Subsidy Control Bill

Lord Fox Excerpts

Committee stage
Monday 31st January 2022 Grand Committee

[Lord Lamont of Lerwick (Con)]

My Lords, I will speak even more briefly than did the noble Viscount, Lord Chandos, in expressing a modicum of support for him. It is up to the Minister to explain why equity is not included rather than for the noble Viscount to prove the case for including equity; it seems a bit of an omission. We read today about the failure of the British Business Bank to do well on some of its investments. We have also had the publicity about the Covid loans that have not been recovered. Why do I mention the British Business Bank? Because we have seen a whole series of equity injections by this Government that have not always had an overall rationale.

The noble Viscount, Lord Chandos, referred to the spread of returns from equity investment and how different investors would take a different view of the future, but the reason often advanced by government for direct investment is what is termed “market failure”, and I see that the phrase “market failure” is referred to in the Bill. Unfortunately, market failure is a convenient get-out for Governments wishing to subsidise a particular entity. The very fact that Governments provide direct investment, which I know the noble Viscount favours in a way that I would not, often disguises the fact that there is a subsidy. They say that it is because of market failure and they want it to be on market terms, but, too often, it turns out just to be an implicit subsidy. I agree with the noble Viscount that equity, particularly from a public sector grant-making organisation, can often conceal a degree of subsidy. I hope that careful consideration will be given to the point that he has rightly raised.

[Lord Fox (LD)]

My Lords, I shall speak to Amendments 2 and 3 and then Amendment 2A, as they seem to associate with each other.

In the speeches of the noble Lord, Lord Wigley, and my noble friend Lord German, the nub of the question is: what is a subsidy and what is it not? I see Amendment 2 from the noble Lord, Lord Wigley, as trying to unearth that definition. Later, we will discuss Clause 11, which allows certain definitions to be defined by affirmative regulation rather than appearing in the Bill. These definitions are:

“subsidy, or subsidy scheme, of interest”,

and

“subsidy, or subsidy scheme, of particular interest”.

This is the Subsidy Control Bill and it would be enormously helpful if the Government would put in the Bill what they seek to control because, at this stage, they have not revealed their hand. In this amendment, the noble Lord, Lord Wigley, seeks to delineate where a subsidy starts and finishes: the territory, as he puts it. This is a moot point and a key issue that we will talk about later. The noble Lord, Lord Lamont, talked about market failure. We need to understand what the Government understand as “the market” in the first place to delineate where a failure may or may not have occurred. Hereby lies the issue.

In a letter to my noble friend Lord Purvis, the Minister sought to help and, perhaps, to clarify. He replied:

“The geographic scope of a market depends on the goods, services and activity in question—which means geographic scope can vary.”


I think that that flies in the face of some of the words that we heard just now from the noble Lord, Lord Wigley. The letter continues:

“A key factor is the distance over which these goods or services can be supplied”—


the sandwiches of the noble Lord, Lord Wigley, perhaps—or

“the preference of customers”.

I understand the issue about distance—I can get that—but to include the preference of customers is potentially specious.

To take an international example rather than a Welsh one—although, of course, Welsh is international, if I am speaking from England—there was no market for Spanish-grown strawberries until such time as Spanish-grown strawberries were imported to this country. Then there was a market, because customers showed a market preference. So at the outset of a subsidy there may be no customer preference because there is no product for the customers to prefer. Some time after the six months have expired and the subsidy is open to challenge, the product appears on the market. How is customer preference to be applied retrospectively to subsidies as the market goes forward? I do not think that the issue of customer preference is easy to define, understand or control. If the Minister stands by the words in the letter to my noble friend, we need a much clearer understanding of how that customer preference role will play out. Not only do we need to understand geography, but we need to understand the customers.

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[Lord Fox (LD)]

My Lords, as we have heard, this set of amendments seeks to create some foundation for a future subsidy regime, whether that is geographical or socially minded or in terms of activity.

In introducing the Bill, and at other times, the Minister has sought to use phrases such as “flexible” and “light touch” to describe the Government’s plans. We do not have to rely on our own experience: we can read what the noble Lord, Lord Agnew, wrote in the newspapers over the weekend about how he saw a light touch rooted in ad hoc decision-making that created a soft touch for light-fingered individuals. We do not want to enshrine that in an Act of Parliament.

To guide where we are going, it is useful to look at where we have been. That is not nostalgia; it is common sense. As my noble friend Lady Sheehan said, about 10 months ago, the Government abandoned any pretence that they were seeking to deliver a modern industrial strategy and withdrew their promise to set out a long-term plan to boost the UK’s productivity. This interrupted what had been something of a consensus. From Heseltine to Mandelson to Cable to Clark, all of them worked within the same tramlines to a lesser or greater extent. This is characteristic of a Government who constantly seem to want to chip away at things that are multilateral and consensual, and to introduce their own stand-alone version.

As I am sure the Minister remembers, the strategic intensions for the industrial strategy were artificial intelligence and data, clean growth, the future of mobility and supporting an ageing society, alongside the important need to improve the UK’s declining productivity. As we know, the political U-turn was executed by the Business Secretary, the right honourable Kwasi Kwarteng, who at the same time disbanded the Industrial Strategy Council, which was due to oversee this whole process. Meanwhile, I understand that, in BEIS, the associated industrial strategy team was also broken up.

What we got instead was the Build Back Better brochure: a glossy, colour catalogue composed half of launches—usually ones that had already happened—backed up by page after page of colour library photos. The Minister may note that the picture illustrating the infrastructure page is of a Victorian viaduct, which perhaps rather indicates the direction in which the Government might be going. In other words, there is nothing now to guide where we might focus subsidy investment. I understand the Minister’s allergy to central micromanagement but what we have been left with will be chaotic and, I am sure, wasteful and unfair.

On the issue of focusing on regions or areas, there is an example we could look at. It is called the European Regional Development Fund—the ERDF. It aims to strengthen economic, social and territorial cohesion in the European Union by correcting imbalances between its regions. It is what you might call levelling up. It states:

“The ERDF finances programmes in shared responsibility between the European Commission and national and regional authorities in Member States.”


I think that reflects some of the words we have heard already. It goes on:

“The Member States’ administrations choose which projects to finance and take responsibility for day-to-day management … In 2021-2027 it will enable investments in a smarter, greener, more connected and more social Europe that is closer to its citizens.”


The aim is to create businesses that are

“more competitive and smarter … greener … more connected”,

supporting the social life of the areas in which they operate—this very much speaks to the point of the noble Baroness, Lady Jones, about improving the lives of the people who live in the country, which is something we should all be seeking every time we debate an issue—and are

“closer to citizens, supporting locally-led development and sustainable urban development.”

I am not proposing that the Minister leads us bravely back into the European Union. What I am proposing is that the Minister learns from the experience of others and applies that learning in a sensible way. This is an opportunity to do such learning.

[The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Callanan) (Con)]

Apologies; I thought that the noble Lord, Lord McNicol, was going to speak there. I thank the noble Lords, Lord Ravensdale and Lord McNicol, the noble Baronesses, Lady Blake and Lady Randerson, and the noble and learned Lord, Lord Thomas, for tabling Amendments 4, 4A, 5, 5A, 6 and 25.

Let me go back to first principles. The Bill establishes a clear, flexible set of rules for granting subsidies for all public authorities in the United Kingdom. Its central function and purpose is to reduce harmful distortions to domestic competition and investment—as well as to trade and investment between the UK and other countries, of course—which can arise from the giving of subsidies. The new domestic regime will not, however, instruct public authorities on which policy objectives they should direct subsidies towards, so long as they remedy a market failure or address the much-discussed equity concerns.

We are not in the business of interfering with the policy decisions of democratically elected public bodies in Scotland, Wales, Northern Ireland or elsewhere in the United Kingdom. In keeping with this, the new subsidy control regime will empower public authorities to design subsidies in a way that is tailored and bespoke for their local needs, without facing excessive bureaucracy in order to do so. That is why we have provided clear guidance that supports public authorities, and which they must consider, to support them in choosing the appropriate indicators because we believe that they are the ones who are best placed to make those final decisions.

Turning first to Amendments 4 and 25, I thank the noble Lord, Lord McNicol, for his amendments; the noble Baroness, Lady Sheehan, put her name to Amendment 4. However, it is my view that Amendments 4 and 25 go against the grain of the Bill. Taken together, they would provide for the Secretary of State to make, by regulations, a strategy that sets out how subsidies should be used by all public authorities to support the delivery of various other strategies. They would then require public authorities to consider the subsidy strategy before awarding a subsidy or making a subsidy scheme. The UK Government have developed various strategies for specific policy issues and will continue to do so. This is where and how the Government will articulate and develop a coherent approach to issues such as net zero and levelling up.

To take an example, in March last year, the Government published a policy paper on how they will build back better, setting out plans to support growth through significant investment in infrastructure, skills and innovation. The Government will also soon publish a levelling-up White Paper—eagerly awaited by the noble Baroness, Lady Blake, no doubt—articulating how bold new policy interventions will improve opportunity and boost livelihoods across the country as we recover from the pandemic. On the points made by the noble Baronesses, Lady Blake and Lady Sheehan, the shared prosperity fund will ramp up to £1.5 billion per year in 2024-25 and total funding will, at a minimum, match the size of EU funds in all nations each year. The Government will publish further details of the fund in due course.

The Committee should bear in mind that subsidies are but one possible tool in the toolbox for supporting strategic public priorities. It is not necessary for the UK as a whole, or even the UK Government, to have an overarching strategy for the provision of subsidies, much in the same way as there is no need for a broad strategy on the use of regulatory levers. Strategies should focus on how to tackle the major issues, rather than the specific tools through which we may address them. A subsidy strategy could well risk steering public authorities towards using subsidies inappropriately or indiscriminately.

It is imperative that public authorities give proper consideration, on a case-by-case basis, to whether the subsidy they propose is the appropriate instrument for achieving any given policy objective. In many cases, there may be more appropriate measures which a public authority can deploy. To take an example dear to the heart of the noble Baroness, Lady Jones, meeting our net-zero targets will involve leveraging a mixture of public interventions, including but not limited to regulation, the emissions trading scheme and public procurement, as well as appropriate and carefully targeted subsidies.

I will now address Amendment 5, tabled by the noble Lord, Lord McNicol. Subsidy control principle A allows public authorities to address inequality and disadvantage through the use of subsidies. It states:

“Subsidies should pursue a … policy objective”


that either remedies a market failure or addresses

“an equity rationale (such as social difficulties or distributional concerns).”

Amendment 5 seeks to include areas of relative economic deprivation as an example of an equity rationale that may be addressed through subsidies. I welcome the noble Lord’s support for levelling up and his interest in ensuring that the subsidy control regime provides for this. I can assure him, however, that the Bill already facilitates the use of subsidies to support areas of relative economic deprivation.

The concept of equity rationale set out in principle A unquestionably covers investment in areas of relative economic deprivation. It is my view that guidance is the best place to provide further examples of legitimate policy objectives for subsidies and, more broadly, to address the practical application of those principles. The Government recently published illustrative guidance on the application of the subsidy control principles. This elaborated on the meaning of an equity objective:

“Equity objectives seek to reduce these disparities between different groups in society or geographic areas.”


It further states that subsidies targeted at

“Levelling up a deprived or disadvantaged area”

would be an example of an equity objective. I would be very happy to discuss this further ahead of Report with the noble Lord, Lord McNicol, and my noble friend Lord Lamont as I am keen to ensure that the intention here—that regional disadvantage is an example of equity rationale—is clear.

The amendments tabled by the noble Lord, Lord Ravensdale, raise a number of similar issues. I am glad of the opportunity to address those as well. A Bill for regulating the granting of subsidies for all purposes, in all policy areas, is not the place to articulate a levelling-up strategy. There will be plenty of time to debate that when the White Paper is published. The purpose of his amendment is to ensure that subsidies to remedy regional disadvantage are permitted under this regime, and on that point I hope I can give him complete reassurance.

As I have mentioned, this is an inherently permissive regime; there is no default prohibition on subsidies. I confirm again that addressing regional disadvantage is an equity rationale for the purposes of principle A, and one that would therefore justify the giving of a subsidy. In contrast to the EU state aid regime, there is no need for central government to set out maps or other metrics of deprivation in the Bill to permit levelling-up subsidies. By empowering public authorities at all levels of government to give subsidies that are designed by them to meet the needs of the places for which they are responsible, the Bill will undoubtedly be an important enabler of the Government’s levelling-up agenda.

However, the subsidy control regime is distinct from it. It is not directly through this Bill or regulations made under it that the Government will pursue their programme to level up the UK. It is perhaps also worth noting that, just like the EU state aid regime, the Bill is concerned with regulation; it is not a source of funding. No doubt there will be lots of debates at other times and in other places about the appropriate level of funding, but I submit that Committee on the Bill is not the place to have those debates. Everything is in its place. This is a flexible and permissive subsidy control regime. Although it facilitates levelling up, it is not the place to define it and it should not be seen as the main vehicle for pursuing it.

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[Lord Purvis of Tweed (LD)]

My Lords, if I speak briefly now, I need not intervene on the Minister. Relating to electricity and energy, having had a second weekend without electricity in the Scottish borders as a result of the storm, I may say that moving towards a more sustainable and reliable network is a key consideration for many people in the north of England and the Scottish borders. The Minister led the Statement on this issue, and I know that it is an important issue for him, but we are still vulnerable in this country.

It is a pleasure to follow the noble Baroness. Before I ask the Minister my question, it is worth putting on record that we are already a number of weeks behind member states of the European Union, which has now integrated within the subsidy scheme state aid for climate, environmental protection and energy. Whatever we secure as a result of any new scheme, we will be playing catch-up. It would be most interesting to know whether companies in Northern Ireland can now utilise the new scheme from the European Union within the areas of goods and electricity provision.

My questions to the Minister relate to Clause 51. The noble Baroness, Lady Jones of Moulsecoomb, referenced nuclear. I am happy if the Minister wants to write to me on these points. First, how will our approach on supporting nuclear power for both our domestic consumption and exporting technologies, which we will soon see in the Nuclear Energy (Financing) Bill that is going through Parliament, interact with this legislation? I understand that the Government’s proposal for funding nuclear is to make its funding model more akin to how we fund our railways and our regulated asset base. How will the regulated asset base for private sector companies, which will be able to use it, interact with the subsidy principles? We could see all the work we are doing here become completely irrelevant if private sector companies can use a regulated asset-based system. Can the Minister explain how they will interact? Does the regulated asset base fall into scope within the Bill?

Secondly, as I understand it, the Government, through small modular reactor funding, have already provided £210 million to Rolls-Royce as part of supporting small modular reactors. However, that is for export. Rolls-Royce is very keen to promote the fact that Qatar is interested in buying these technologies; a Minister who was in Qatar in recent months was saying how good that would be, with joint funding from a French company and an American company. My understanding is that support for export, unless it is WTO-approved or through export finance guarantees, is prohibited within this, so I would be grateful to know where that £210 million of small modular reactor funding fits. Is it a subsidy, or would the scheme supporting it be considered a subsidy? If the Minister could respond to those points, I would be grateful.

[Lord Fox (LD)]

My Lords, we have had a detailed debate. Before making a few comments—I emphasise “a few”—I return to the idea of having meetings. I recommend that perhaps the noble Baronesses, Lady Jones and Hayman, and others should all have separate meetings with the Minister. Then we can compare notes afterwards.

I find it interesting to read Schedule 2 because it refers to:

“Subsidies in relation to energy and environment”.


I am trying to think of any human activity that, strictly speaking, does not involve energy or the environment. Perhaps the Minister can suggest an activity that goes on which does not consume energy and/or affect the environment in one way or another, because that seems a false distinction. Many speakers have made the point that trying to put energy and the environment in a ghetto within Schedule 2 does not make any sense. Human activity, by its nature, is interacting with the planet at that level. It therefore seems clear that those activities pervade all elements of the legislation that we are talking about here.

Each of this suite of amendments—I have never heard a group of amendments called a “suite” before but it is nicer than “raft”, which I have always wondered about— seeks to address on a small scale, in its own way, the bigger point that speakers have made: these issues need to be at the centre of the Bill. I am not going to compare and contrast any of the amendments but I will pull out a point around Amendment 12 that is worth emphasising: supporting activity that can cause pollution. We have not heard much about that in these speeches, although I think my noble friend Lady Sheehan mentioned it. We have to be clear that if subsidies are there then they are not supporting pollution, which is another aspect of our environmental impact.

I reiterate—but without repeating—that we need a plan. Net zero is not an easy target. Whichever year we set for it, there is an awful lot to do; we need to find ways of developing technology that we do not even have yet. It is clear that subsidies will be a key element in delivering our response to net zero. However, the plans are not there to get us there. That is not my opinion; I take as my text the Climate Change Committee’s statement on its annual report to Parliament last year, showcasing the strategic blind spot that we keep coming back to:

“The Government has made historic climate promises in the past year, for which it deserves credit. However, it has been too slow to follow these with delivery. This defining year for the UK’s climate credentials has been marred by uncertainty and delay to a host of new climate strategies. Those that have emerged have too often missed the mark. With every month of inaction, it is harder for the UK to get on track”—


the point that my noble friend Lord Purvis was making. The committee says:

“An ambitious Heat and Buildings Strategy, that works for consumers, is urgently needed. Delayed plans on surface transport, aviation, hydrogen, biomass and food must be delivered. Plans for the power sector, industrial decarbonisation, the North Sea, peat and energy from waste must be strengthened. The … cross-cutting challenges of public engagement, fair funding and local delivery must be tackled.”


Subsidies are going to be a key way of making many of those issues happen—the Government sometimes use the phrase “pump priming”—but, instead of having a plan, the Government are settling back for what I can only describe as a free-for-all. It is clear that the amendments are trying to set out a structure where that free-for-all can be brought in and focused on something that matters to all of us every day.

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[Lord Callanan (Con)]

The noble Lord makes some valid points on the RAB mechanism, which will be debated in full on the upcoming nuclear Bill, but I will write to him on the specific points, particularly about support for the SMR reactors he talked about. I point out that existing subsidy schemes are of course excluded from the Bill. No doubt he will want to ask what happens if we want to award a similar subsidy in the future.

In my view, the energy and environment principles provide helpful support to our energy, environmental and climate change ambitions, but they are not the main engine of those ambitions. Finally, to answer the other questions of the noble Baroness, Lady Jones, on community energy—not really a matter for the Bill—and the Government’s approach to net zero, I am very happy to follow that up and write to her with the details. We are fully in favour of community energy projects, but of course they have to pay their share of the costs towards the network, as all other projects do if they wish to be connected to the national grid. I will write to her with the details and follow up with the noble Lord, Lord Purvis, on SMRs and the basis of nuclear subsidies.

[Lord Fox (LD)]

My Lords—

[Lord Callanan (Con)]

I have not satisfied them all yet.

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[Lord Fox (LD)]

There may be something to add to the letter. My noble friend Lord Purvis made a valid point about paragraph G of Schedule 1, to which the Minister feigned non comprendi. The point my noble friend was making is that the Minister had said there was no need to have an explicit environmental or energy benefit in the Bill because that was implicitly within everything. However, paragraph G absolutely says that unless something is a specific policy objective, it is not considered to be a beneficial effect, so that paragraph cancels out what the Minister said to the Committee. Some sense of resolving that tension would be helpful. That is something we can come back to because, if indeed paragraph G overrides other benefits, which it seems to do, it is even more important that environmental and energy issues are placed at the heart of the Bill.

[Lord Callanan (Con)]

I think if the objective is set then it is an overarching benefit, but I will be happy to confirm that to the noble Lord, Lord Purvis, and will copy the letter to the noble Lord, Lord Fox, as well. Once again, I will be very busy in my letter-writing activities for the next few days. With that, I hope noble Lords are satisfied—or, if not satisfied, content—with the answers that I have given and therefore, in compliance with that, that the noble Lord will feel able to withdraw the amendment at this stage.

Subsidy Control Bill

Lord Fox Excerpts

Committee stage
Wednesday 2nd February 2022 Grand Committee

[Lord Callanan (Con)]

I do not want noble Lords getting mixed up. I was referring to the fact that schemes can be designed for the whole of the United Kingdom. The purpose of this clause is to prohibit direct subsidies where a business is paid a sum of money to move from area A to area B—let me finish this point—depending on the definition of the areas that we spoke about previously.

However, that is only for direct subsidies, of course. The attractiveness, training provisions et cetera that could exist or be subsidised in a different area might make it more attractive for that business elsewhere, but the idea is to avoid the situation in the US that I talked about, where they come along and give companies—I will not name them, but noble Lords know the examples I am talking about—huge amounts of money literally to get it to close down its operations in one state and move to another. That is what we are trying to avoid, but we fully accept that it is perfectly in order to increase the attractiveness of an area, show how wonderful it is and show what is available there, including trading provision, sites et cetera. However, we do not accept using direct financial assistance to move from one part to the next.

We have already published illustrative guidance. We will look at enhancing that further with more detail before we commence with the legislation. If it is drafted and ready in time, I will share it with the noble Lord, of course.

[Lord Fox (LD)]

Without labouring the point, but labouring the point, I want to come back to the point made by the noble and learned Lord, Lord Thomas, about the grey areas that appear to be here. This is not a hypothetical example—it is a real one without names—but imagine that you have an inward investor, possibly doubling down on an investment that has already been made. As part of the process of negotiating with that investor, government, whether national or local, determines that it is important to have a technology park where the investor’s suppliers are aggregated and work together to support the investor.

The level of support needed to create the system of suppliers that supports the inward investment, which is clearly of benefit to the region, and therefore to the country, is clear. However, it is also clear that, if arms are not twisted, they are also being bribed or given money to create that park, that environment, to make sure that the inward investor gets what they want when it comes to the investment. Is the Minister saying that this sort of process will be entirely legal even if Clause 18 remains in the Bill?

[Lord Callanan (Con)]

Yes, if they are an inward investor coming into the country and they do not already have an operation in another part of the country.

[Lord Fox (LD)]

But if they are relocating suppliers in order to support—

[Lord Callanan (Con)]

That is not the example the noble Lord quoted. My understanding is that, if they are just increasing the attractiveness of an area and there is no direct financial payment to the company to move from one area to the next, yes, that would be allowed. If that is not correct, I will write to the noble Lord, but that is certainly my understanding of how that would work.

As I explained, this prohibition puts down a marker that is intended to prevent the small class of disruptive but harmful subsidies, such as poaching and outright bidding wars. I suggest to the noble and learned Lord, Lord Thomas, that it would not be easy for such subsidies to circumvent this prohibition.

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Moved by

[Lord Fox]

15: Clause 10, page 6, line 33, leave out subsections (5) and (6) and insert—
“(5) A streamlined subsidy scheme must be made or modified by regulations subject to the negative procedure.”Member’s explanatory statement
This amendment would require a streamlined subsidy scheme to be made by regulations, as recommended by the DPRRC.

[Lord Fox (LD)]

My Lords, they say that a change is as good as a rest, so the Minister should be very sprightly now, as these amendments bring a slight change of gear. The group consists of eight items, mostly on the same theme, with the exception of the clause stand part in the name of the noble Baroness, Lady Bennett. Because that is so different, in the interests of time and clarity I shall not speak to it, so I look forward to hearing more about it from her.

I am tempted to say, “Here we go again”. The pattern we see here is one that we see with every Bill. First, the Government table new legislation absolutely riddled with secondary legislation. There is usually at least one case of secondary legislation allowing the amendment of primary legislation. Then the Delegated Powers and Regulatory Reform Committee steps forward and issues a report highlighting those issues and recommending remedies. Next, the Minister—in my area it is always the noble Lord, Lord Callanan—stands up, pleads the case for flexibility and sometimes, indeed increasingly, disputes Parliament’s competence to even make some of the decisions that will be required in the future. If we are successful through this process, some, although usually not all, the offending clauses get removed or modified. Lately, however, I detect an emboldened Minister. Increasingly—the ARIA Bill is an example—he uses the Dispatch Box to refute the arguments of the DPRRC.

We should be clear that this committee is an important senior committee of your Lordships’ House, and its report Democracy Denied? The Urgent Need to Rebalance Power between Parliament and the Executive stated that

“the principles of parliamentary democracy, namely parliamentary sovereignty, the rule of law and the accountability of the executive to Parliament”

should be at the heart of how a department approaches the delegation of legislative powers. The Bill falls far short of that objective, which is why there are so many amendments in my name in this group. I am also pleased to support the noble Lord, Lord McNicol, and the noble and learned Lords, Lord Judge and Lord Thomas, in Amendment 50, which seeks to deal with Clause 47, which is clearly the most egregious example of executive overreach.

I turn to the amendments in order. Amendment 15 would require a streamlined subsidy scheme to be made by regulation. Clause 10 allows Ministers to make streamlined subsidy schemes, which are defined opaquely in Clause 10(4). This demonstrates that Ministers consider that all subsidies within such a scheme comply with the Bill’s subsidy control principles and requirements. In practice, it means that if a public authority keeps within the limits of the scheme it is no longer required to consider the subsidy control principles or requirements when giving an individual subsidy. Streamlined schemes will be laid before Parliament after being made. They will not be subject to the negative or the affirmative procedure for regulations. The DPRRC report sets out a very good rationale for recommending that the power to establish streamlined subsidy schemes in Clause 10 should be exercised by regulation and that then the negative procedure would be appropriate, hence Amendment 15.

Next is a probing amendment to raise concerns about the definitions in Clause 11 being made by regulations, as also highlighted by the DPRRC. Clause 11 allows certain definitions to be defined by affirmative regulations rather than appearing in the Bill. These definitions are

“subsidy, or subsidy scheme, of interest”

and

“subsidy, or subsidy scheme, of particular interest”.

We have touched on this already. These definitions are important in determining the scope of the subsidies or the schemes that must be referred to the CMA under Clauses 52 to 64. The DPRRC is sceptical about the Government’s reasoning for leaving these definitions out of the Bill, and so am I. The DPRRC states:

“The power in clause 11(1) to define in regulations certain key terms is inappropriate and we recommend that it be removed from the face of the Bill.”


As a coda, and this is quite unusual, the DPRCC adds:

“Although we have been critical of the over-use of Henry VIII powers, we prefer to see key definitions appear on the face of the Bill—perhaps with a Henry VIII power to amend by affirmative regulations—rather than not appearing on the face of the Bill at all and always being a matter for regulations.”


That is an interesting twist, and one that is worth debating.

Amendment 26 addresses Clause 16(4) to (7) and seeks to require designations related to marketable risk countries to be made by regulations not by direction. Again, this is recommended by the committee.

Clause 16(4) is subject to neither the affirmative nor the negative procedure. The Government’s reason for having no parliamentary procedure is that they

“want to be able to act rapidly to allow short-term export credit finance where market factors may have rendered the list of marketable risk countries in need of amendment.”

One thing that the Covid crisis has demonstrated is that there is no barrier to the rapid tabling and approval of regulation. One thing that Brexit has demonstrated is that your Lordships’ House has a huge capacity to handle literally thousands of regulations when they are set before it. So any pleading that executive power is needed because Parliament cannot move fast enough is tosh, frankly—or, as the DPRRC puts it rather more politely,

“the Government can make rapid legislative changes by negative regulations or ‘made affirmative’ regulations. The idea that the making of regulations is inconsistent with the need to move quickly is fallacious. Negative and ‘made affirmative’ regulations can be made as quickly as can a direction.”

In other words, it is tosh. This amendment would install a process of regulation rather than ministerial direction.

Amendment 30

“would remove the ability of the Treasury to amend the definition of ‘deposit taker’”.

Amendment 31

“would remove the ability of the Treasury to amend the definition of ‘insurance company’”.

Amendment 32

“would remove the ability of the Treasury to amend the definition of ‘insurer’”.

Clauses 25 to 27 give the Government the ability to revise certain definitions to cater for developments that cannot be anticipated at the time of the Bill’s enactment. By way of example, the definition of “deposit taker” in Clause 25 uses a standard definition found across the statute book. If this definition required amendment in some future primary legislation, it would be perfectly possible for that legislation to contain the necessary consequential provision to enable the definition in Clause 25 of this Subsidy Control Bill to be amended in due course. The same reasoning applies to the definitions of “insurance company” in Clause 26(4) and “insurer” in Clause 23(7). Amendments 30 to 32 would remove the ability to amend those definitions, which, clearly, would not hamper future changes.

Amendment 50, proposed by the noble Lord, Lord McNicol, and signed by myself and the noble and learned Lords I mentioned, would remove Clause 47, which aims to give the Treasury powers

“to keep financial stability directions secret from Parliament and the public, thereby enacting a recommendation of the Delegated Powers and Regulatory Reform Committee.”

As the committee states,

“clause 47 involves fundamental issues of government accountability and parliamentary scrutiny … Not only does the provision enable the Government to disapply a legislative provision—the Bill’s subsidy control requirements—by a direction that can be kept secret from Parliament, but the justification for the power not being subject to any parliamentary scrutiny procedure includes, according to the Memorandum, ‘the potential for non-approval by Parliament’”.

In other words, this has to be included because Parliament might not agree with it. That should give us pause for thought.

The DPRRC is clear on the malign nature of this clause. It says that

“clause 47 is extraordinary for several reasons … Parliament has no power to scrutinise and reject a Government direction suspending the application of the Bill’s subsidy control requirements … Parliament may be deliberately kept in the dark about the existence of such a direction if the Treasury elects to rely on clause 47(7) … One of the Government’s reasons for having no parliamentary procedure is that the potential for non-approval by Parliament would create uncertainty that the subsidy will continue to be available. In other words, because the Government might be defeated if the direction could be voted upon, there should be no parliamentary procedure and no vote.”

In conclusion, the committee recommends

“that clause 47(7) should be removed from the face of the Bill”,

which is what Amendment 50 would do.

I am sure the noble and learned Lords who follow me, and indeed the noble Lord, Lord McNicol, will be more erudite, but I leave this set of amendments with a final injunction that we should seek to uphold all the DPRRC’s recommendations, not just the most serious ones. Parliamentary power is being eroded, little by little, one piece at a time. We have to resist this. I beg to move.

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To close, I look forward to no doubt substantial engagement with noble Lords further on these issues. Therefore, for the moment, I hope noble Lords feel able to let Clauses 11 and 46 stand part of the Bill, and that they will not press Amendments 15, 26, 30, 31, 32 and 50.

[Lord Fox (LD)]

My Lords, this has been an interesting debate. The Minister said “for the moment”—perhaps for the moment.

I appreciate that the Minister has at least left his door ajar to some of this, but the body language, and indeed the language, still indicate that there is this cultural campaign to make sure that executive power is gathered where possible and that the legislature is pushed to one side. This is what the DPRRC referred to in its report; it is what we have to put up with in every piece of legislation. Actually, as I said, I get the sense that the Government are emboldened and keep going even further with this. I feel that your Lordships will have to consider where we go with this on Report.

I have a couple of observations. When a Minister says that something is too technical, I feel as though I am being tapped on the head and told that I should not worry about such things—this coming from the Minister who tabled the 17 technology areas for the security and investment Bill, which was one of the greatest aggregations of technical information that I have ever seen. The idea that we and Parliament are not capable of handling something that is “technical” is deeply patronising.

Turning the focus to Clause 47(7), nowhere in it are the words “delay”, “temporary” or “otherwise” used. If, as the Minister implied—said absolutely, in fact—the purpose is a temporary delay in what would otherwise be a fully transparent process, that is not what Clause 47(7) says. If that is what the Minister wishes to put to us, that is what it should say in the Bill, but it does not.

Putting those comments to one side, I am sure that we will come back to this unless the Minister mobilises the full forces of righteousness and comes back with some meaningful amendments. I beg leave to withdraw Amendment 15.

Amendment 15 withdrawn.

Amendments 16 and 17 not moved.

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[Lord Callanan (Con)]

That issue is not covered by these amendments, but I will come back to the noble Baroness in writing.

[Lord Fox (LD)]

My Lords, those on this side welcome these three amendments. It is always hard to get those first government amendments out; after then, you can keep them coming, Minister. We have one or two suggestions about what you might like to put in them.

It is good to have a consistent approach; indeed, a consistent approach to how you value a subsidy is a good starting point. Perhaps we can then have a consistent approach to how local authorities evaluate the need for a subsidy, and to how they are regulated and managed within areas. Consistency is what we are calling for. This is clearly the first baby step towards having a control system operated from a level playing field.

[Lord McNicol of West Kilbride (Lab)]

I echo the points of the noble Lord, Lord Fox: it is interesting to see government amendments at this early stage, even though none of these issues was raised at Second Reading. Likewise, we are not going to oppose any of these amendments.

Similarly, not just on consistency but on transparency, a good number of amendments were tabled in Committee on which we are more than happy to work with the department and the Minister to bring them back on Report. This will hopefully deal with a number of issues on which we have concerns, so that we do not object to them at that point.

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[Baroness Sheehan (LD)]

My Lords, I added my name to Amendment 24. I also support Amendment 21, which is closely related, and Amendment 68, which has real implications in addressing limits on enforcement for subsidies that may have been misdirected. I thank the noble Lord, Lord McNicol of West Kilbride, for tabling these amendments and for his very able introduction of them.

To my mind, Amendments 21 and 24 have been tabled to try to establish why the Government wish to disapply the subsidy control principles and the energy and environment principles from a subsidy merely because it has been given under a subsidy scheme. According to the excellent Library briefing on the Bill, the Government have said that a subsidy scheme is a means for public authorities to award a number of subsidies to enterprises on a discretionary basis, as opposed to awarding subsidies on a case-by-case basis to individual enterprises. To use the Minister’s words, the Government want to try to create a “minimally burdensome” scheme. It would make it quicker and easier for subsidies to be given if this were to be the case.

As drafted, the Bill says that subsidy schemes must be made by a public authority only if the subsidies provided for by the scheme will be consistent with the subsidy control principles laid out in Schedule 1—I hope noble Lords are still with me; I think it will make sense in Hansard—or, where relevant, the energy and environment principles laid out in Schedule 2. That is all well and good. A subsidy made under a subsidy scheme must comply with the principles laid out in Schedules 1 and 2, so you would think it would be open to review on that basis and enforceable as such. But you would be wrong, because Clause 12(2) states that

“‘subsidy’ does not include a subsidy given under a subsidy scheme.”

Why? It does not make any sense. Hence Amendment 21 is needed to take out this nonsense, so that the subsidy control principles can apply to all subsidies.

Similarly, Amendment 24 would remove Clause 13(2) so that the energy and environment principles can also apply to all subsidies. Given that there is a threshold for transparency and accountability of about £500,000 for subsidies given under a subsidy scheme, that will very quickly add up to millions of pounds, for which, as the Bill is currently drafted, there will be no scrutiny. That would not serve businesses or the Government.

Amendment 68 is necessary because Clause 70(2) says that the CAT cannot be asked to review a subsidy decision if the subsidy was given under a subsidy scheme; only the subsidy scheme itself can be reviewed. That makes a nonsense of the enforcement regime because no route will then exist to review whether a subsidy complies with the subsidy scheme. To the question of when a subsidy is not a subsidy, the answer is when it is given under a subsidy scheme. Surely the Minister can see the absurdity of such a position. Every subsidy must be available for review if necessary. That is why these amendments are necessary. I thank the noble Lord, Lord McNicol of West Kilbride, for tabling them.

[Lord Fox (LD)]

My Lords, it is with great pleasure that I follow my noble friend Lady Sheehan and the noble Lord, Lord McNicol, in support of these amendments. Subsidy schemes seem to be designed as monoliths with no granularity at all. Why is that one of the central theses of this Bill? What possible advantage do the Government seek to gain, other than the ability to hide what money is going to whom? To those of us on this side of the Committee, that appears to be what is going on.

Amendment 21 would ensure that subsidy schemes cannot be used to hide subsidies that would, if they were stand-alone subsidies, be reported, as my noble friend set out. It is clear to all three of us that there is huge scope for significant and expensive subsidies to be hidden in these schemes. That seems to be the only reason why this is in the Bill. I am sure that the Minister will want to explain the reasons, because that must be the response to these amendments. I am sure that we will all be happy to throw our hands up if we are wrong and there is a hugely important reason why this is needed for the operation of the subsidies.

Amendment 24, co-signed by my noble friend, would require individual subsidies given under the subsidy scheme to be judged against the energy and environment principles. Once again, we are back to Monday evening, when my noble friend Lord Purvis posed a question regarding principle G in Schedule 1. The noble Lord, Lord Callanan, got to answer it; I suppose that this time it is the turn of the noble Baroness, Lady Bloomfield. During that debate, the Minister seemed to make it clear that sustainability considerations are indeed implicit in every aspect of the Bill. He suggested that, by implication, there must be some benefit for these things to be legal, but there is no explicit reference to that. I apologise if I am putting words in his mouth because principle G says the opposite. Therefore, rather than repeat what I have said, I have invented another one of my little examples, for which I apologise in advance.

Let us say that I have won a subsidy to expand my pottery business. As part of the submission, I cite increased employment and increased local sourcing of services as the beneficial effects that investment in my pottery business would bring. Nothing in the schedule or the rest of the Bill says that I have to benefit the environment by using less energy. If I am successful, I employ 30% more people and use 30% more local services, therefore achieving the scheme’s objectives, while also using 30% more energy to fire my products. That would appear to be how the Bill will work. Therefore, we need Amendment 24 to include consideration of the environmental impact that that subsidy would bring. It is very simple.

Amendment 68 would allow individual subsidies given under a subsidy scheme to be reviewed. Once again, it is cracking open the monolith and being able to look at the granularity within a scheme. Again, it follows my initial points: we need to be able to see inside these schemes for transparency to be available.

[Baroness Bloomfield of Hinton Waldrist (Con)]

I thank the noble Lord, Lord McNicol, for tabling Amendments 21, 24 and 68. Perhaps it would be helpful if I started by explaining the status of subsidy schemes in the Bill and why the Government have taken this approach.

Public authorities that seek to give multiple subsidies have three options available to them. First, they can consider each subsidy separately and assess its compliance with the principles and the other requirements in the Bill. Secondly, they can set up a scheme—that is to say, they can identify a group of possible subsidies, with defined parameters, and ensure that any possible subsidy within that group complies with the subsidy control requirements. Thirdly, they can use a streamlined subsidy scheme or another scheme where a public authority—perhaps the UK Government or one of the devolved Administrations—has already assessed that defined group of possible subsidies as compliant with the requirements.

Clauses 12 and 13 place a duty on public authorities to consider the subsidy control principles and the energy and environmental principles respectively before deciding whether to give an individual subsidy or make a subsidy scheme. A public authority cannot go on to give the subsidy or make the scheme unless it is of the view that it is consistent with the principles, including the energy and environmental principles the noble Lord, Lord Fox, emphasised. Once created, public authorities can then award multiple subsidies under that scheme with the confidence that they comply with the subsidy control principles.

By making a scheme instead of assessing multiple individual subsidies against the principles, public authorities will save themselves the administrative time and effort—ultimately equating to taxpayers’ money—it takes to consider any assessment, even one that is light touch and common sense. Schemes also provide a way for public authorities to grant subsidies with greater confidence and security because anyone wishing to make a challenge in the Competition Appeal Tribunal must do so to the scheme itself within the limitation period of one month following publication of information about the scheme on the transparency database. That one month period can be extended by a pre-action information request. We believe that this strikes the right balance between facilitating proper scrutiny of the scheme and removing any perpetual threat of challenge, which can make public authorities more reluctant to give, and recipients more hesitant to accept, beneficial subsidies.

Noble Lords will be aware that this subsidy control regime presents a new approach tailored to the specific needs of the United Kingdom. I do not believe that it is generally useful to justify elements of the Bill on the grounds that they correspond to how things used to be done in the EU state aid system, but it is helpful to underline that public authorities have been making use of subsidy schemes for the purposes of administrative simplicity for a long time. Although the EU mechanisms for decision-making and challenge were quite different, public authorities that gave subsidies in compliance with pre-approved schemes generally did not need to obtain further approval for each individual subsidy under a scheme and could proceed to give those subsidies with confidence.

I also add, as the noble Lord, Lord McNicol, pointed out, that transparency is very important. Subsidies given under schemes over £500,000 must be uploaded on the transparency database under the Bill as it stands. We believe that the £500,000 threshold represents an appropriate balance between minimising the administrative burden and requiring subsidy transparency in the public interest.

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[Baroness Bloomfield of Hinton Waldrist (Con)]

I take the noble Baroness’s point on that. I would like to discuss it with the team when I have had a chance to look into it more thoroughly.

As I have just set out, under the terms of Clause 70, an interested party may not submit an application for the Competition Appeal Tribunal to review a decision to give an individual subsidy under a scheme. This is to ensure that scrutiny and challenge occur at the scheme level. The noble Lord’s amendment would enable applications for review to be made to the Competition Appeal Tribunal for individual subsidies granted under a subsidy scheme without the requirement for the broader subsidy scheme also to be reviewed.

[Lord Fox (LD)]

I am glad that the Minister has come to this point. Earlier on, I think I heard her say that transparency on a subsidy would raise the potential for a challenge to happen, but the whole system of policing this is through challenge, so how can challenge happen if invisibility is the result of this?

The Minister was suggesting that you can challenge only the overall scheme, not the individual granularity of a scheme within it, but that flies in the face of the central principle of the Bill which is that if I am a business and another local business gets a subsidy, I can challenge that through the CMA, assuming that there are grounds for it. If I do not know that my local competitor is getting that money because its subsidy is locked inside one of these schemes, I cannot challenge it. So the Minister is correct: transparency will lead to more challenge and that is the purpose of the systems put in place within the Bill. We need some working through of this from the Minister—it may not be now but perhaps in writing—because it seems that there are two things working in opposite directions.

[Baroness Bloomfield of Hinton Waldrist (Con)]

Given that the whole structure of the subsidy regime is to have the overarching scheme, compliant with all the principles contained in the Bill, and then a series of other subsidies given within that, if you increase the likelihood of challenge and therefore reduce people’s confidence in it, why would a local authority or a government body give a subsidy? Why would there be any incentive for them to give a scheme? While we are wholly appreciative of the importance of transparency, there is a balance to be struck here. Perhaps we could make more progress and I can write to the noble Lord.

[Lord Fox (LD)]

It was the Government who chose to put the principle of challenge on the face of the Bill. The noble Lord, Lord Lamont, and I are coming to the idea of creating a body that can police those things. Perhaps that would solve some of the problems that the Minister suggested—but those problems are central to the way in which the Government have decided that subsidies should be policed under the Bill.

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Clearly, the levelling-up fund will have to face scrutiny of an intense kind to ensure that it is levelling up and addressing the life chances of people in those areas which are put as the priority. We hope that safeguards will be built into the schemes that we are discussing. There is a lack of clarity around this and I hope that the measures which exist in this legislation will be clear and honoured. I hope that the Minister can outline the Government’s thinking on this and how we can, in a very troubled time, all be reassured and get the clarity that we need so that the highest levels of probity will be followed in the award of subsidies under the provisions.

[Lord Fox (LD)]

My Lords, it is a great pleasure to follow that speech by the noble Baroness, Lady Blake. I was reassured by some of things she said about how the Nolan principles are being applied at the local level—that that is her experience is reassuring. Of course, it brings this Bill into focus again.

To some extent the amendment is idealistic, but look at it the other way round. What is the converse of this amendment? It is that we allow a Bill to go through that will be subjected to huge political manipulation and little transparency. We have already seen that the Government are not averse to using political direction to spend literally billions of pounds. I ask the Minister to put himself in the boots of the Opposition, because the Bill that he is creating is one that future Governments will have to use. If the Minister, if he were listening, were to put himself—

[Lord Callanan (Con)]

I am listening.

[Lord Fox (LD)]

Sorry; I withdraw that. If the Minister were sitting in the opposition seat and opposing this Bill—or, indeed, opposing its use—he would, I am sure, find it very difficult. That is why it is to the enormous credit of Her Majesty’s loyal Opposition that they are standing hard against this Bill. I am sure that they harbour a view that, in time, they will find themselves in government and the temptation for them—indeed, for any Government—to use these powers would be quite high. It is therefore to the Opposition’s credit that, together, we are seeking to put some transparency into this.

At Second Reading, I said that the more flexibility and opacity there is in the subsidy system, the more opportunity there will be for subsidies to be directed for political purposes. I did not use the phrase “pork barrel” but I should have, because there is no other way of explaining how almost seven-eighths of the £1-billion English towns fund goes to Conservative-held seats. There is no way to explain how that money goes there other than political direction. I am sure that the Minister will tell me that there is a formula. There is a formula for almost anything; if you know what you want to create, you build the formula to achieve it. We are already seeing that. I assume that schemes like that will be rolled into a subsidy scheme so that we never see the granularity by seat. This is perhaps our last chance to point to that evidence before it all gets rolled up and aggregated so that we cannot disassemble it.

As we look at this Bill, we should look at the future of subsidies in this country, not the short-term gain for a political party. That is what we are seeing at the moment: a short-term gaming, or potential gaming, of the subsidy system. That is why this amendment was moved and why we have had an interesting short debate on it. I will be interested to see whether the Minister decides to engage at all, because sometimes he just does not. If he does decide to engage, I will be very interested to hear what he has to say.

[Lord Callanan (Con)]

It is very unfair of the noble Lord, Lord Fox, to suggest that I would not engage with his amendment. In this debate, I particularly enjoyed the noble Baroness, Lady Blake, using exactly the same argument that I will deploy against the amendment to argue somehow that she is in favour of it.

Anyway, let us explore the amendment as it was tabled, because I think we will all agree that it is a particularly ridiculous amendment. However, I thank the noble Lords, Lord Purvis and Lord Fox, for putting it forward. Essentially, the amendment seeks to prevent subsidies being given where there is a political motivation or influence. I will not engage with some of the broader points noble Lords made about transparency and things like that because we will come on to those points later in the debate, but I will take the amendment as it is printed. I suspect that what both noble Lords actually meant to say is that they seek to prevent improper political influence over subsidy decision-making. On that, we completely agree, of course. However, as I will argue, I do not believe that this amendment is necessary to achieve that.

First, there are already a number of safety nets in the Bill which will help to prevent improper political influence over subsidy decision-making. Any subsidy, unless exempted, must meet the subsidy control principles, including remedying an identified market failure or addressing an equity rationale. In addition, the subsidy must be limited to what is necessary to achieve it. A subsidy which had improper political influence would struggle to meet those principles.

Secondly, Clause 77 prevents the misuse of subsidies, and a public authority may recover a subsidy from the beneficiary where it has been used for a purpose other than the purpose for which it was given. Even outside the subsidy control requirements, a subsidy must meet value-for-money tests, which help to ensure that public spending is being made appropriately. For UK government spending, this is governed by the Treasury Green Book—all those in government who have to engage with the Treasury will know how rigorous it is in implementing that—and, of course, all the principles set out in Managing Public Money. They will be generally applicable to all public authorities in the UK, although the devolved Governments have their own detailed rulebooks, as is right. Finally, a subsidy granted for an improper purpose may give rise to judicial review on public law grounds.

More broadly—this comes back to the point that the noble Baroness, Lady Blake, made, even though, bizarrely, she was arguing in favour of the amendment—it is unclear how a public authority might avoid any political motivation whatever. I do not think that that would be desirable. When the noble Baroness, Lady Blake, was in a position of authority on Leeds City Council, her authority, or a devolved Government, for example, was or would have been democratically elected. I assume that when she stood for election with her party she set out her political priorities. She might have said that where a subsidy was appropriate she wanted to stand for election on that basis. It is right and proper that she should have been able to do that where the subsidy met the subsidy control principles. It would be almost impossible for any democratically elected local authority or a devolved Government to avoid any political influence. We are all politicians, some of whom were democratically elected. This applies to central and local government.

All subsidies have a degree of political motivation or influence because they are desired to achieve a public policy objective on which people stand for election and which will have been set by a public authority with democratic accountability. Let us pursue the example from the noble Baroness, Lady Blake. If she stood for election on Leeds City Council with a commitment to, for instance, provide subsidised transport in rural parts of Leeds—I think Leeds has some rural areas—it might have been appropriate to provide a subsidy to a bus operator. That commitment will have been made at a political level as the result of her manifesto in a political election. That would have been a politically motivated subsidy, but I think we would all agree that, in the circumstances, that would have been wholly appropriate and presumably useful for that particular area.

I hope that I have demonstrated that the amendment is unnecessary. The wording is clearly seriously flawed. I therefore hope the noble Lord will be able to withdraw it.

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[Lord McNicol of West Kilbride (Lab)]

My Lords, I shall speak also to the other three amendments in this group. Without wanting to do the Minister’s job for him, let me start by acknowledging that there is a rolling programme of improvements to the subsidy database which I think all sides would acknowledge does not yet meet the standards one would expect a database of this importance to meet. Irrespective of that rolling programme of improvements, the introduction of a new subsidy control regime affords us an opportunity to look again at how subsidies are reported by public authorities so that they can be looked at by possible economic competitors and the public at large and be held to a higher account. The most obvious and effective way of ensuring the database fulfils its purpose is to ensure that it is subject to periodic audits with any recommendations being acted upon within a reasonable timeframe. We see no reason why the Minister would not want to accept Amendment 37. As the Government have freely admitted, the quality of the data has not been sufficient.

I turn to Amendments 44, 45 and 46. I thank the noble Lord, Lord Fox, for putting his name to them. Amendment 44 would require relevant authorities to include in the entry to the database the exact date on which the information was submitted. One of the fundamental differences from the previous scheme, the European state aid scheme, was that agreements were made before the scheme came into effect. The flipside of this is that that obviously speeds it up, but the schemes or the subsidies will already be in place. Putting into the database the specific date on which the information was submitted will again help with the transparency around it. It is hard to think of any case against such a requirement so I hope the Minister will be able to confirm that. It increases transparency and provides clarity for those gathering the information from the database. It may also allow identification of those authorities that are particularly good or bad at submitting their entries.

Amendment 45 would require information on domestically sourced content to be posted on the database. While Clause 17 prohibits subsidies contingent on the use of domestically produced content, nothing in the WTO provisions or elsewhere, including the TCA, would prevent basic reporting requirements. Some organisations, including the GMB trade union, believe that regular reporting of the use of domestic content could drive—but, importantly, not compel—contractors to make better use of UK supply chains. Indeed, in specific cases such as steel procurement, the Government have set a benchmark of 60% domestic content for the offshore wind sector, so some of these requirements already exist. Putting them inside the database and shining a light on them could help encourage more.

Finally, Amendment 46 would require authorities to demonstrate the terms and conditions of their subsidy schemes. When I first read it, I thought Amendment 46 may well have fitted into the group we dealt with three groups previously, but because it is relevant to the database it probably sits within this debate. The argument, however, is very similar to the debate we had three groups ago.

All the amendments are intended to improve the quality of the database and the amount of information available to practitioners operating in that field. Interestingly, Chapter 3 of the Bill is headed “Transparency”, so a bit more transparency may help.

One point not covered by the amendments, but to which we may well come back, is that the chapter on transparency, especially Clause 34, uses the word “may” a lot. To take one example, Clause 34(3), at line 28, says:

“In relation to subsidy schemes, the regulations may require a public authority’s entry to include”.


When the Minister responds, I wonder whether he could give us just a bit more detail. These are partly probing amendments but, on the use of “may”, when would those regulations and requirements on the public authorities have to be followed and when would they not have to be followed? Again, I think the use of “may” in there does not help. With that, I beg to move.

[Lord Fox (LD)]

My Lords, I rise to speak to Amendments 44, 45 and 46, to all of which I have added my name. It is a pleasure to follow the noble Lord, Lord McNicol. Amendment 44 requires the date a subsidy scheme is entered into to be put into the database, Amendment 45 is about domestically sourced content and Amendment 46 is about other areas of specifying the date. All three of these amendments come together to play to the word that we have been using in these groups, which is “transparency”.

I shall briefly focus on Amendment 45 because it is an interesting point. The nature of what we are talking about hinges around Clause 17(1), which I assume is a WTO-driven point that we cannot favour domestic content over external content. I accept that we need to follow WTO rules. However, as the noble Lord, Lord McNicol, said, that does not stop us collecting the data. Why collect the data if you do not have an actionable need to use it? Therefore—never mind the subsidy that is running, for which we are collecting the data—if it turns out that all that subsidy leads to imports only rather than domestic benefit to the supply chain, when we come to extending or repeating that subsidy or using it in a similar way in another sector, I assume that it is perfectly legal within WTO for the Government to take the benefit and the learnings of that data, having of course given themselves the power to collect it through Amendment 45, to modify future schemes which would still be legal within WI and benefit the domestic supply chain. WI? Jam for all. I meant WTO.

It is a legal question. The Minister may not have the answer straightaway. That data having been collected, I assume, and I would like confirmation, that it is perfectly legal to use that data to design repeat or future schemes so that the UK economy benefits more from that subsidy. That is my main question on these amendments.

[Lord Callanan (Con)]

I am grateful to the noble Lord, Lord McNicol, for these amendments. I think we have much more consensus on the principles. I shall start with Amendment 37. I think we agree that the database should be as accurate as possible. There was an extensive debate in the other place about the quality of the database and the requirements on public authorities when uploading to the database. As was set out there, the database is relatively new and, as the noble Lord acknowledged, it continues to be developed. My department has been working on a range of improvements and we continue to review how it operates. I genuinely welcome any feedback that noble Lords have now or in future on how it can be improved.

Since Report in the other place, our officials have launched an initiative to follow up with public authorities where the information on the database is vague or the links provided go to a landing page rather than providing the necessary detail about a subsidy. In addition, where the subsidy control team receives information about schemes that have been made, that information is now cross-referenced with what is on the database to ensure that it is correct. More broadly, the Government are committed to best practice when it comes to public data, and the subsidy database uses the service standards specified by the Government Digital Service.

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I will respond to the concern of the noble Lord, Lord Fox. It is perfectly legal and, indeed, important to ensure that a subsidy targets a UK-specific policy objective. If he needs more technical information about compliance with international law, I will be happy to write to him. But, importantly, he will understand that I cannot agree that the use of the database proposed by the noble Lord would be an appropriate way to promote subsidies as a tool to facilitate economic growth in the UK. As both noble Lords are probably aware, WTO rules mean that there is a prohibition on subsidies with local content requirements—namely, subsidies contingent on the use of domestic over imported goods. The TCA of course also includes a similar prohibition for both goods and services within its scope. The noble Lord may be about to remind me that the EU has either just commenced or is about to commence action against the UK in the WTO over the contracts for difference scheme on precisely this point, so he will understand why I will need to be careful about that.

[Lord Fox (LD)]

I understand the Minister’s sensitivity, and I thank him for his answer. I was putting it the other way around: having had a scheme that, it turns out, really benefits only the international market, as the data tells you, that data can then be used to decide not to have a similar scheme. So it is a question not necessarily of designing a new scheme but of not committing the same mistake again because the data gives you the ability to make those decisions. That was the point that I was trying to make.

On the previous issue, I am sure that the Minister will already know that the impact assessment says that the cost of adding more data points is minimal, so there is no cost in financial terms, although obviously there is some administrative cost.

Subsidy Control Bill

Lord Fox Excerpts

Committee stage
Monday 7th February 2022 Grand Committee

[Lord Wigley (PC)]

My Lords, I shall speak to these amendments very briefly. This has been a bipartisan debate, and there is a consensus across the Committee that amendments along these lines can improve the working of the Bill and make it more acceptable in the court of public opinion. I urge the Minister, if he cannot accept the amendments as they stand today, to consider at least bringing forward his own amendments at the appropriate time.

[Lord Fox (LD)]

My Lords, I was not intending to speak to this set of amendments until I received the Minister’s letter—this time before the Committee started rather than during it, which is a great step forward. Unfortunately, the letter creates a problem for me because what I understand from the debate seems not to be represented in this letter, so perhaps the Minister can explain.

On the issue of subsidy schemes, the letter states:

“As my noble friend Baroness Bloomfield stated during the Committee session, all schemes must be uploaded to the transparency database”—


and I understand that to be true, so the scheme will go up on the database. The letter continues:

“This database will be freely accessible and is a key part of the new subsidy control regime, enabling the public and any interested parties to see which subsidies have been awarded, and to whom.”

But my understanding is that people will be able to see only those subsidies that exceed the limit, whereas the implication of the letter is that all subsidies will be accessible to everyone freely via the database. I would like the Minister to acknowledge that that is not the case, whether they are within a scheme or stand-alone, and this letter is therefore incorrect.

[Lord Purvis of Tweed (LD)]

My Lords, further to that point, I wish to ask a couple of questions. First, on a factual issue—I have been struggling to find this—what has the typical award been for relatively small schemes that will operate under the Bill? I am familiar with schemes in my former constituency, either under LEADER+ or a number of other schemes, where there was not a single award over £500,000 but there was transparency as to who received it, because that is basically along the principles on which local authorities operate. So my question, really, is: what piece of legislation will trump the duty that the noble Baroness, Lady Blake, referred to? If a local authority has a duty to publish, then ordinarily if it receives a grant through, for example, the levelling-up fund—on which the Minister wrote to me; I thank him for his letter and look forward to the answer to the question on a separate occasion, as I have replied to his office to highlight an omission from it—what will be the primary duty on the local authority as far as making that information public is concerned? Will it be under the duty on the local authority to publish subsidies greater than £500,000, or, if it is defined as a subsidy scheme, will it not be under such a duty?

However, my specific question is: how will this Bill interact with the Freedom of Information Act? The only way that any enterprise or anybody would be able to find out what the award is if it is under £500,000 would be to submit a freedom of information request. I have not seen anything in this legislation which excludes elements of the Freedom of Information Act, and I therefore assume that all elements of the Freedom of Information Act will apply. If that is the case, it is rather pointless having a £500,000 limit for publication if you can get all this information by issuing an FoI request. If the Minister’s response is, as I expect, that the whole thrust is to have less burden on our public bodies for the administration of this scheme, I wonder which is less burdensome: simply publishing what is already used under the e-claims scheme—I understand that most applicants under these schemes will be through the e-claims schemes, and therefore it is a press of a button to publish the information for an award—or responding to an FoI request. If I were a member of a public body, I know which one would be far less burdensome for me. I wonder whether the Minister agrees.

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[Lord Callanan (Con)]

Nothing in this Bill affects the existing duties of local authorities and others to publish any financial information that they already do. This Bill concerns the information that needs to be published on the subsidy database. The same point applies to the earlier question from the noble Lord, Lord Purvis, about freedom of information. I hesitate, given the trouble I got into last time, to return to the FoI principles, but nothing in this Bill affects the original FoI legislation or the principles contained in it.

I turn to Amendment 47, which seeks to introduce a transparency threshold of £500, above which subsidies granted as minimal financial assistance would need to be uploaded to the database. As noble Lords will be aware, the MFA exemption allows public authorities to award low-value subsidies of up to £315,000 per recipient over three years, with no requirement to consider the subsidy control principles or other requirements, and no need to upload on to the subsidy control database. I think that clarifies what the noble Lord, Lord McNicol, asked about—what I said earlier on this was probably incorrect, so my apologies for that. The Government have taken this approach to ensure that public authorities can deliver smaller subsidies quickly and easily without undue administrative burden, since they are very unlikely to have any appreciable distortive effects.

This amendment, by seeking to require the addition of low-cost subsidies to the subsidy control database, would certainly introduce an additional burden for public authorities. Introducing a low-value transparency threshold for such low-value subsidies would require additional staff time and costs as the volume of entries would be expected to increase significantly—for what gain, bearing in mind that these subsidies are those that, by their very nature, are unlikely to have any appreciable distortive effects?

On this basis, I do not believe that the amendment would introduce the appropriate balance between sufficient transparency to allow for meaningful scrutiny and an efficient allocation of resource to identify those subsidies that are most likely to harm our economy, either locally or nationally.

Turning to Amendments 48 and 49, as we have discussed before, the Committee will be aware that services of public economic interest—SPEI—are vital services that, without public subsidy, would not be supplied in the appropriate way by the market or, in some cases, would not be supplied at all. This clause exempts certain SPEI subsidies from the transparency requirement in Clause 33 to upload the subsidy on to the database. There are two categories of exemption: first, for subsidies of less than £14.5 million; and, secondly, subsidies for one of the activities listed in subsection (1)(b). In response to the question posed by the noble Baroness, Lady Blake, the reason for the difference is that, in our view, subsidies in the second group are even less likely to distort competition.

These amendments would mean that all SPEI subsidies of £500 or more would need to be uploaded on to the database. I submit that this would represent a significant burden on public authorities, yet it is generally agreed in the Committee, I think, that these subsidies, granted for public services, are unlikely to be unduly distortive.

The same arguments put forward for not setting a transparency threshold of £500 for MFA apply equally here, in that doing so would not represent a balanced or proportionate outcome for our domestic regime. Although noble Lords are right to challenge the Government on the issue of transparency, I would like to set out why reducing the exemption from transparency requirements for SPEI subsidies to £500 would not result in a stronger regime.

First, by its nature, granting subsidies for public services is unlikely to be unduly distortive. This is because the very reason they are needed is that other providers are unable or unwilling to provide the necessary service at a reasonable cost. This goes back to the example we discussed last time, when the noble Baroness, Lady Blake, referred to bus services in rural areas: granting a public subsidy there is unlikely to be distortive because the reason why the public authorities have to provide that service is because nobody else in the market does so. The lower risk of distortion therefore justifies a higher transparency threshold.

Secondly, Clause 29 sets out that the award of a SPEI subsidy must be given in a transparent manner, which means that the subsidy must be being given through a written contract or other written legally enforceable arrangement. As the noble Lord, Lord Purvis, noted, public authorities normally publish these contracts, and it is good practice to do so.

Thirdly, a public authority providing SPEI subsidies must be satisfied that the subsidies are limited to what is strictly necessary in providing that service, with regard to costs and reasonable profit, and must keep that under review. This means that the SPEI enterprise should not gain an unfair advantage over other enterprises; consequently, again, there is unlikely to be undue distortion to competition.

The Government do not share the view that requiring public authorities to upload SPEI subsidies with a value as low as £500 would contribute to a more robust regime. SPEI subsidies are, and will continue to be, subject to appropriate safeguards where public authorities actively ensure that this is the case so that contracts deliver value for money for the citizens in that particular area.

Although I understand the objectives of the noble Lord, for the reasons I have set out, I cannot accept this amendment. I hope, therefore, that he will feel able to withdraw it.

[Lord Fox (LD)]

I have a brief question because £14.5 million is a curious number. There is no reason why it should be a round number in millions, but it is strange. Can the Minister explain the genesis of that particular number? Also, could I be cc’d into the Minister’s reply to the important question asked by the noble Lord, Lord McNicol, on the subject of what is in and what is out?

[Lord Callanan (Con)]

Indeed. The noble Lord, Lord Fox is clearly not tired of receiving letters from me, so I will happily copy him into the letter that I send to the noble Lord, Lord McNicol. I will have to come back to him on his question about the £14.5 million. I will include that in yet another letter—or maybe even the same one.

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[Lord Lamont of Lerwick (Con)]

My Lords, I added my name to these amendments in the name of the noble Lord, Lord McNicol. I shall not weary the Committee by repeating the points that he made, but I strongly agree with him. I added my name just because I was puzzled and regard as unfair the imbalance between the time given to public authorities to list subsidies and the very short timetable for people to object to them. I do not see why it should take six months to make public what has been done, while one month seems an extraordinarily short time for somebody to challenge it. As may have been said when I was unfortunately out of the room trying to get on PeerHub, one could easily imagine circumstances where perhaps the website was not working very well, and a few days were missed. “It never happens,” the Minister says. Well, we shall see. That would be a first in public sector computers.

There seems to be an imbalance here. What is sauce for the goose ought to be sauce for the gander—or is it the other way round? Six months is certainly far too long and one month is far too short. I agree with everything that the noble Lord, Lord McNicol, said.

[Lord Fox (LD)]

My Lords, during the debate on the previous group, the noble Baroness, Lady Altmann, asked, “How will they know?” This amendment seeks the answer to the question: how will they know in time? As the noble Lord, Lord McNicol, said, because of the limits of reporting, we are talking about very sizeable subsidies that could exist with a competitor company for up to a year before a person is able to find out what their company is competing against. I am sure that the Minister would understand that that is not a fair situation, and it is within the gift of the Government to make it fairer.

Both noble Lords spoke about the imbalance; that is, a long time to report it and a short time to appeal it. One would almost think that the Government were seeking to discourage the process of challenging subsidies. I am sure that that is not the Minister’s aim and therefore the best way of expressing that aim is to redress that balance.

Reflecting on the last debate and this one, I think that we are in a bit of a mess around reporting—or, indeed, we are not but the Government are. On the one hand, we have the database with the six-month time limit and a very high ceiling; on the other hand, we have local authority websites with a three-month time statute and a much lower ceiling, and potentially we have FoIs—although the problem is that you need to know something exists before you can FoI it. The Government have therefore knowingly or unknowingly set up a multiple market for information.

If I am a business and I need to know what is happening in my sector, the Minister will say that this information is freely available. It is freely available on a pull basis. I shall have to employ someone to go out there regularly to check whether the information exists, where it is and what is happening in my sector. If I am a small business in a market where the receipt of subsidy could affect my business, I shall have to employ an extra person or part of an extra person to do that. This does not seem a sensible way of dealing with the issue. A central database with a shorter time span and a lower value ceiling would be the best way to help businesses thrive.

[Lord Callanan (Con)]

I thank the noble Lord, Lord McNicol, and my noble friend Lord Lamont for these amendments, which seek to reduce the time available to public authorities to upload their subsidies to the database. I note the comments made by the noble Lord, Lord McNicol, on the limitation period, which I look forward to discussing in our next Committee session.

As is the case with the thresholds on transparency, our objective here in setting the upload deadlines has been guided by the fine balance between minimising bureaucratic burdens while ensuring that accurate information is available promptly for interested parties to enable them to consider whether to launch a challenge. We agree that subsidies should be available to be seen on the database as soon as is practical. However, there are good reasons why public authorities require longer than the one and three months put forward in these amendments.

First, let me note that public authorities have an incentive to upload subsidies as quickly as possible. The sooner a subsidy is uploaded to the database, the sooner the clock for the limitation period starts to run, and therefore the sooner the public authority and the beneficiary will gain certainty that the subsidy will not be challenged. Public authorities also have a strong incentive to upload subsidies accurately first time round to avoid the possibility of having to amend entries later on.

Upload deadlines as short as one and three months may result in more public authorities needing to amend their entries at a later date. Although this is of course possible on the database, it creates an unnecessary burden for those authorities. This means that the initial period where the subsidy has been uploaded is more likely to contain inaccuracies, which will not help an interested party to know whether they wish to challenge. Surely we agree that, although we all want prompt uploads to the database, upload speed should not come at the expense of accuracy.

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[Lord McNicol of West Kilbride (Lab)]

My Lords, it is a pleasure to follow my noble friend Lord Whitty. I agree with all his comments. I am grateful to the noble Baroness, Lady Randerson, for tabling this amendment to enable further and deeper discussion on another of the many concerns that were raised by colleagues across the House at Second Reading.

As we have already debated, although relatively briefly, the new subsidy regime will operate alongside certain legacy schemes, including, but not limited to, basic payments given under the EU’s common agricultural policy. As we have heard, the Government’s decision to include agriculture and fisheries in the scope of the new subsidy regime is an interesting one. BEIS asserts that there is logic in applying the same rules across the board. While that might make sense in some areas, doing so raises other significant issues. As we have heard from my noble friend Lord Whitty, agriculture is fundamentally different and therefore so are the issues relating to the subsidies and the subsidy control systems. That is before we even touch on the issue of devolved responsibilities.

As we know from many hours following debates on the Agriculture, Fisheries and Environment Bills, these are areas of devolved competence. Some of those matters have been addressed in discussions on the UK-wide common framework arising from the Brexit process. However, due to Her Majesty’s Government’s treatment of subsidy control as an entirely reserved matter, there is no common framework on this topic, something that we have already touched on in Grand Committee and will be returning to in later groups.

Specific nations and regions of the UK have very different interests from those of their neighbours. Public authorities will of course be able to do what they deem appropriate in the context of overarching subsidy control principles, but this is one of the areas where we may end up seeing subsidy battles and/or legal appeals. If we can reach agreement in your Lordships’ House, then we may be able to reduce the chances of some of that happening. One potential solution to some of these issues may be for the Secretary of State to establish one or more streamlined subsidy schemes covering agriculture. I ask the Minister: is that one of the department’s intentions?

I want to ask a couple of practical questions that have been subject to initial exchanges between my advisers and the Minister’s office. I thank her office for that information, but it raises some questions. Is it the case that schemes already made under the Agriculture Act, for example, will be treated as legacy schemes for the purposes of this legislation? If the environmental land management scheme, which has already been rolled out, is treated as a legacy scheme but the Defra Secretary of State later introduces a separate agricultural scheme using powers under either Act, will that new scheme be subject to the subsidy controls? If the answer is yes, will that not make it harder for everyone involved to keep track of which requirements apply and when? If so, how exactly does the decision to include agriculture in the new subsidy control regime meet the target of making the new process more straightforward and less burdensome?

A number of other issues arise around devolved authorities, many of which have been touched on. We will come on to them when we look at the CMA but, if we do not make changes to the Bill as it is currently written, we could end up with a situation in which the devolved authorities have responsibility for these delegated areas but no oversight in the Bill—no engagement with the CMA or the subsidy advice unit—and will not be at the heart of the decision-making. I look forward to the Minister’s response.

[Lord Fox (LD)]

My father spent half his working life milking other people’s cows and the other half milking cows in a small, tenanted farm. Farming is a way of life across the United Kingdom. You must be committed to it to make it work, so people are anxious when they see this subsidy scheme in such turmoil.

At Second Reading, the Minister said that including agricultural subsidies in the subsidy control regime would

“help to protect competition and investment”—[Official Report, 19/1/21; col. 1749.]

in agriculture and fisheries. First, will the Minister acknowledge that the agricultural subsidy scheme has much wider objectives than simply competition and investment? There is a range of social and other economic benefits that the schemes are supposed to be designed to protect. Secondly, how does including agricultural and fisheries subsidies in the subsidy control regime protect competition and investment better than leaving them where they are: outside the scheme?

[Lord Purvis of Tweed (LD)]

My Lords, I wish to ask the specific question of how, if this Bill includes all agricultural support without the delineated areas we have discussed previously in Committee—such as for upland farmers and areas with less favoured status—it will interact with the internal market Act.

My noble friend Lady Randerson specifically referenced hill farmers. I represented many hill farmers; I will debate with my noble friend separately the merits of Welsh lamb as opposed to Scottish Borders lamb, but it is fairly obvious which is the superior product. The point is that specific subsidy support for the type of production rather than the end product is allowed under the subsidy scheme because upland farms have less favoured area status. It was delineated.

However, the Government proposed under the internal market legislation that no discrimination would be allowed on any of the end product—the lamb. We allowed that discrimination because of the less favoured area status for hill farming. I question whether, if all this is now wrapped into the subsidy Bill, this is open to challenge in terms of competition and non-discrimination, as specific support for the production of one product—lamb—will be provided to certain farmers in certain areas but will not be available to others who do not have less favoured area status.

This Bill removes all those delineated areas. Presumably, all that is now within scope of the internal market Act. That means, I think, that none of this area of support can have the assured status that it did beforehand. I strongly support my noble friend’s efforts to get clarity on this.

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[Baroness Bloomfield of Hinton Waldrist (Con)]

The public authorities can devise their own schemes according to their own policy priorities, as long as they comply with the principles of the Bill.

[Lord Fox (LD)]

Let me give a specific example. Herefordshire County Council decides, within the seven principles of the Bill, to subsidise the production of beef in Herefordshire, brands it “Herefordshire beef from Hereford animals”, and then markets it in Aberdeenshire at a rate that undercuts Aberdeen Angus or whatever it is that my noble friend Lord Bruce is peddling in his area. It seems to me that this Bill puts in place a chaotic situation that cannot be managed. We do not know what an area is, we are allowing flexibility for any authority to take action as long as it sits within the seven principles, and then we are going to rely on the CAT to adjudicate. Is this really what the Government have in mind?

[Baroness Bloomfield of Hinton Waldrist (Con)]

I think a lot of this overlaps with the internal market Act, which we will debate at length on a later group of amendments. All I can say is that the set of principles will cover the position of the Herefordshire farmer.

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[Lord Bruce of Bennachie (LD)]

My Lords, I am very pleased to have added my name to this group of important amendments. We are pressing a real depth of concern about the UK Government’s attitude to the devolution settlement altogether. With this Bill and the internal market Act, the Government are using the case for reserved powers to appear to be testing the devolution settlement, not quite to destruction, but to considerable tension.

These amendments ask why it is right that the Secretary of State has the right to instruct a public authority to seek a report from the CMA but the same Secretary of State—who is also the Secretary of State for England—is not susceptible to being challenged over any subsidy scheme that he or she has devised that may be perceived by any or all of the devolved Administrations as contrary to their interests or concerns. As the noble Baroness has said, it may not be the case that there should be absolute equality—we do not have a federal system yet—but we need recognition that it is simply not good enough that the Secretary of State can ignore, cast aside and overrule the devolved Administrations without them having any comparable right to challenge the English regime, never mind the UK regime. It is important that Ministers show some sensitivity and understanding on that.

This Committee does not need me to tell it that I have no sympathy with the SNP case for breaking up the United Kingdom or for independence. My view is that the SNP is a monumentally incompetent, obsessive political party that has no capacity to lead Scotland anywhere useful. However, the fact remains that it is in a mood to try to use every opportunity to stir up discontent and break the UK apart. The Government should not be helping it. They should be looking at how they can show, clearly, openly and honestly, that they are trying to set up a system based on mutual respect and understanding.

Even though the powers are reserved and the Secretary of State, in his capacity as Secretary of State for the United Kingdom, may be the decider of last resort, it should be as a last resort. Until you get to that position, it is important that the devolved Administrations have balanced and comparable powers. My simple question is this: why is it right that the Secretary of State can challenge Scotland, Wales and Northern Ireland on a scheme, but they have no right to challenge him or her on a scheme applied within England, which is what the Bill says?

[Lord Fox (LD)]

My Lords, just as the noble Baroness, Lady Blake, suggested, I shall speak to Amendments 55, 57 and 59 in my name. We are back trying to break up the monolith again. In the Bill, the Government seek to centralise the power in the Secretary of State in Westminster and, as my noble friend Lord Bruce set out, that person is Secretary of State for both England and the United Kingdom.

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[Lord Callanan (Con)]

Do we have time to finish?

[Lord Fox (LD)]

I think we are comfortable starting again on Wednesday and giving this proper time.

[Lord McNicol of West Kilbride (Lab)]

The noble Lord, Lord Lamont, has yet to respond as well. It will not take long on Wednesday.

Subsidy Control Bill

Lord Fox Excerpts

Committee stage
Wednesday 9th February 2022 Grand Committee

[Lord Callanan (Con)]

I think that speaks for itself. I stand by those words.

[Lord Fox (LD)]

I thank the Minister for giving way. Perhaps that is why we asked him to stop—so that we could start again today. His answer to my noble friend Lord Purvis is intriguing. He seems to be saying that no matter how much a subsidy affects the UK internal market—I will wait for the Minister to finish his conversation—it can never be within the purview of the internal market Act. Is that what he just said?

[Lord Callanan (Con)]

Yes. Subsidy is not a regulated provision within the scope of the UK provisions. We are debating this in a future grouping, so we will no doubt be able to come back to it, but my advice is that it is not.

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[Baroness Bloomfield of Hinton Waldrist (Con)]

On the noble Lord’s first point, it has been a year since the Bill was introduced and therefore things have moved on since the impact assessment was done. On his second point, we are looking for a broad range of expertise that will enable the CMA and the SAU to fulfil their functions.

[Lord Fox (LD)]

Can I ask that in future, all impact assessments be given a time lapse, so we know how many weeks they last for, until such time as they cease to be? Seriously, if one year on the impact assessment for this means that the number of people triples, then it was not necessarily a very accurate impact assessment.

[Lord German (LD)]

I wonder if, in concluding, the Minister could indicate the deadline for when the 50 extra advertised posts have to be filled? She may have to do so in writing, I understand that. Also, what is the difference between those who will be allocated to the traditional work of the CMA—competition, mergers and anti-trust—and those on the subsidy side of this split? They are distinct areas of work and quite distinct skills are needed. At some stage, could the Minister also tell me how many lawyers have been recruited so far, and how many they are short of. That would be very helpful.

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[Baroness Blake of Leeds (Lab)]

My Lords, I am grateful to the noble Lord, Lord Purvis, for tabling these amendments. At Second Reading and over the past three and a half days of Committee, we have repeatedly come back to how the new subsidy regime interacts with the broader provisions contained in the United Kingdom Internal Market Act.

As we know, the Government have clearly classified subsidy control as a reserved matter, but there a number of sectors where local or devolved interests may conflict with the wider interests of the internal market Act. The Government repeatedly come back to the notion that the new regime should facilitate the smooth functioning of the internal market. However, if we return to Monday’s discussions about Northern Ireland’s unique position and the inclusion of agriculture, we have to accept that those issues have raised more questions than answers when it comes to how the new regime will balance competing interests.

It is fair to say that some of the responses that we have had thus far have not been entirely convincing, and some of the answers given by the Minister seem to have highlighted the complexity of the issues that we are discussing and, therefore, the need to raise the matters in these amendments.

The wording “even-handedly”, as raised in Amendment 72 and used in other legislation, is particularly interesting. What is the Minister’s personal interpretation of that? How will it be administered and who will make the judgments, if it is deemed that unfairness is built into some of the decisions that are made?

We are repeatedly told when debating this Bill as well as when discussing whole rafts of government policy in other areas that there is a commitment to devolution and that is the most important thing—but, in the same breath, the Government say that subsidies must not undermine the internal market. How can both those statements be true?

[Lord Fox (LD)]

My Lords, this is an interesting debate. I originally set out, as Committee stages are wont to do, to tease out some minor details and things from this legislation, but it is clear that there is a major philosophical point that needs to be established before the minor details can be filled in.

Perhaps the Minister can cast himself back to when he was at school. I am sure that he popped into the odd mathematics lesson. He may well have come across a thing called a Venn diagram. For those who missed that particular week, a Venn diagram is made up of a number of circles. The degree to which they intersect indicates the amount of common area that they have—and perhaps the Minister is beginning to understand the direction of travel.

The issue here is that the Minister is asserting that, when it comes to subsidies, essentially, the internal market Act and this Subsidy Control Bill are discrete circles—that is circles that barely intersect or do not do so at all. We have ministerial assertion, and then we have the words as written in Bills and Acts. My noble friend Lord Purvis carefully and usefully filleted the words from the internal market Act, which seem to indicate that there is a large element of common ground with respect to subsidies between these two circles—these two pieces of legislation. Therefore, it is not possible to unpick the words and aims of the internal market Act when talking about subsidies.

My noble friend set out some of the potential contradictions. I will be simpler, because I am a simpler person. Reading those two pieces of legislation, and looking at words rather than hearing the Minister’s assertions, it seems to me that the Scottish Government could design a subsidies scheme. The CMA and the SAU within it, using this Subsidy Control Bill as their guide, as my noble friend set out, would indicate that this scheme is allowable and that market distortions are only minimal, as the Bill allows. The scheme could therefore be launched. However, the OIM—the Office for the Internal Market—would then analyse that subsidies scheme and detect that there are indeed distortions, albeit minimal ones, in that market. This information would be passed to the Secretary of State, who could, quite properly, then withdraw that scheme or cause it to be withdrawn; that is what the words in that Act and this Bill say. So I am interested to understand from the Minister why this might not be the case.

A separate and slightly smaller issue is that, within the CMA, we have the OIM and the SAU. Will these two organisations be operated discretely? Will there be Chinese walls between them in that they will operate under different Acts? Will they operate off the same data, or will they have to get their data separately? Indeed, coming back to the question asked by the noble Lord, Lord German, will they share the same lawyers when push comes to shove?

We seem to have here two things that the Minister is trying to push apart but which the words bring closely together. The purpose of these amendments is to understand how the Minister can assert that these two worlds are separate when the words indicate quite the opposite.

[Lord Callanan (Con)]

First, I thank the noble Lords, Lord Purvis and Lord Fox, for their amendments. They seek to probe the interactions between the OIM and the Bill, as well as the functions of the CMA more generally; I will take them together. Seeing as we were all involved in the debate on the then internal market Bill, I am getting flashes of déjà vu with all the different acronyms, such as the OIM and the SAU. Perhaps it is a Venn diagram, as the noble Lord, Lord Fox, indicated, but I will set out the position and, hopefully, resolve it.

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[Lord Lamont of Lerwick (Con)]

My Lords, I have added my name to this amendment, which was so powerfully and eloquently moved. Its purpose is to give the CMA standing to exercise enforcement powers through the CAT.

To some extent, this amendment overlaps with the amendment I moved earlier. I strongly agree with what was said about the limitations of relying on people who are affected by subsidy decisions to challenge them within the tight time limits that we have debated. I have already said, probably at too great length, that there needs to be much more independent enforcement.

I do not want to go over all the points I made earlier but, just in case some of the Committee thought I was overegging or inventing it, I want to refer to what the Financial Times said about this Bill. It carried an article on 2 July headed:

“The UK carves a risky new path on state aid.”


It went on to acknowledge what the Government have claimed as the great advantage of the new system—that it is speedier and more flexible—but commented:

“On the altar of speed, it”—


the Government—

“has sacrificed scrutiny. This is worrying from a government that has shied away from accountability and spent lavishly on contracts.”

It went on:

“The government envisages public bodies largely having a free hand in deciding whether subsidies comply with broad principles.”


I mentioned this point earlier: really, the regime seemed to amount to allowing public authorities to do whatever they wanted, and the assumption was that public authorities knew the law and would therefore observe it.

Finally, the FT said:

“The combination of a light-touch system and an interventionist government willing to spend lavishly on special projects creates dangers of a distortive spending spree—and of ministers becoming vulnerable to lobbying by vested interests.”


That is one of the problems. I am not in any way questioning the integrity or motives of the Government, but it is so easy for vested interests to have an undue influence on these decisions and it is a slippery road down to the politicisation of subsidies. I very much think that we need to move one way or another, whether it is by the route that the noble and learned Lord, Lord Thomas, so eloquently laid down or the one that I referred to earlier. We need to move to more arm’s-length, independent and effective enforcement.

When he spoke in reply to my earlier amendment, the Minister said the Government will not refer themselves to the CMA, as though that were perfectly obvious. It may be perfectly obvious that no one would do that, but in a sense they ought to. There ought to be a mechanism by which a Government are referred to the CMA.

When I first got into the House of Commons, I used to come and listen to debates here. People always gave Latin tags. I am sure that if Lord Boyd-Carpenter or Derek Walker-Smith, Lord Broxbourne, were examining this Bill today, their Latin tag would be “Quis custodiet ipsos custodes?”—who will guard the guards? I am sure everybody knew that already. That is the principle. Who is going to contain and limit the Government?

[Lord Fox (LD)]

My Lords, I rise to speak to Amendment 71 in my name. I thank the noble Lord, Lord Lamont, and the noble and learned Lord, Lord Thomas of Cwmgiedd, for their support. I acknowledge that anything I say is unlikely to carry the weight of those two authoritative Peers, so your Lordships will be pleased to hear that I will be brief.

The noble and learned Lord, Lord Thomas, raised the issue of private enforcement. It is intriguing to me that the Government should choose private enforcement to police something as important as a subsidy regime. They do not use private enforcement to police their income tax regime or all manner of important economic activity, yet they have chosen this route. They have explicitly decided to eliminate the devolved authorities, councils and LEPs from the process of enforcement and have added a 28-day deadline to that private enforcement process, which makes it almost impossible for private individuals to enforce in a timely manner. One would think that enforcement was perhaps not at the forefront of the Government’s objectives when looking at the Bill, and nothing so far has convinced me that the Government are interested in enforcing.

At Second Reading, the noble Lord, Lord Lamont, let out the cri de cœur: who will enforce the Bill? The answer is clear: no one. There is an informal system of bringing to book that will ensure that very little enforcement goes on. Yet if we look somewhere else in the CMA, the Digital Markets Unit is pre-emptively calling the big techs in and dealing with issues under its orbit. It is not that the CMA cannot do it; it is that the Government have decided not to let it do it.

Both these amendments—the one in my name and the other—seek to give a role for the Competition Appeal Tribunal to pre-emptively deal with transgressions. What are the Government frightened of in this? I do not think that the Minister has so far articulated a valid reason as to what is wrong with enforcing the Bill. If the Government think it is important to have the Bill, why not enforce it?

I used one example: the CMA’s own digital markets unit. It is clear that regulators all over are acting pre-emptively. Look at the Pensions Regulator. It can proactively go in and do things, so it is not as if we do not do it in this country. Generally, the regulator can act pre-emptively, except in this case. It is not clear to me what is behind the Government’s decision to do that. My key objective for Amendment 71 is for the Minister to very clearly articulate to the Committee why this subsidy regime should not be policed.

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While I continue to believe that the time limits provided for in this clause strike an appropriate balance between offering an opportunity for challenge and providing legal certainty for beneficiaries, I have heard the strong feelings expressed by all parts of the Committee and will have a look at it before Report. I hope the noble Lord, Lord McNicol, will feel able to withdraw his amendment.

[Lord Fox (LD)]

I am interested in this concept of a chilling effect. What evidence is there for that, and what consultation has there been? There may or may not be a chilling effect. It seems like more of an idea than a practical reality. I have a suggestion that might help. The Bill could start out with a longer reporting time—perhaps 60 days, or something along those lines—and the evidence, or otherwise, of a chilling effect could be gathered. If necessary, and if the reality of a chilling effect actually emerges, the Government could come back and reduce that period by statutory instrument.

[Lord Callanan (Con)]

I think that is the first time the Liberal Democrats have proposed giving the Government more secondary legislation powers, but I understand the noble Lord’s point. As I said, I have heard the strength of opinion on both sides of the Committee and will reflect further on this matter.

Subsidy Control Bill

Lord Fox Excerpts

Lords Hansard - Part 1 & Report stage
Tuesday 22nd March 2022 Lords Chamber

[Lord Ravensdale (CB)]

My Lords, starting with the government amendment to Clause 18, I must thank the Minister for listening to my concerns in Committee and for responding by putting forward this amendment, which addresses my concerns with the impact of Clause 18 on the levelling-up agenda and meets the intent of my original stand part amendment. I must also thank the officials for the work they put into drafting and finding an acceptable way forward and for engaging with me throughout the process. I thank the noble Baroness, Lady Blake, the noble Lord, Lord McNicol, and the noble and learned Lord, Lord Thomas, for all their support throughout.

The Government have proposed a comprehensive amendment in Amendment 14, which will ensure that subsidies that target regional disadvantage are exempted from the prohibition on relocation of economic activities. It will address concerns from stakeholders I worked with in the Midlands Engine, home to many of the most deprived regions in the UK, that this would be a constraint on supporting disadvantaged areas; and it will address concerns from local authorities and other disadvantaged regions. I believe it will prove an important part of the Government’s toolkit in levelling up, through allowing productive relocation activities that reduce economic disadvantages within the UK as a whole.

I also welcome the clarification, provided through Amendment 2, to the equity rationale in Schedule 1 to the Bill, that it covers subsidies aimed at regional economic disadvantage. This whole package of amendments goes a long way to address concerns expressed by noble Lords in Committee. However, there is always more that can be done.

I very much support Amendment 9 in the name of the noble and learned Lord, Lord Thomas of Cwmgiedd, to which I have added my name. It addresses an issue in that the way the common principles are drafted can be viewed through a local context; there is nothing in the Bill to define what a disadvantaged area is, as opposed to an advantaged area. If national direction is absent, there is no means via subsidy control to steer intervention to those areas that need it most. The amendment seeks to set objective criteria to define a deprived area, which would resolve this difficulty. It would also give legal certainty for business on which areas would count as deprived, and hence work to drive investment into those areas.

The other way this could be approached is through streamlined routes. A streamlined route or routes could be created, through the mechanism in the Bill, to provide national direction on funding into deprived areas. This could be on the basis of the same economic indicators as in the amendment of the noble and learned Lord, Lord Thomas, where any one of several markers of deprivation is present. Again, the legal certainty that comes from this route would then help direct business investment into the deprived areas. There would be a clear definition of what a deprived area is, and therefore the areas of the country for which support would be available through the streamlined routes. Obviously the streamlined route would not prevent subsidy in a non-deprived area. It would just mean that the giving of a subsidy in a non-deprived area would be more complex, require more scrutiny and therefore help direct investment into deprived areas.

I would be most grateful if the Minister could give some clarity on a couple of things. First, to echo the request from the noble and learned Lord, Lord Thomas, can the Minister provide some reassurance that the Government will provide some specification or objective criteria of what a deprived area is within guidance? Secondly, can he provide some detail on the government programme for streamlined routes and how these will feed into the levelling-up agenda?

In concluding, I was delighted to see the appointment of Professor Sir Paul Collier to the Government’s levelling-up advisory council. Several years ago he wrote that what was needed was a shock to expectations, which in itself would provide the momentum required to level up the country. Noble Lords will recall Mario Draghi saying that he would do “whatever it takes” to save the euro. In a similar way, the Government need to take on the challenge of levelling up by stating that they would do whatever it takes to level up the regions. The Bill will be a key part of the Government’s toolkit for achieving just that.

[Lord Fox (LD)]

My Lords, before speaking to this group, I must say that our colleagues, my noble friends Lady Randerson and Lord German have been struck down with Covid, so, although there are amendments in their names, we will struggle on without them. Happily, my noble friend Lord Bruce has been restored from his bout, so at least we are not completely bereft.

I would characterise the purpose of this group of amendments largely as trying to avoid levelling down. I would put it down as damage limitation, and I think many of these amendments go some way towards that process. On Amendment 1, in the name of the noble Viscount, Lord Chandos, having dealt with the dual meaning of the word “equity”, I agree with him that this is a really important principle that ought to be enshrined in the Bill. It is not too late, and I hope the Minister can once again reflect on the wise advice of the noble Viscount and bring something back when we get to Third Reading.

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[Lord Hope of Craighead (CB)]

My Lords, I will say a word in support of Amendment 5 in the name of the noble Baroness, Lady Bennett of Manor Castle. Her list of small projects reminds me of the position of the many small islands around the coast of Scotland, in the Northern Isles, the Western Isles and the Inner Hebrides.

About 15 years ago I spent a week on the island of Fair Isle, which lies midway between Shetland and Orkney. It is too far away from the mainland and from those islands to have any electricity supply provided from outside; when I went there it was largely reliant on diesel generators, which were expensive and wasteful and could not run all the time. People had been relying on the diesel generator coming on at, say, six in the evening to fire up their cooking utensils and so on, but just before we got there someone with funding had been able to put up a wind turbine. It was there, and I remember the thrill of the islanders when it was put into operation and provided a reliable source of electricity which was available all day because it did not involve wasteful use of diesel oil.

That would fall well within the small projects in proposed new sub-paragraph (2)(d)(v); it is just one example of the value of these small projects to small islands such as that. I do not know how many like Fair Isle there are still relying on diesel generators, but anything that can be done by introducing and supporting projects of this kind to stop them using carbon fuels and relying instead on the renewables listed here would be of great value. Of course there is a climate change aspect to it, but it also has a real practical value for the communities themselves—otherwise, they are driven to spending money on carbon fuels, which we would all like to stop having to use.

Subsidy schemes for small projects have a real value in these remoter communities that cannot be linked into the grid around the mainland or some of the larger islands which can have their own generating facilities. The list is very interesting and valuable, and I hope the Minister will pay attention to it.

[Lord Fox (LD)]

I rise to support briefly Amendments 3, 51 and 61. On the point made by the noble and learned Lord, Lord Hope, and our Green friend, I was not aware that this scheme excluded small projects. What it will exclude is us finding out about them as they will all come in under the threshold and will not be reported. I hope that the Minister can perhaps come back and report on them; we will not find them in the database.

We have heard fantastic speeches on Amendments 3, 51 and 61. I will not repeat them but want to pre-empt a little what the Minister’s response might be. I have a hint of that; I suspect that he is guided by his feelings about Ukraine. Since its invasion, the mood will have changed, and that will be his line. The Russians are indeed committing atrocities in Europe as we speak, and it is terrible, but the climate crisis is not standing back while this happens. With this amendment, we are asking the Government to walk and chew gum at the same time. Yes, we have to deal with the consequences of the war and we understand how hard that is, but we have to do that within the context of attacking the net-zero challenge. Unless the Minister can officially announce that global warming is performing a ceasefire, this amendment has to be there for us to meet both the important things that this country has to face right now.

[Baroness Blake of Leeds (Lab)]

My Lords, I am grateful to the noble Baroness, Lady Boycott, for tabling her amendments and sorry that she cannot be here to move them today; I am grateful that my noble friend Lord Whitty stepped into the breach much more than adequately. I want also to recognise the contribution of the debate and the importance of getting on to the front foot with its urgency on such a range of different issues. Obviously we have the climate emergency, but we have to mention Russia’s illegal invasion of Ukraine and the West’s urgent discussions about how to lower its dependence on Russian oil and gas.

These discussions are happening at the highest possible level. For some, I fear that they will give a convenient excuse to promote activities that will cause significant environmental damage if unchecked, whether that is firing up coal-fired power stations, resuming fracking, or indeed Shell’s announcement just this morning that it will look again at the Cambo field. For many, the focus is on the acuteness of the energy security issues that we are facing, which have come to the forefront, and the ever greater need to develop energy self-sufficiency; that means focusing on the climate imperative together with security issues, regeneration and the new green jobs that will come along.

Following COP 26, the UK remains a key player in driving implementation of the various agreements reached. What hope do we have of ensuring that other countries follow through on their commitments if we do not play our leading role in this global fight? Another aspect is that we know the Government want a degree of flexibility for public authorities at every level, but we do not see anything in Amendment 3 that takes that flexibility away. The Minister has been keen to use the example of Welsh steel during our discussions on this matter. If, when conducting the so-called balance test, the Welsh Government decide that the short-term economic benefits outweigh the costs of emissions, they will be able to award the subsidy. However, as a general principle, public money should be used for public good, and what greater public good can there be than preserving our planet for future generations?

Now is the time for us to double down on our commitments to renewables and nuclear rather than being swayed by those who are seeking to turn back the clock. I finish by picking up on the comments of my noble friend Lord Whitty about pressing Amendment 3 to a vote. If he does indeed decide to do so, we will support him.

Subsidy Control Bill

Lord Fox Excerpts

Lords Hansard - Part 2 & Report stage
Tuesday 22nd March 2022 Lords Chamber

As emphasised earlier, we will continue to work closely with the DAs in developing different streamlined routes. This will include inviting DA officials to sit on expert working groups for each route we are developing. The DAs will, of course, also be able to suggest areas that future streamlined routes might cover, and we will undertake to consider any proposal extremely carefully.

[Lord Fox (LD)]

I apologise to the Minister and thank him for giving way. I am struggling a little with why the Government want to hoard the right to create streamlined subsidies to central government. I can assume only that it is because it gives the Government the ability to parachute schemes into Scotland, Wales and Northern Ireland—which might not be seen by those devolved Administrations as something they would have—and, because they are streamlined schemes, they cannot be challenged. Is that the reason the Government are not prepared to let devolved authorities have streamlined subsidy schemes for themselves?

[Lord Callanan (Con)]

No, I think the noble Lord is being unfair; the operation of these schemes is entirely optional. We will consult the devolved Administrations closely before making any such schemes. I only just said that we will seek to involve DA officials and others in expert working groups for each of the routes we are developing.

[Lord Fox (LD)]

I am sorry to prolong this, but is the Minister now saying that, for a streamlined scheme that is presented by central government and could be taken up by, for example, organisations and companies in Scotland, the Scottish Government have the option of not allowing that to happen? That, I think, is what the Minister just said.

[Lord Callanan (Con)]

They could choose not to use the scheme if they wished, but it would be a UK-wide scheme. They would be consulted on the development and involved in the expert groups that put them together.

I will move on to Amendment 58, also tabled by the noble and learned Lord, Lord Thomas. This amendment sets out a new route for subsidies given in devolved primary legislation to be considered by the courts, by allowing the relevant law officer to refer the question of whether a Bill is compatible with the principles in Chapter 1 of Part 2 to the Supreme Court. It also removes the requirement for the promoter of the legislation to consider the subsidy control principles and other requirements, and the ability of the courts to consider whether the provisions of Parts 1 and 2 of Chapter 2 have been properly applied, thereby removing the ability of an interested party to challenge the subsidy in the general courts on that basis.

I am of course very grateful for the interest taken by the noble and learned Lord in this clause and for his engagement on it with me and my officials. I believe that both he and I share an objective to ensure that these provisions reflect our constitutional and legal institutions, as well as our obligations under international law. Schedule 3, as it stands in the Bill, accomplishes those objectives.

It is important that the subsidy control requirements apply to subsidies in devolved primary legislation, and that these subsidies are not immune from challenge by interested parties. This is both for consistency with other subsidies and to ensure compliance with our international obligations, particularly under the trade and co-operation agreement with the EU. However, it is also important that the unique constitutional status of the devolved legislatures is respected. That is why we have tailored the provisions in Schedule 3 specifically, and there is no mandatory referral to the subsidy advice unit for these subsidies.

I must therefore reject the amendment tabled by the noble and learned Lord for two reasons. First, it would not meet our international obligations under the TCA, which requires us to make available a route to challenge in a court or tribunal for interested parties, on grounds of compliance with the substantive subsidy control requirements. This amendment would, effectively, remove that route.

In response to the noble and learned Lord, Lord Hope, on the intention of paragraphs 6 and 7, it is those interested parties that may challenge, for example, another public authority or another business, as long as they meet the test set out in Clause 70. The promoter would normally be the government Minister, or the person making an amendment to the Bill, and this is defined in paragraph 2 of Schedule 3.

The second problem with the amendment is that it would have the effect of asking the Supreme Court to consider questions of fact. It is my understanding that the High Court or Court of Session is the appropriate forum to consider these questions in the first instance, followed by the relevant appeals court, and, as relevant, the Supreme Court as the ultimate arbiter for questions of law. Creating a route for the law officers to refer a question to the Supreme Court implies that any challenge to a subsidy in devolved primary legislation would be a constitutional question, as it is comparable to the route for referring devolution issues under the devolution settlements. While the Bill affects the exercise of responsibilities of all public authorities in the UK, I do not consider that this is a constitutional question.

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[Lord Hope of Craighead (CB)]

My Lords, this group of amendments gives me an opportunity to express my appreciation to the Minister and his team for the work they have been doing under the legislative consent process. The Constitution Committee studied the working of this process for much of last year and in its report, Respect and Co-operation, expressed the concern that the process was not working properly—indeed, we heard quite a lot of evidence from the devolved Administrations that they were dissatisfied with the way it was working.

My impression has been that since late autumn of last year the working of the system has very much improved, and the remarks made by the Minister at the beginning of his reply on the last group of amendments tend to confirm that a great deal of work has been done behind the scenes to try to make the process work. I am therefore much encouraged by what he said, both in private conversations and in the Chamber.

I have one particular to request to make. When we come to Third Reading, I wonder whether the Minister would provide the House with a report to explain why, if it is the case, that consent Motions have not been passed by the devolved legislatures. It would be helpful to know what the sticking points were and why the Government were not prepared to give ground to the devolved legislatures to obtain their consent. It would inform the House. It would also enable us to understand how the process is working and to appreciate that the Government have been working as hard as they could to obtain consent and that there were genuine reasons for their inability to obtain it. I would be grateful if the Minister could do that when we come to Third Reading. I make that point now so that he can take it into account when the time comes.

[Lord Fox (LD)]

Your Lordships will remember that I made a very long speech on the DPRRC’s reports and I would like to think that it was the power of reasoning within that long speech that led to these very welcome amendments from the Government. I suspect, however, that it is the reputation of the DPRRC and the rigour of its work that caused these changes to be made. For that, we should be grateful and pleased. It is a shame that the Government had to go through this process to do it, but it has happened.

We on these Benches also welcome the announcement made by the Minister on financial stability issues and bringing in the PAC and Treasury Select Committees confidentially on that. That is a common-sense approach, and it goes a long way to solving any issues.

On defining subsidies and schemes of interest and of particular interest, we are disappointed that the definitions are not brought into the Bill, but I hope that following the consultation process the Government will come back and, either formally or informally, inform the Front Benches and those others involved in the Bill of progress, so that when the regulation is made, we will in a sense have been brought into that process. This is a good set of amendments that we broadly welcome.

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[Lord Fox (LD)]

My Lords, as the Minister has set out, this group includes a number of concessions around the transparency issue. Again, we should thank him for coming some of the way towards the arguments that surfaced in Committee.

We welcome the reduction in the reporting threshold from £500,000 to £100,000. We recognise that that is some way short of the level that many external organisations were calling for and indeed that we wanted, but we also understand that it is a big step for the Government and they have come a long way towards where we think it should be.

I put my name to Amendment 20, tabled by the noble Lord, Lord McNicol, and I am looking forward to hearing his proposal. I am still not 100% convinced by what the Minister said, although he worked hard to explain to us why it would not be an issue. I think some of the points he made were right—sorry, acceptable; I am sure they were all right.

On the Minister’s first point about multiple payments to different branches, if they all have the same parent company, I start to get concerned about that issue. However, the biggest point was that if nefarious activity is going on and a £99,999.99 subsidy is being paid out by this mythological nefarious authority, the Minister said that that would no doubt surface. I am not sure how it would do so, given that there is no reporting requirement, unless that extra penny is forthcoming. Apart from sleuthing, submitting freedom of information requests and citizens’ activity, how does the Minister expect this information to surface—or indeed is he going to have an investigative unit at his side, ready to swoop on such nefarious organisations? I am interested to hear how this disclosure or uncovering process will work.

Other government amendments mean that the declaration of subsidies scheme is being improved in time terms, and that is also very welcome. The Minister was talking about a review process. I think he would be wise to maintain a rolling review in the department to be able to surface any issues and problems. This is a new process and a lot of different organisations will be trying to bed into it. The sooner that any misunderstandings or misapprehensions are understood, the sooner the department and the Government can do something about it.

In closing, I have a personal request. I probably should really understand this but I still do not: could the Minister clarify the rules regarding the declaration of subsidies awarded within subsidy schemes? I have heard different wordings at different times throughout the process, so perhaps the Minister could clarify once and for all how and if individual subsidies awarded under subsidy schemes will or will not be reported.

Overall, we are pleased with the amendments in this tranche. The Minister has moved on transparency, but we hope he will keep that situation under review with a view to more transparency in future rather than less.

[Lord McNicol of West Kilbride (Lab)]

My Lords, this group of concessions, as the Minister has outlined, is significant because of both the number of amendments and, more importantly, their text and practical effect. We are grateful to the Minister and the Bill team for their engagement on these issues over many weeks now; our discussions have been very useful, and although we have not achieved everything we wanted, as the noble Lord, Lord Fox, said, the new subsidy control scheme will be far more transparent than the Bill initially proposed. There are 31 amendments in this large group, 30 from the Government and one from me. I still think mine is a good amendment but I understand the Minister’s points, which we will come on to in a second.

The main issue is that we remain somewhat unconvinced of the Government’s argument in relation to the £100,0000 threshold. Given that many public authorities already have to publish details of spending at much lower levels—in many cases, it is £500 for local authorities—the £14 million cost quoted by the Minister to take the transparency threshold down from £100,000 to £500 would be well spent because that transparency would then sit across the whole of the subsidy controls and subsidies issued. However, an 80% reduction, coupled with the universal requirements across different subsidy types, is a clear step in the right direction.

To be fair, the noble Lord, Lord Fox, has already stolen a lot of my thunder in relation to Amendment 20. The points he made were absolutely spot on so I will not repeat them; I look forward to the Minister’s response. I tabled Amendment 20 in an attempt to deal with the potential for public authorities to award multiple payments that fall under the £100,000 disclosure threshold. As the Minister outlined in his opening remarks, there are a number of possible reasons why a subsidy may be given at that level. The noble Lord, Lord Fox, is right: it is the final one of those three points, about a nefarious reason why an individual in a local authority would encourage a local authority to give multiple awards under the reporting threshold. A fundamental question still sits there: how will we and, more importantly, businesses and organisations that are or could be affected by a subsidy, challenge it if we have no sight of it?

We would be delighted if the Minister accepted this amendment but he explained in his opening remarks why he will not. If the Government are not willing to accept it, can the Minister outline any other safeguards that could be brought in to check this possible kind of behaviour? He did not touch on safeguards in outlining the three points; his response was that the Government do not expect this to happen or do not believe that it could happen. I hope that the Minister can also confirm, because this is important, that the ministerial delegated powers to amend the transparency thresholds will not be used before—I would prefer that they were not used at all, but especially before—the CMA and other interested parties are able to see the new system in operation. We appreciate that any future increases are subject to a cap but it would make a mockery of the process and the concession package if any of the thresholds were increased before the new system was up and running and had been tested and checked by the CMA.

One area not subject to amendments today but which we see as incredibly important is the process around MFA subsidies. At present, beneficiaries in receipt of MFA subsidies must maintain paper records, which not only increases the bureaucracy involved but goes against the grain of the general transition to paperless record-keeping. We do not believe that moving this system to a digital process would require any amendments to primary legislation, so can the Minister commit today to looking at the available options for digitising the MFA process, either as part of the department’s existing subsidy database workstream or as a stand-alone project?

I will touch on one final point about the move on upload from six months to three months. Again, I fully support this. The sooner this information is uploaded on to the database, the better for all, but we still have concerns about the right to appeal against a subsidy that a business or an organisation could be affected by. That is limited to one month; the Minister and the department have not moved that to six weeks or two months. I have some concern that we could have gone a bit further. With the reduction from six months to three months, we could have increased the ability for someone—or an organisation—adversely affected by a subsidy awarded to a competitor to challenge this by giving them a little more time. I understand the Minister’s argument about wanting the subsidy to be in place, agreed and unchallengeable, before the business will spend it, because it then has certainty. None the less, we could have given a bit more time to those who could possibly be adversely affected by it to make a challenge. With that, I again thank the Minister for the 30 amendments—it is just a shame that he could not go one more and make it 31.

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Moved by

[Lord Fox]

47: Clause 55, page 30, line 40, after “State” insert “or the CMA”

[Lord Fox (LD)]

I rise on behalf of the noble Lord, Lord Lamont, to move Amendment 47 and also speak to Amendments 48 to 50. I had never expected to be the noble Lord’s stunt double but I do not regret it at all. As on many issues, the noble Lord and I agree that the role of the CMA requires boosting so that, as he said at Second Reading, it can police the control of the regime. It is a shame that he is not here to speak on his own account as he would do so with much more vigour and verve than I, but we both see these amendments as analogous to the independence that was given to the OBR and the Bank of England. If the Government genuinely want to control subsidies, as the title of the Bill suggests, there should be greater independent enforcement instead of what is a pretty weak SAU.

I have a number of direct questions to channel from the noble Lord, Lord Lamont, before I speak on my own account. It is worth noting that on 7 February, the Minister said that

“the Bill does not, of course, replace our gold-standard mechanisms … for managing public money”.

The noble Lord would like to know: to what mechanisms was the Minister referring? I am looking forward to the answer to that question as much as is the noble Lord himself. As the Minister highlighted at the time, and as is the view of the noble Lord, Lord Lamont, balancing the current budget while having national debt on a declining trend does not deal with the micro issues such as distortions of competition caused by subsidies. That is clearly true. I wonder on my own part why the Minister brought that up. The final point is that the Minister went on to say that

“public authorities … take their statutory obligations seriously … we expect the vast majority of public authorities to comply with these requirements”.—[Official Report, 7/2/22; col. GC 382.]

The interpretation of that is that public authorities, including the Government, are to police themselves. This is not an enforcement mechanism; it is incredibly weak.

For my own part, I would say that this is strong criticism from a former Chancellor of the Exchequer and hits at the heart of the Bill. To that end, I think that we deserve a serious and studied answer from the Minister, which I am sure we will get. This centres around the self-policing, public reporting mechanism that, essentially, has been adopted. What we have are amateur regulators and citizen detectives. It is clear that this is not the way to police something as important as a subsidy regime.

In addition to the amendments from the noble Lord, Lord Lamont, I am delighted to support Amendment 55 in the name of the noble and learned Lord, Lord Thomas of Cwmgiedd. Throughout this and previous debates, his dedication to the cause of trying to bring some structure to this legislation should be commended by us all. In many ways, this amendment sits somewhere between the positions of the noble Lord, Lord Lamont, and the Government. As we would expect from the noble and learned Lord, Lord Thomas, it also addresses some serious devolution issues. I am really looking forward to hearing him set out how this amendment will solve some of the problems we have encountered throughout our debates.

A lot of those problems are based around the asymmetry that both the noble and learned Lord, Lord Thomas, and my noble friend Lord Purvis raised on a previous set of amendments. There is an asymmetry here: the Secretary of State in London can call in the CMA, whereas the authorities in Edinburgh, Cardiff and Belfast cannot do the same thing. This is at the core of the problem that people have. When we hear, in response to the request by the noble and learned Lord, Lord Hope, what the stymie on getting legislative consent is, I suspect the problem—one of the central issues—will be a version of that. Addressing that would go a long way towards bridging the gap to getting legislative consent, which I hope is the Minister’s objective.

That said, I will speak no longer and look forward to the noble and learned Lord, Lord Thomas, explaining his Amendment 55 much better. I beg to move Amendment 47.

[Lord Thomas of Cwmgiedd (CB)]

My Lords, I will speak to Amendment 55. I first thank the noble and learned Lord, Lord Hope of Craighead, and the noble Lords, Lord Wigley and Lord Fox, for their support. The amendment has two purposes, one of which has been outlined by the noble Lord, Lord Fox, dealing with the position of the CMA. The second is to deal with the position of the devolved Governments and legislatures.

I ought to deal first with the position of the CMA. Although I co-signed amendments with the noble Lord, Lord Lamont, before Committee, the amendments he put down did not include two of them; I am not sure why. I have restored them all, because it seems to me that, on analysis, if the Bill is to be regarded as a serious attempt to uphold the rule of law and not as a piece of window dressing to satisfy our international obligations, we need to look more carefully at the position.

There are three methods of enforcement. The first is to have transparency and force disclosure. We know of the force that has; the effect of sunshine as a disinfectant is well recorded in history.

Secondly, there is the need for the CMA to investigate. It seems to me that without the CMA having powers of investigation, you do not have a properly independent system of enforcement compliant with the rule of law. It cannot be right to leave enforcement to those giving subsidies. You must have someone independent and objective in making the investigation. That is a requirement of the way in which all investigations are carried out; they have to be independent and impartial. I simply do not understand why the CMA cannot be allowed to conduct investigations that it thinks should be carried out, not merely those that the Secretary of State wants carried out or that are referred to it. Of course it will carry out the investigations referred to it by the Secretary of State independently, but it does not have the necessary power to do it where it thinks it is in the interests of enforcement.

For a similar reason it seems clear that, as was proposed in the amendments in Committee, the CMA ought to have powers of enforcement before a CAT—this is where it differs slightly from the amendments put forward by the noble Lord, Lord Lamont. Again, independent powers of enforcement are essential. The Secretary of State will have some powers, as will those who say they are injured as a result of what has happened. But that is essentially, to take an analogy with the ordinary enforcement system, a system of effectively private prosecution. My experience of private prosecutions has always been that, unless they are funded for extraneous and charitable purposes, such as is done by the RSPCA, or there is money in it by obtaining a conviction for those who are businessmen interested in getting a private prosecution, it is unlikely that there will be private enforcement. There is no doubt that this kind of enforcement action is extremely expensive. Therefore there is a real risk that there will not be much effective enforcement and that such effective enforcement as there is will be directed only at what I would call big money cases. Having a justice system that deals only with big money cases is recognised to be no just system at all.

The noble Lord, Lord Lamont, put it very pithily by creating Juvenal: “Quis custodiet ipsos custodes?” It seems to me that that summarises it in four words. There must be someone independent, both to investigate and to bring a matter before the courts if necessary, who can ensure that the Secretary of State and others uphold the rule of law. That is all I wanted to say about the position of the CMA.

On the second purpose of the management, I can deal with that briefly. It is an important question even at this hour of night, because it raises the issue of equality between our nations. I spoke at length about this when proposing the amendments in respect of seeking the consent of the devolved authorities and giving them certain powers, but this is an egregious example of inequality. Whereas the Secretary of State qua Minister responsible for England and the giving of subsidies in England can refer matters dealt with by, say, the Welsh, Scottish or Northern Ireland Governments to the CAT, there is no equality the other way round. That seems a fundamental flaw in this part of the Bill. It could be remedied by an undertaking by the Secretary of State that, if he was asked by the devolved Governments to make a reference, he would do so, and I very much hope that the Minister will be able to give such an undertaking.

What is important about these issues of equality is that they matter in two respects: first, that there is equality, but also that there is seen to be equality, and the equality between the nations is fundamental to the union. Secondly, there is the purpose of the amendment relating to the devolved authorities—this differs from the amendments in the name of the noble Lord, Lord Lamont. It seeks to make clear that the devolved Governments will always be interested parties for the purposes of appearance before the CAT. Again, this could be clarified. It would be far better if this was done in legislation, but at least it could be taken some way by the Minister making this clear.

I am sorry to have spoken at such length at this hour of night but these are important points of principle. They go to the rule of law and the position of the CMA, but also go to the equality between our nations and the survival of our union.

--- Later in debate ---

[Lord Callanan (Con)]

I thank all those who have contributed to the debate. It has been a good discussion, both tonight and in the previous discussions we have had on the regime as a whole and the subsidy advice unit. I particularly enjoyed the contribution from the spokesman for my noble friend Lord Lamont. This is a trend that should perhaps continue on other subjects on which my noble friend feels strongly.

[Lord Fox (LD)]

Have I been fired as the Minister’s speechwriter?

[Lord Callanan (Con)]

If the noble Lord is going to write my speeches, he might as well write them for my noble friend Lord Lamont, as well. The answer to the question of my noble friend Lord Lamont, through his spokesman, is the Green Book and Managing Public Money guidelines; I suspect as an ex-Chancellor he knows that very well indeed—probably better than we do.

Government Amendments 52 and 53 to Clause 65 have been tabled to address your Lordships’ concerns regarding the frequency of the CMA’s monitoring reports under Clause 65. Instead of mandating a report within five years of the implementation of the regime, the amendments require an initial report after only three years, subsequently followed up by a further report after another three years. Subsequent reporting will then revert to a five-year cycle.

I hope noble Lords will agree that the publication of these two initial reports will be sufficient to keep Parliament and the public informed of how the new subsidy control regime is functioning, and to assist in setting best practice going forward. As a result of these changes, I have also tabled two consequential amendments to clarify how these new initial reports will interact with other provisions in the Bill. These are Amendments 54 and 63.

--- Later in debate ---

I turn to Amendment 56 tabled by the noble Lord, Lord McNicol, supported by the noble Lord, Lord Fox, on the question of whether subsidies given under the scheme should be subject to challenge in the CAT. We debated that extensively in Committee, and the House will be pleased to know that, given the lateness of the hour, I will not repeat the arguments I made then. But this does not mean there is absolute protection for a subsidy purportedly given under the scheme. An interested party can argue that a subsidy does not in fact meet the terms of the scheme and can challenge it as a stand-alone subsidy. I therefore hope that the noble Lord will be able to withdraw his amendment. I would like to move my amendments and hope others will not press theirs.

[Lord Fox (LD)]

My Lords, I thank the Minister for his answers, although many of them are disappointing. On Amendment 56, it would be helpful if the Minister could write on how that challenge would work. I am looking particularly at where a scheme has been approved and a number of businesses granted subsidy under that scheme. What happens if I want to challenge not the scheme but the validity of that particular business getting that particular subsidy? It is not clear to me, under the rules, how that works, so could the Minister write a letter to me and the noble Lord, Lord McNicol, clarifying that?

On Amendment 55, repeating the mantra that it is a reserved issue is almost exactly the opposite of what we were calling for: having some sensitivity in the nature of the Bill. It is a reserved issue but it trespasses into areas that are devolved and, as my noble friend Lord Purvis illustrated, agriculture is one such area—there are others. The absence of sensitivity is the disappointing thing.

The noble and learned Lord, Lord Thomas, the noble Baroness, Lady Bryan, the noble Lord, Lord Wigley, my noble friend Lord Bruce and the noble and learned Lord, Lord Hope, all made valid points about reaching across that barrier, but there seemed to be no such reaching from the Minister. I hope he will have time to reflect on this and can come back at Third Reading with something a little more conciliatory than “This is a reserved issue” because that is really not good enough.

The criterion on which I was allowed to act as the spokesperson of the noble Lord, Lord Lamont, was that under no circumstances should I press Amendment 47 so, as a man of honour, I beg leave to withdraw the amendment.

Amendment 47 withdrawn.

Subsidy Control Bill

Lord Fox Excerpts

3rd reading
Monday 28th March 2022 Lords Chamber

[Baroness Blake of Leeds (Lab)]

I will start by sharing our concern at the information the Minister gave regarding the devolved authorities. We look forward to being involved in ongoing consultation and discussions as time goes forward. I echo the comments already made by the noble and learned Lord, Lord Thomas, and the noble Lords, Lord Wigley and Lord Dodds, on this issue.

I think it is fair to say that this Bill might not have been noticed by as many people as the more high-profile Bills that are going through the House at the moment, but everyone who has been involved in it recognises the significance of the work undertaken and just how deep the implications are for how public money will be spent for years to come. As we made clear from the outset, we agreed with the Government’s core principles in this area, including introducing greater flexibility through the removal of pre-notification requirements. However, as we have stressed throughout the debates on this Bill, with power comes responsibility. It is for this reason that we have focused on increasing the transparency obligations on public authorities, as the Minister just outlined. We are talking about large sums of public money, which must be easily accounted for and deliver real value for money. Unfortunately, we have had too many examples recently where we cannot claim that that is the case.

However, we are very grateful to the Minister and to the Whip, the noble Baroness, Lady Bloomfield, for their genuine engagement on these matters. Although we did not achieve everything that we would have liked, we believe the Bill is much improved as a result of the substantial package of concessions brought forward on Report.

I would like to echo our profound thanks to everyone involved through the Bill team. Our access to officials has been particularly helpful; they have been very open. It has enabled us to delve into the detail and discuss potential ways forward, whether legislative or non-legislative.

Despite good progress being made in most areas, there are significant concerns in others—particularly, as we have already highlighted, in relation to the involvement or otherwise of the devolved Administrations and the substantial financial and practical barriers imposed on SMEs and others if they wish to challenge individual subsidies. A particular concern of the business community is the lack of clarity in the guidance around the decision-making on when subsidies will be awarded.

We will have a review, as is outlined in the Bill, of some of these matters in three years’ time, and we hope the Government will act quickly in response to the findings. Until then, we hope public authorities will make the most of this new framework. In particular, I am appreciative that the Government listened to all the arguments about focusing and directing money towards areas with economic deprivation. This is a welcome shift from the Government across this area.

Another regret is failing—just—to pass the amendment to improve the Bill’s green credentials. We hope all levels of Government will continue to have regard to the fight against climate change. Pursuing a net-zero strategy is not just a statutory duty but a moral one. I firmly believe we have missed a trick by not more firmly linking net-zero obligations to the awarding of subsidies.

All that remains is to thank all colleagues who took part during the Bill’s various stages—particularly, as has been highlighted, the noble Lords, Lord Fox, Lord Lamont, Lord Ravensdale and Lord Wigley, the noble and learned Lord, Lord Thomas, and the noble Baroness, Lady Sheehan. I would like to pay tribute to my noble friend Lord McNicol. Unfortunately, he cannot be with us today, but I think we all recognise the amount of work he put in. I would like also to add my thanks to all the staff, clerks and doorkeepers in the normal manner. I end by thanking sincerely Dan Stevens, the officer in our office, for his unfailing patience, support, and clarity of thought and purpose, and for helping us to put down the improvements sought.

[Lord Fox (LD)]

My Lords, it is genuinely pleasing to see the Minister looking in a substantially better state than he did at the end of Report. I am pleased that he is back up and at the Dispatch Box.

As the Minister has repeatedly told us throughout the process, this Subsidy Control Bill is a consequence of the TCA. The Minister also claimed that it was rare for such controls to exist in other countries around the world, and said it would be a permissive regime, the antithesis of the regime it is replacing. So it is something of a legislative experiment as it goes forward.

Since its introduction, as has been stated, improvements have been made, and the Bill leaves your Lordships’ House much improved. My noble friends, Her Majesty’s loyal Opposition and some important voices from the Cross Benches and Conservative Benches have helped to make these improvements, along with the work of the Minister and his colleagues.

But noble Lords would expect me to say that it remains a flawed Bill. As was highlighted, it is more transparent—but a £99,999 subsidy need not be reported, and that remains a very large sum of money that can be passed from government to business without a report. It invests some powers to the CMA, but insufficient authority. I align myself with the comments of the noble Baroness, Lady Blake, on the subject of the burden on SMEs and the absence of any net-zero quantity.

The biggest uncertainty hanging over the Bill, as far as we can see, is this: if it is permissive, what will it permit? True to the nature of this Government, they have delivered a Bill that is not designed to deliver a strategy—almost the opposite. By permitting authorities to deliver subsidies or subsidy schemes in their area of control, essentially independent of schemes in adjacent areas, they are creating the potential for huge confusion and conflict, with money flowing from the richest areas back into their own communities to ensure that they remain the richest areas. The failure to grasp the need to map deprivation systematically could well render this system very divisive.

My noble friend Lord German used the Welsh example, but I will use an English one, because the Minister is the English Minister. As we know, EU funding in Cornwall over the seven years from 2014 to 2020 was nearly €600 million. This was based on a realistic assessment of the relative poverty of that county. The proof of this Government’s subsidy scheme, system or control, and of their promises, will be how much UK money flows into Cornwall.

As the Minister mentioned, there was the whole devolution issue. I will not repeat all the arguments, but the Government’s mantra of repeating over and again “It is a reserved issue” does not represent negotiation, nor is it designed to win the hearts and minds of those who sit on the edge of the unionist/separatist divide—quite the opposite; to then include agriculture, which is a devolved issue, in the Bill made matters substantially worse. We heard from the Minister that these were the issues driving the absence of legislative consent. Despite the many improvements we have seen, we on these Benches remain very concerned about the effect this Act will have on the union, but I will pass from this critique and move on to the Oscars ceremony part—the Minister can be assured that I do not mean that part of it.

I again thank the Minister. He showed remarkable fortitude during the Bill’s passage, along with his Whip, the noble Baroness, Lady Bloomfield, who showed the customary availability and relatively good humour. Those in Bill team itself were, as usual, authoritative and helpful. I thank them, as set out by the Minister.

During the debates, the noble Lord, Lord McNicol, and the noble Baroness, Lady Blake, the noble Lord, Lord Ravensdale, the noble and learned Lords, Lord Thomas and Lord Hope, as well as the noble Lord, Lord Lamont, made significant contributions that helped to shape the Bill. On these Benches, my noble friends Lady Sheehan, Lady Randerson, Lady Humphreys, Lord German, Lord Bruce and Lord Purvis offered wisdom and experience. In the office, making sure that the whole thing held together, we must once again thank Sarah Pughe, along with Dan in the Labour office, who helped to drive us along.

So the Minister will have his Act. Whether it is indeed a subsidy control regime remains to be seen. I think many of us still suspect that it is actually a mechanism for central government to parachute schemes into areas of its choice, unchallengeable by devolved authorities, local authorities or indeed the CMA.