The amendment proposed by the Opposition does not affect that. It would still apply only in the case that the devolved Administrations wanted to call in something that was a scheme of particular interest, or something that the Secretary of State had presumably already called in that was against chapters 1 and 2 of part 2 or where the Secretary of State agreed there were negative effects on competition or investment within the United Kingdom. Those are not, as the Government members of the Committee have suggested, unlimited powers parallel to those of the Secretary of State; they are limited powers. The only time the power would be exercisable is if the schemes were of interest—rather than of particular interest, because they are mandatorily referred—and the three devolved Administrations would be able to call those schemes in. It would be a limited power that would only apply for schemes of interest. I absolutely support the amendment—it makes sense—and we would obviously like it to go further. We have a devolution settlement and this is a proportionate amendment that makes sense in the context.

[Paul Scully]

Under the powers in the Bill as drafted, when the Secretary of State decides to exercise the call-in power, that direction has to be published. In addition, the SAU has to provide annual reports on its caseload, including any subsidies and schemes that were called in by the Secretary of State. That transparency will help ensure that the powers are used appropriately and that Parliament has oversight of how and when the powers are being used. Amendment 52 would allow those referrals to the SAU under the terms of clause 55 to be made by devolved Administrations, whereas the Bill provides the power for the sole use of the Secretary of State.

In the majority of cases, the most potentially harmful subsidies will be those that meet the criteria for subsidies of particular interest, which will be set out in regulations, but it is inevitable that there will be some subsidies or schemes that fall outside those boundaries. They will still benefit from the additional scrutiny offered by the SAU.

The call-in power provides a mechanism to catch potentially highly distorted subsidies that may not be caught within the “subsidies of particular interest” definition. It will also provide a safety net where there is a risk of failure to comply with the subsidy control requirements or there is a risk of negative effects of competition and investment within the UK. This is a reserved power and as such the Secretary of State’s responsibilities and interests in making referrals are UK wide. As a member of the UK Government, they are responsible for subsidies granted in all parts of the UK being compliant with our international obligations.

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[Kirsty Blackman]

I have two questions. I would have expected that “particular interest” would cover anything that does not meet chapters 1 and 2 of part 2 anyway, so it would be nice if the Minister could clarify that point. Secondly, if any of the devolved Administrations request a meeting with the Secretary of State because they are concerned and want the Secretary of State to call something in, would the Secretary of State grant that meeting?

[Paul Scully]

On meetings, I am not the Secretary of State, but effectively, yes—we want to engage with the devolved Administrations. We do that on a regular basis, and have done in the formulation of this Bill, as we have discussed many times, and we will continue to do so as we go through guidance and the working of the Bill.

In the event that one or more of the devolved Administrations has serious concerns about a subsidy given or a scheme made, of course they can request that the Secretary of State use that call-in power. The Secretary of State would carefully consider any request from their counterparts in the devolved Administrations, just as they would on any other policy matter. As I say, we have met the devolved Administrations a number of times since July 2020 on the formulation of this Bill. We continue to meet and engage with them regularly, and listen to their views as the Bill progresses through Parliament, and we will do so in the lead up to implementation. I request that the hon. Member for Sefton Central withdraws the amendment.

[Kirsty Blackman]

My other question was about the definition of “particular interest”, or “interest”. Subsidies of particular interest will be mandatorily referred, as we have already agreed, but subsides that risk to fail to comply with the requirements of chapter 1 and 2 of part 2 could be referred by the Secretary of State. It would concern me if compliance was not part of schemes of particular interest, or schemes of interest. I understand that some schemes of particular interest would be defined on the basis of the sector they are in and the specific details of the subsidy, but I would expect that lack of compliance with the rules would cause a scheme to be of particular interest anyway. I hope the Minister understands what I am trying to get at here. If a subsidy does not comply with the subsidy control principles, surely it is either not a subsidy—it is not allowed—or it is a scheme of particular interest that would need to be looked at mandatorily, or perhaps optionally, by the CMA.

[Paul Scully]

I think I get the general gist of where the hon. Lady is going with that point. That is why, rather than trying to define them as not complying, we are trying to define them specifically at the outset, hence the regulations that we will be putting forward, but there is plenty of opportunity to have that discussion.

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[Paul Scully]

Clause 55 gives the Secretary of State the ability to direct a public authority to request a report from the subsidy advice unit on a proposed subsidy or subsidy scheme. That may be made in relation to a subsidy of interest or any other subsidy or scheme that the Secretary of State considers to be at risk of failing to comply with the subsidy control requirements or of negatively impacting competition or investment in the UK. It is not intended to be used routinely, but it is a necessary safeguard. It is there to ensure that an additional layer of scrutiny can be applied to subsidies that might risk creating market distortions but would otherwise not be subject to mandatory referral to the SAU.

[Kirsty Blackman]

I was going to ask a question about this clause, and the Minister has managed to make me even more confused. Subsection (1) states:

“A public authority may request a report from the CMA before giving a subsidy, or making a subsidy scheme, of interest.”

It does not state that, additionally, any other subsidy may be referred to the CMA under a voluntary referral. It might elsewhere in the legislation, but it does not at this point.

My concern was that it relates only to subsidies “of interest”—subsidies of particular interest are covered by mandatory referral, and that is fine—but for subsidies that fall outside the category of interest, perhaps because interest is narrowly drawn by the regulations when interest is set, there seems to be no way for those public authorities to refer them voluntarily to the CMA, as the legislation is drafted. It would be good if they could.

Let us say that “particular interests” and “interests” are defined by the Government, that goes through the affirmative procedure, we have a discussion, and the definitions are agreed. Accidentally, however, something is left out of the category of interest—because we do not think of everything—and a local or public authority discovers the anomaly and thinks to itself, “Do you know what, I should refer this to the CMA voluntarily, because I think it probably should be included in the schemes of interest, but in the way that the legislation is written, it does not fall under that”, so it tries to make a voluntary referral. It cannot, however, because it may make a voluntary referral only in the case of something that is of interest.

There is a bit of a gap. Authorities should be able to make that voluntary referral, whether it is a scheme of interest or not. There is a concern. As to what the Minister said, absolutely, if the Secretary of State has a concern additional to the interest section, that would be fair enough and make a difference, or if the authority itself decides that it should be referred to the CMA. I do not think that that will be a huge amount of extra work. Authorities will not refer themselves to the CMA for fun; they will do so when they feel that there is a reasonable chance that what they are considering doing is contentious.

I will not vote against the clause, because voluntary referrals are a good thing, but I do not think that it goes as far as the Minister suggested it goes—unless I have missed something.

[Bill Esterson]

I was not entirely clear which clause the hon. Member for Aberdeen North was speaking to. We are still on clause 55 stand part—but it was a very good speech on the next clause, so we now know what she will say.

We expressed our concerns in the debate on our amendment. I hope that the Minister will reflect on those concerns and consider whether greater strength is needed in this clause and, similarly, I suspect, in clause 56—when we get to that debate.

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[Kirsty Blackman]

It is no wonder that I was confused by what the Minister said. He was speaking to clause 55 and I was looking at clause 56. Apologies.

[Paul Scully]

We will hear the hon. Lady’s comments again.

Question put and agreed to.

Clause 55 accordingly ordered to stand part of the Bill.

Clause 56

Voluntary referral to CMA

Question proposed, That the clause stand part of the Bill.

[Paul Scully]

The clause—wait for it—allows public authorities voluntarily to refer certain subsidies or subsidy schemes to the subsidy advice unit before they are given or made. Those are known as subsidies or schemes of interest, and the criteria will be set in secondary legislation, as set out in clause 11.

To make that voluntary referral, the public authority has to provide certain information about the subsidy or the scheme that will be referred, including an assessment by the public authority of whether its proposed subsidy or scheme would meet the principles, the prohibitions and the other requirements set out in chapters 1 and 2 of part 2 of the Bill.

The Secretary of State is also given the power to make new regulations specifying the form in which that information must be provided to the SAU, as well as any additional information that must be provided beyond that which is already set out in the clause. That will enable the content and the form of the request to be adapted based on operational experience of whether the SAU is getting the information it needs to report back effectively.

Openness, transparency and a risk-based approach to scrutiny will ensure confidence in the new UK subsidy control regime. The voluntary referral process provides an additional avenue of scrutiny for public authorities seeking to grant some of the more potentially distortive subsidies and schemes. To answer the question from the hon. Member for Aberdeen North, who may want to ask it again, the process gets the balance right by ensuring a flexible system with enough information for the public authorities to get it right in the first place. A lot of that will be done through guidance, and the SAU is there to be helpful and give advice; it is not an enforcer or a regulator.

[Kirsty Blackman]

Let me just imagine that I made an excellent speech.

The concerns that I raised a few moments ago still stand. I think there should be more flexibility in the first part so that it is made clear to public authorities that they can refer something should it not fall under the specific definition of “schemes of interest”. I would appreciate it if the Minister considered tabling an amendment to that effect. I do not feel that that would make additional work.

I genuinely feel that public authorities would use that flexibility only in circumstances where they feel that “schemes of interest” has been defined too narrowly to cover the scheme that they would like to refer to the CMA. That flexibility would not be overused; nobody would be daft enough to overuse it. There seems to be no ability for public authorities to refer anything unless it is classed as a scheme of interest or particular interest, or is something deemed by the Secretary of State to meet various criteria. I would appreciate it if the Minister looked at that.

[Seema Malhotra]

The clause does indeed allow public authorities to

“request a report from the CMA before giving a subsidy, or making a subsidy scheme, of interest.”

We have had some interesting and helpful discussion so far, but our main concern remains the lack of clear definitions in the legislation, particularly the definition of “interest”. Such clarity would provide some necessary assurance to public authorities, the CMA and subsidy recipients about how the regime will work in practice.

We could have pre-empted this issue and had clearer definitions to ensure that more was done upstream by public authorities, meaning fewer referrals. More referrals will create more burden on the subsidy advice unit. Referrals will be made for good reason, however, so we absolutely need the provision. It is likely that there will be greater demand for referrals in the earlier stages of the regime’s implementation, but as people become familiar with the process and judgments become clearer, and the CMA gets some case studies to use, the system will improve.

It is important that there is clarity from Government. We may come back to some of this, but the referring public authority will also need clarity on what it will and will not get back. Guidance on that would be extremely helpful to make the legislation work effectively.

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[Bill Esterson]

Thank you, Ms Nokes. On that basis, it will probably not be wise to take the interventions. I am using these things as an example of the ruling party’s attempts to remove independence. The CMA is also supposed to be independent. We have seen a desire to break the rules and then just remake the rules in the main Commons Chamber, and I fear that now we may be seeing something similar—we need to ensure that we do not see something similar—when it comes to the independence of the CMA in its role with regard to the subsidy control regime.

Without amendment, the clause will allow the Government to rewrite the contents of an independent report if there is any warning that it will say something that they do not like. That is not how independence works, and it is not good government. Our amendments would remove the power for the Secretary of State to do that. It would remove the power to edit reports published by the CMA, and it would ensure that the independence of the CMA stays as it is.

[Kirsty Blackman]

I have just a brief question. This clause lays out things that reports following mandatory or voluntary referrals “must” include and some things that the reports “may” include. Can the Minister confirm that the reports may also include things not mentioned here and that the additional things that would be included would be at the discretion of the CMA? If it can include only the musts and the mays in the clause, it will not be able to include anything else that the CMA considers would be relevant in the report. Given that the Minister has stressed the independence and expertise of the CMA, it would be sensible to confirm that it can include matters that it feels are relevant, whether or not they are explicitly mentioned in the Bill.

[Paul Scully]

The CMA is independent and will use its expertise. I think that we have crossed wires here, because actually the clause allows the Secretary of State to talk about the content of the report but not to textually amend an independent report. That is not what we are talking about here, which is what is within scope of the report—to ensure that it can actually do it. This is to be able to give additional transparency and scrutiny in the regime itself. The clause allows him to make provision about the content and form of the report, but, as I said, not to change the text of an independent report.

Any changes to the content of the report must be made by the affirmative procedure. That is core to the subsidy control regime, because if the Government believe that the process needs to be refined, it is only right to have parliamentary scrutiny of it. By contrast, any specification as to the form of the report would be a technical regulation, for which the negative procedure is appropriate. Amendments 53 and 54 remove that possibility, except by future primary legislation.

As I say, removing the mechanism for amending or enhancing the baseline for SAU reporting that is set out in clause 59 would unnecessarily tie the hands of the SAU and future Governments seeking to improve the referral process based on the experience and expertise that is gathered over time through the functioning of the new regime. As set out in clause 67, the power to change the content of the report may be exercised only for a period of one year following the publication of SAU’s first report under clause 65.

As I have set out, however, changing the form of the report is a technical matter, so it is appropriate for the regulations to be subject to the negative procedure. I therefore request that the hon. Member for Sefton Central withdraws the amendments.

[Bill Esterson]

Clause 59(4)(a) uses the phrase

“amend subsection (1), (2) or (3) to make provision about the content of the CMA’s report”.

The Minister used the terms “text” and “content” interchangeably, which highlights our concern. Using secondary legislation, the Secretary of State is able to give himself the power to amend CMA reports. That is the problem—that is what overturns the power.

[Kirsty Blackman]

The Minister did not answer my question about additional information that the CMA may include in a report that is outwith the scope of the Bill. It does not fall under part 2; it falls under something else that the CMA thinks is relevant and should be in the report. Does the hon. Gentleman agree?

[Bill Esterson]

The Minister did not answer the hon. Lady’s question, so maybe he can do that after I finish my summing up, which will not take much longer.

We will push the amendment to a vote, because the Minister did not address our concerns about removing the independence of the CMA.

Question put, That the amendment be made.