Subsidy Control Bill

Liz Saville Roberts Excerpts

2nd reading
Wednesday 22nd September 2021 Commons Chamber

[Kwasi Kwarteng]

In her brief time in the House, my hon. Friend has been an impressive and focused campaigner on behalf of her constituents and the wider industry. As she knows, I am a particular fan of the steel industry, and want to seek a sustainable future for it here in the UK. I cannot give any budgetary guarantees, as she will appreciate, but this system does give us much more flexibility than was the case previously.

[Liz Saville Roberts (Dwyfor Meirionnydd) (PC)]

Will the Secretary of State give way?

[Kwasi Kwarteng]

May I make a little more progress? Many other colleagues want to speak.

This is a Bill that promotes autonomy, transparency and accountability. It will empower hundreds of local authorities, as well as the devolved Administrations and other public authorities, to take control, allowing them to design subsidies to meet local needs while also meeting national policy objectives.

[Liz Saville Roberts]

I am grateful to the Secretary of State for giving way to me now. I wanted to pursue his earlier comment. The Conservatives appear to be perpetuating a gift for blaming the EU for everything, to all intents and purposes, and it is no surprise that we have heard a little more of that today. We must bear it in mind that the UK was known for underutilising EU state rules—we were ranked 22nd out of 28 member states in 2018—and it could be suggested that that was due to Conservative ideology rather than to any intrinsic problem.

This Bill will steamroll devolved competence. Does the Secretary of State agree that it reflects a new Conservative ideology, which is deliberately dismantling the powers of devolved Governments and their accountability as elected Governments per se?

[Kwasi Kwarteng]

That was a rather lengthy intervention, if I may say so, although I do not want to entrench on the Chair’s prerogative. As the right hon. Lady will appreciate, the Bill is a function of our leaving the EU. We are not trying to rehearse the arguments of Brexit; we were doing that long before she was elected to the House. I was certainly involved in those debates.

The Bill sets out a regime founded on seven clear and transparent principles. According to those principles, the subsidy must be designed to remedy a market failure. It must be designed to bring about a change in behaviour. It cannot normally cover costs that would have been funded in any case. It must be appropriate, proportionate, and designed to minimise any distortions to competition and investment in the United Kingdom. Finally, the public authority giving a subsidy must carry out a balancing test, and proceed only if the benefits of the subsidy outweigh any distortions to UK competition and investment, and to international trade.

Those principles will be supported by guidance for all to see. That will ensure that public authorities fully understand their legal obligations, and will make clear which subsidies are permitted and prohibited and under what circumstances.

--- Later in debate ---

[Liz Saville Roberts]

If the devolved Governments are as content as the Secretary of State is saying, why are the Welsh Government making a legal challenge to this Bill?

[Kwasi Kwarteng]

As I said, there is agreement on the fundamentals of the regime. The seven principles are not contested; they are agreed across the devolved Administrations and the UK Government. I am not privy to the exact motivation of the devolved Administration in this case but, as far as the general principles are concerned, there is a wide measure of consensus.

It is worth reminding the House that the devolved Governments will have more control over subsidies than they have ever had before. Previously, it was Brussels that made the decisions about which subsidies could be granted to support viable businesses. Now, with this Bill, it will be for the elected Governments in Edinburgh, Cardiff and Belfast to make those decisions.

During the trade and co-operation agreement negotiations and the creation of this new regime, ministerial colleagues, officials and I have worked closely with the devolved Administrations, and I thank those Administrations and the officials and Ministers here in Westminster for their considered and constructive input to the development of this policy.

Subsidy Control Bill

Liz Saville Roberts Excerpts

3rd reading
Monday 13th December 2021 Commons Chamber

[Kevin Hollinrake]

I rise to speak briefly in support of the amendments tabled by my hon. Friend the Member for Weston-super-Mare (John Penrose). I will particularly address amendments 1 and 8, which are about something brutally simple: scrutiny and transparency. The Government are rightly approaching this through their obligation to meet the competition requirements of the European Union. For that purpose, £500,000 would perhaps be the right level.

I think this is about more than competition; it is also about cronyism and, potentially, fraud. My hon. Friend put it well when he talked about armchair auditors. Time and again, information about things going wrong is brought to the attention of parliamentarians like me by members of the public and members of the press. The more we give people access to such information, the more likely we are to clamp down on any suggestions of cronyism. Although most are ill-founded, it is important that we clamp down on any suggestions of cronyism and of fraud.

I agree with my hon. Friend that we should lower the threshold for reporting and registering on the database from £500,000 to £500. That seems an enormous difference, but consider what we know already. The easiest place to look is the furlough scheme and the bounce back loan scheme. The National Audit Office estimates that some £26 billion may have been lost in those coronavirus loan schemes, not all of it through fraud—some of it was through non-repayment of debt, or defaults. Nevertheless, a significant proportion of the moneys granted to businesses, which were effectively a subsidy, might have gone missing. The Government rightly put together a huge new team of people within Her Majesty’s Revenue and Customs, with an investment to the tune of £100 million, to try to clamp down on it by investigating the potential for fraud.

Alongside that, it would be a simple requirement for the database to include every single subsidy over £500 for the armchair auditors, the press, the public and—another important component—the whistleblowers. People within an organisation often do not know what subsidies the business may have received, but they might be able to identify the moneys as inappropriate and alert the authorities to that effect. Some 43% of all crimes are now economic crimes, and 40% of those are brought to light by whistleblowers, so it is hugely important that they have access to this information so they can scrutinise what is happening within these businesses.

My hon. Friend the Member for Weston-super-Mare asked why would we not do this? One answer might be bureaucracy and cost—we are not big believers in bureaucracy and unwanted, unneeded cost, and we rightly want to make our system simpler, not more complicated, for businesses—but the requirement to publish on the database is negligible. As others have said, businesses have to issue a letter anyway, so putting five bits of information on a database is not exhaustive. The impact assessment suggests that the total cost of doing it annually will be only £20,000 extra, which is insignificant in terms of the cost of red tape, but the benefits are huge.

As I mentioned in my earlier intervention, the US had much lower levels for reporting than we did. Our level was €500,000 for telling the EU who received benefits from the loan schemes, and it was done quite late in the day, after the loans were received by businesses. In the US it was $150,000, which effectively brought about a $30 billion return of moneys to the US Treasury because those businesses were embarrassed to be receiving the moneys inappropriately.

Another reason we are not doing this is that, when the British Business Bank looked at the coronavirus business interruption loan scheme and the bounce back loan scheme, it felt it should not report on this because it might be likely to lead to

“speculation about the Recipients’ financial position”.

I do not agree. Even if it were true, we are already putting on the database loans over €500,000. Are we saying only businesses below that level would have that problem? That is clearly not the case. A lot of businesses that received coronavirus business interruption loans over £500,000 were quoted on AIM, for example, including my own business. I draw the House’s attention to my entry in the Register of Members’ Financial Interests, although I am no longer associated with that business in any meaningful capacity, as it was subject to a takeover earlier this year. I would have no problem at all with the loan we took under the CBILS programme being declared on a database so people could see it. The reasons we were taking it were quite obvious and I do not think it brought our financial position into question at all. Clearly, in the desperate times we were in, most people would see that we were going after desperate measures in terms of insurance policies, which the loan was to most companies. I do not see that as a valid reason for preventing the declaration to the database being completed for all subsidies down to that £500 level.

I will refer quickly to amendment 8. Allowing individual challenge to individual decisions under a subsidy scheme is another check and balance—another way to ensure money is being handed out appropriately. I think all these amendments make sense, which is why I have signed them all. To give the public, the press and Parliament access to the database is a crucial step. I do not think it would be a bureaucratic issue at all for the people responsible for it. I know we have spoken about it, but I urge the Minister to look at this again and to table such amendments at a later stage, if they are not accepted today.

[Liz Saville Roberts (Dwyfor Meirionnydd) (PC)]

Diolch yn fawr, Dirprwy Lefarydd. It is interesting to hear the hon. Member for Weston-super-Mare (John Penrose) describe this Bill as part of a post-Brexit dividend. For many of us from the devolved nations, it actually bodes ill. It bodes ill in relation not just to key devolved competencies, but to questions about whether this negates the power of public procurement and, particularly, whether it undermines the levelling-up agenda. We would expect to see more principles in operation than we currently do, particularly when we compare this with the regimes we worked with and complained about, but were familiar with, under the European arrangements.

My party, Plaid Cymru, will support new clause 1, proposed by the hon. Member for Aberdeen North (Kirsty Blackman), which would exempt devolved agricultural subsidies from the subsidy control requirements. This is a vital new clause that protects our farmers and ensures that the devolved nations can continue to tailor support to local requirements and priorities. I do not think I need to persuade anybody in this Chamber that UK agriculture is highly regionalised in its type, its significance, the impact it has on its local economies and whether it requires region-specific subsidy for its needs.

I am very much aware of that for the less favoured areas, representing as I do the constituency of Dwyfor Meirionnydd, which is very much an upland area. I have whole communities watching these legislative developments with some concern. I know the farmers’ representatives from Wales, Scotland and Northern Ireland are equally concerned about the implications of what, on its face, appears to be a fairly technocratic Bill, but none the less sets a precedent for the sort of legislation we see coming out from the trade and co-operation agreement in the United Kingdom Internal Market Act 2020.

In Wales, where more than 80% of land is used for agricultural purposes and farmers are the bedrock of our rural communities, guardians of our natural environment and protectors of our cultural identity, subsidies are vital to protecting that legacy. The latest farm business survey showed that subsidies provide on average 30% of upland cattle and sheep farms’ income. Leaving their fate to a Westminster Government set on securing questionable trade deals that boost UK GDP by 0.01% to 0.03% while at the same time sacrificing our farmers is clearly unacceptable. Equally, without this new clause, the Bill would pre-emptively tie the hands of the Welsh Government as they look to establish a new, post-EU subsidy regime. I therefore urge hon. Members across the House to support the clause to protect our farmers, as well as amendment 11 on net zero commitments.

I also extend my support to the amendments tabled by the Opposition, including amendments 19, 23 and 26, which would extend the rights of the devolved Governments. Although I believe that they could, and possibly should, be strengthened by recognising the value of the co- production of guidance, they nevertheless address somewhat some of the Bill’s governance issues. As we have seen time and again, the Government play hard and fast, and make the rules up as they go along. That is why such guarantees as are offered by the amendments are so important.