Subsidy Control Bill

Lord Thomas of Cwmgiedd Excerpts

Committee stage
Monday 31st January 2022 Grand Committee

[Lord Ravensdale (CB)]

My Lords, I shall speak to Amendments 4A and 5A in my name and first apologise to noble Lords for their late tabling. I thank Jonathan Branton, a subsidy control expert at DWF Law, for his assistance with my remarks today.

As I said at Second Reading, for me the key aspect that is missing from the Bill is how it will assist disadvantaged areas and how it fits with the levelling-up agenda. I see the Bill as being a central part of how levelling up can be delivered through targeted subsidies into disadvantaged areas. What business across the UK really needs is clear visibility and legal certainty about which areas will benefit from financial assistance, through an evidence-based mechanism. Then the market can get on and do its job of driving investment into those left-behind areas of the UK and deliver on levelling up.

I listened carefully to what the Minister said at Second Reading: that the Bill gives public authorities the flexibility to grant subsidies where they are best served to support economic growth in local places. At present, however, it does not give businesses clear visibility of which areas in the UK will benefit from increased help. There is nothing to differentiate between a wealthy area and a disadvantaged one.

Having a commitment in the Bill on levelling up could not be more timely, with the levelling-up White Paper being due for publication imminently. We have had continued debate over the last two years about what levelling up actually means, as the noble Baroness, Lady Blake, said. If the Government could point to a clear strategy within the Bill to deliver on it and prioritise business investment into disadvantaged communities, that would send a powerful signal about their intent to those communities across the UK and indeed to the business community.

My Amendment 4A is in similar vein to Amendment 4, tabled by the noble Lord, Lord McNicol, and spoken to by the noble Baroness, Lady Blake, which I also support. It proposes an areas of disadvantage subsidy strategy, which would need to be laid before Parliament within six months of this Act being passed. Critically, that would need to involve defining what a disadvantaged area was. Under the previous subsidy regime, we had a map defining assisted areas. That mechanism was not perfect; there are a number of issues with attempting to draw on a map which areas would receive preferential treatment. Previous maps were developed by Eurostat, but we now have the opportunity to develop a map that is right for the UK and uses the wealth of economic data available at a local level. For example, I am co-chair of the Midlands Engine APPG. The midlands engine encompasses many of the most deprived areas in the UK and is home to around 11 million people. Our regional observatory produces a wealth of economic data that could be used in the development of such a map.

As I highlight in my amendment, a map is not necessarily required here. A list of agreed economic indicators could do the same job and perhaps provide a more flexible route to defining a disadvantaged area in the context of subsidy control. Again, it would give business the clarity needed on where subsidies would be available to drive inward investment.

My Amendment 5A would simply serve to make Amendment 4A operable, as Part 1 of the Bill deals only with definitions, by making reference to the strategy in Schedule 1.

In conclusion, the way the Bill is drafted, if a manufacturer were deciding whether to locate in Scunthorpe or Surrey, or deciding between Bilston and Buckinghamshire, there is nothing to advantage the former locations. The legal certainty that would come from implementation of an areas of disadvantage subsidy strategy would be attractive for many organisations and businesses considering offers from different areas, and would therefore make a key contribution to levelling up across the UK. I hope the Minister will agree with the logic here and I look forward to her response. In particular, I would like to get her views on how the Bill will support levelling up from a national perspective. When a business is deciding where to locate, what clear visibility of subsidy support in disadvantaged areas will there be to inform its investment decisions?

[Lord Thomas of Cwmgiedd (CB)]

My Lords, I shall speak to Amendment 6. I am extremely grateful to the noble Baroness, Lady Randerson, and to my noble and learned friend Lord Hope of Craighead for their support of the amendment. It tries to grapple with the areas that have been raised so far, but it must be remembered that the Bill applies to agriculture as well, and that makes the task much more complicated. It seems to me that the Bill provides in Schedule 1, that it is possible to have a subsidy that addresses an equity rationale, such as social difficulties or distribution concerns.

It is unfortunate that the word “equity” was used, because we used it in a completely different sense in our earlier debate. That must be one really good reason, if I may say so with respect, for not adopting the amendment of the noble Viscount, Lord Chandos—but I did not mean that as a throwaway line for the Minister. We will need to know what it means, and it is very important, it seems to me, to grapple now with the question of how we take into account the need for levelling up, or providing subsidies, where regional help is necessary in agriculture and fish. I think this is ultimately a political question—I will return to that in a moment—and the worst possible thing to do would be to allow independent bodies, particularly judicial bodies such as the CAT, to be embroiled in political decision-making.

It seems clear to me that we must have some form of agreement or definition of what are the criteria, or a map if need be, by which we can apply levelling up. As I understand it, we could look at GDP per person, which is the European Union method. We could look at GDP per employee. We could look at household income, and could then dream up—I do not mean that disrespectfully because it was no doubt carefully considered when it was done—a broad economic index that takes into account productivity, skills, unemployment rates, population density, employment, et cetera. We must be very clear how a business, or Ministers giving agricultural subsidies, can direct those subsidies according to some metrics that have a UK-wide basis. Is that something that can be done?

My concern here arises out of the criticism that has been made—I do not want to go into the merits of the criticism—of the way the social prosperity fund has had its index looked at. It must, it seems to me, ultimately be a political decision to decide what are the factors that go into making disadvantages which need to be addressed for a levelling up. This is not something a court should do; it is a political question and, for the sake of the courts, we should not be shunting political decisions to a judicial body, or an independent body such as the CMA.

That is the first proposition: this is a political question and it should be resolved politically. There are two ways of doing that. The first way and, I argue, by far the best way is to do it is by agreement in a common framework.

Subsidy Control Bill

Lord Thomas of Cwmgiedd Excerpts

Committee stage
Wednesday 2nd February 2022 Grand Committee

I repeat that if we are trying to redistribute some of the wealth, the growth and the economy, surely relocation is part of that. After all, in principle the Government are keen to redistribute civil servants, who presumably could fall foul of the Bill if they are directed and provided with incentives to move out of London, Edinburgh or wherever. It is important that we get some clarity on how this will work, and a recognition that local partnerships, local authorities and the private sector are better placed than central government to deliver that. It should not be left to short-term political decisions to meet the threat of electoral reversals, but should be based on a proper, transparent strategy which is about showing that everywhere that has the will and capacity to change has the backing and the resources to do so.

[Lord Thomas of Cwmgiedd (CB)]

My Lords, I have a few short points. First, I support the noble Lord, Lord Ravensdale, regarding Clause 18 not standing part of the Bill. It is always very unfortunate when we have in legislation something that says that a subsidy is prohibited by the sanction if it is given to an enterprise subject to a condition that the enterprise relocates. The Explanatory Notes make it very clear that, by “condition”, something explicit is meant. Does it mean therefore that something implicit is permissible? As the Bill aims to achieve transparency, should we not be open and clear, particularly regarding the enforcement by the CMA, about what precisely we will allow in respect of relocation? The noble Lord may be right about the principles governing it, but a provision that makes it dependent on whether it is explicit or implicit is of benefit only to the lawyers, and we do not need to go down that route.

The second issue goes to the question of how this is to work and be enforced, which is the interrelationship of subsidies, procurement and the levelling-up fund. It seems quite clear that procurement obviously can operate as a subsidy, although there is an exemption—the Minister explained it in answer to Amendment 3, tabled by the noble Lord, Lord Wigley—which might exempt certain schemes from it. How does the value-for-money concept in the procurement Bill relate to subsidies?

My last question goes to the levelling-up funds. I assume that something will be done to ensure that they will not be part of financial assistance but, even if they are not for the purposes of the Bill, no doubt the Competition and Markets Authority and the court will have to take into account, in looking at distortion, the cumulative effects of funds from the levelling-up fund and funds from the local authority, because they are both, in essence, forms of state aid. It may be difficult to do it today, but can we have a paper which explains interrelationship of subsidy by way of procurement and how the levelling-up funds relate to the Bill? They are all potentially forms of state aid.

[Lord Callanan (Con)]

My Lords, I thank the noble Lord, Lord McNicol, for tabling the lead amendment in this group, and the noble Baroness, Lady Blake, who ably introduced it. It was great to be reminded by the noble Lord, Lord Purvis, of my previous existence in the campaign against the northern regional assembly—I dread to think how many years ago that was. I seem to remember that Mr Cummings was also involved in the campaign; the noble Lord missed his opportunity to have a go at poor Dominic for that. This is an interesting group of amendments which promotes some good questions. I will try to address the points from the noble Lord, Lord McNicol, and the noble Baroness, Lady Blake, and from the noble Lord, Lord Berkeley, on Amendment 25A, as well as the points from the noble Lords, Lord Ravensdale and Lord Wigley, and the noble and learned Lord, Lord Thomas.

As the noble Baroness, Lady Blake, helpfully reminded us, the context for this is the publication of the levelling-up White Paper. In that, we have announced a comprehensive programme of policies that will put the UK on a path towards greater economic prosperity in every region and place—including, I hope, the north-east of Scotland. We will do this through significant targeted investment, such as the £4.8 billion levelling-up fund that has been referred to, which will invest in infrastructure that improves everyday life across the UK, including by regenerating town centres and high streets, upgrading local transport and investing in cultural and heritage assets.

It is not in question that any government subsidy scheme set up in the context of this levelling-up fund or otherwise should be in compliance with the provisions under this Bill, once it is in force. However, as we discussed on Monday and as raised by the noble Lord, Lord Purvis, again today, subsidies can of course be an important tool to achieve levelling up, but for reasons of time and efficiency I will focus today on the Bill itself and the amendments tabled. I am sure there will be plenty of opportunities to debate the levelling-up fund and its excellent proposals in this House in future.

--- Later in debate ---

[Lord Judge (CB)]

My Lords, I apologise that I was not able to attend Second Reading. I had other commitments in the House, so ask noble Lords to forgive me.

I put my name down in support of the noble Lord, Lord McNicol, and was delighted to do so. However, I am sure he will forgive me if I explain that I am actually not supporting him but the Delegated Powers and Regulatory Reform Committee, which is what we should be looking at. The noble Lord, Lord Fox, thought there might be some erudition, but there is no need for it; this is a perfectly simple constitutional aberration.

When the Minister comes to reply, I would like him to kindly look at paragraph 16 of the committee’s report, where there are three “extraordinary” provisions—that was the word used—which need attention. Unless he can answer in a way that convincingly refutes their effect, we might as well keep on fighting about this. As I say, it is a constitutional aberration and we should not have it. It is an amazing thing for one of our committees to say that a subsection, in this case Clause 47(7), should be removed from the Bill. We need to know why it should not.

[Lord Thomas of Cwmgiedd (CB)]

I shall add two very short points. First, it seems to me absolutely fundamental to a democratic society that the laws made by a legislature permit everything to be done openly and stop anyone prohibiting publication at any time. As the committee said, there is enough discretion in the earlier subsection. Secondly, accessible and open legislation is essential to the rule of law. It seems to me that this clause is an attack on both democracy and the rule of law and has no place in this Bill.

[Lord Hope of Craighead (CB)]

My Lords, when the Minister comes to reply, would he explain the purpose of Clause 47(6), which requires that the direction must be published? We need to understand the purpose of that subsection before we look at Clause 47(7) which is the subject of this discussion. As I understand it, it is there in the interests of transparency and clarity. If that is the purpose, it is even more surprising that there is a power to disapply.

After all, the purpose of the direction is to inform somebody. Who is it who is to be informed? It is not subject to parliamentary procedure, but it is there for a purpose. We need to know from the Minister expressly what that purpose is, so that we understand the significance of Clause 47(7).

Subsidy Control Bill

Lord Thomas of Cwmgiedd Excerpts

Committee stage
Monday 7th February 2022 Grand Committee

[Baroness Altmann (Con)]

My Lords, I support these amendments. I support the aim of a more flexible scheme than the EU has, and I welcome the Government’s commitment to introduce transparency to their new subsidy scheme, but, as others have explained, this Bill potentially reduces transparency.

The amendments in this group had strong support in the other place, not least from our honourable friends John Penrose and Kevin Hollinrake. I also thank the Centre for Public Data, which has worked with them to provide information to help the Government achieve what they want to achieve perhaps in a better way, which is what these amendments may enable to be done.

I support the use of subsidies to achieve the levelling-up agenda and the net-zero agenda. I think that we all realise that regional growth and infrastructure need an extra boost now. However, can the aim of reducing central control of subsidies and relying on transparency, so that interested parties can challenge subsidies that they believe are unlawful, be achieved by a process whereby those interested parties will not know that there is a subsidy unless it is more than £0.5 million and there could be a series of subsidies just below that which could amount to quite substantial sums? It would help me understand how this aim could be realised if the transparency that I think we could rely on cannot be achieved because the database does not include a record of those very subsidies that are meant to be challenged. I suggest that this seems somewhat illogical, and I urge my noble friend either to bring back his own amendments on Report or to consider accepting these amendments.

[Lord Thomas of Cwmgiedd (CB)]

I just want to add one very brief word. In a number of the amendments today and on Wednesday, we are really concerned with the movement from the regime that has existed in the EU to a regime more of self-policing. All these amendments interlock, and at the end of the day we will need to pull them together and see how we effect for this country a proper and workable regime.

This amendment deals with one court—the court of public opinion—and we shall turn to the CAT and the Competition and Markets Authority in due course, but it seems to me that, on each of these, the Government have an option. They have to do something to make the move away from the control of state subsidies in the way that the EU did to a more liberal and generous regime. But experience ought by now to have told this Government that, unless there are clear transparency and other mechanisms in place, we will end up with something that will cause more of a problem than we had under the old system. I warmly support these amendments.

[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.

--- Later in debate ---

[Lord Thomas of Cwmgiedd (CB)]

My Lords, I warmly support the noble Lord, Lord Lamont, in this amendment. Earlier this afternoon, I spoke about the centrality of enforcement in the regime introduced under this Bill. I need not repeat what I said then, but it is important to look at the mechanism of enforcement.

Subsidy Control Bill

Lord Thomas of Cwmgiedd Excerpts

Committee stage
Wednesday 9th February 2022 Grand Committee

Moved by

[Lord Thomas of Cwmgiedd]

67: Clause 70, page 39, line 33, after “decision” insert “or, where the CMA has made a report on a subsidy or subsidy scheme after a referral under section 53, 57 or 61 in respect of which a subsidy decision has been made, the CMA”
Member’s explanatory statement
The purpose of the amendment is to give the CMA standing to exercise enforcement powers through the Competition Appeal Tribunal in respect of decisions on subsidies where it has made a report.

[Lord Thomas of Cwmgiedd (CB)]

My Lords, I rise to deal with an amendment in relation to what I would call the broad powers of making this Act work. Whether we call it regulation or self-regulation, there has to be a system of compliance. We looked at one, disclosure, and earlier we looked at the CMA’s role. Now it is the CAT’s turn and, before we conclude tonight, we will look at the role of the High Court and the Court of Session on enforcement against the devolved legislatures.

I was going to say something about the Minister’s remarks relating to what he sees as the role of the CMA, but the noble Lord, Lord Lamont, has dealt with this. I think it is only fair to the Minister to allow him to come back and explain what he said, in slightly more detail, about the role of the CMA. Obviously, the role of the CMA relates very closely to the role of the CAT.

--- Later in debate ---

[Lord Lamont of Lerwick (Con)]

Would the noble and learned Lord make it clear that he envisages, through this mechanism—or route, as he describes it—that the CMA would be allowed to challenge the Government?

[Lord Thomas of Cwmgiedd (CB)]

Yes, indeed; that was my third point. The noble Lord has made it most eloquently in one sentence so I need not make it any further.

My last point on this is simply that the time limit is very short. It will be difficult for private litigants to decide that they want to bring a case. The CMA will be well aware and can act within the time limit. For all those reasons, I beg to move that this amendment be inserted into the Bill.

[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?

--- Later in debate ---

Of course, I am therefore unable to accept amendments that go so completely against the grain of this regime. I suspect that I have not convinced noble Lords, but I have done my best, and therefore hope that they feel able not to press their amendments.

[Lord Thomas of Cwmgiedd (CB)]

I have one question for the Minister on the hard economics of recovery of damages. Will there be recovery of damages against authorities that give subsidies wrongly? Secondly, has any estimate been made about the likely recoveries?

[Lord Callanan (Con)]

Yes, of course, they would be able to recover damages if a party had suffered a loss. I do not think that we have any estimates of likely figures at this stage but, if we have them, I shall certainly share them with the noble and learned Lord.

[Lord Thomas of Cwmgiedd (CB)]

My Lords, I thank all noble Lords who has taken part in this debate. If we are embarking on a new regime, we must make certain that it is effective—not because of whatever the EU says but for the good of our own nation and economy. Without an effective regime, this will not work.

We have taken different approaches—and I am extremely grateful to all who supported this amendment. The noble Lord, Lord Lamont, took the point of principle: who is going to look after those who make the decisions, particularly the Government? Who is going to refer them? Litigating against a Government, who have a bottomless pit, is very difficult—and, of course, there are political considerations against doing so.

The noble Lord, Lord Fox, asked what sort of regime this was, and whether there was a regulator. Whatever the Minister might say, the CMA is a kind of regulator in the market—unless the Minister is to say that there is no regulation at all. But this is law, so someone must have to enforce it.

Then there is the problem that I have referred to, of hard economic reality. Is it realistic to accept private enforcements? The benefits have been shown by the noble and learned Lord, Lord Hope: that we really need a body of case law to strengthen the regime, and the importance of that will become apparent later.

For all those reasons, I am afraid that I am one of those whom the Minister has not managed to persuade, but I do not think that he thought he had. But I beg leave to withdraw the amendment.

Amendment 67 withdrawn.

--- Later in debate ---

Moved by

[Lord Thomas of Cwmgiedd]

69: Clause 70, page 40, line 16, at end insert “, the Scottish Ministers, the Welsh Ministers or a Northern Ireland department”
Member’s explanatory statement
The purpose of this amendment is to remove any doubts about the position of the devolved governments being interested parties.

[Lord Thomas of Cwmgiedd (CB)]

I am going to be very brief about this. The point emerged in the earlier remarks of the noble Lord, Lord Bruce, and deals with the question of standing. I want to deal only with the technical point. It is obvious that where the Minister, qua his responsibility as the Minister for England, grants a subsidy, the position of the devolved Government should be exactly the same as if the Minister in England were able to challenge a decision of the devolved Government. There should be parity. We have talked a lot about equity, which I shall return to, but it seems that there is no equity.

The short point of this amendment is to try to ensure there is no dispute about standing. Standing sometimes causes very serious difficulties. If, however, the Welsh or Scottish Government felt that the action of the Secretary of State or some authority in England was disadvantaging people or a particular enterprise in Wales or Scotland, they should surely have the standing to bring that to the CAT. If, for the reasons I have already adumbrated, private enforcement is not successful—and the Minister has said nothing to persuade me that it will be—this is even more reason to have more custodians of the public interest looking to ensure that our noble and other Ministers in London actually stick to the principles of the Bill. I beg to move.

[Baroness Randerson (LD)]

My Lords, I will be equally brief. The omission of Ministers of the devolved Governments at this stage of the Bill is stark and astonishing. It immediately begs the question why, because the devolved Governments are specifically mentioned elsewhere in the Bill, although they are not given equality of treatment. Here, they are simply omitted. As indicated by the noble and learned Lord, Lord Thomas of Cwmgiedd, we need clarity here.

We particularly need clarity because there is equality of treatment on issues such as common frameworks. There could well be a conflict between what has been agreed by the UK Government in that context and what is in the Bill. I look forward to the Minister’s response.

--- Later in debate ---

[Lord Callanan (Con)]

The legislation is UK-wide so it will apply in Northern Ireland but, clearly, the absence of the Assembly will make it extremely challenging to get the Executive’s consent. However, we certainly will continue to engage with officials.

I want to give some context on all the engagement we have done. Since July 2020, BEIS Ministers and officials have had 75 meetings in total with their counterparts in the devolved Administrations. These are not just talking shops, as has been implied, but sessions of meaningful engagement. For example, our engagement has included sharing draft objectives and building-blocks for the new subsidy control regime; sharing both the Government’s consultation and the consultation response ahead of publication; and sharing our illustrative guidance and regulations in advance of publication, as well as continued engagement as this Bill passes through Parliament. This engagement will need to continue as the regime is implemented. In fact, at this very moment, officials are working with their counterparts on a memorandum of understanding that formally sets out a mutually agreed process for engagement on the crucial next phase of policy development and implementation.

Moving back to the detail of the amendments before us, I will start with Amendment 69. Again, I thank the noble and learned Lord, Lord Thomas of Cwmgiedd, for moving the amendment, which is supported by a number of noble Lords. It would give the devolved Administrations the ability to challenge any subsidy in the Competition Appeal Tribunal, whether their interests have been affected or not. As was confirmed at the Dispatch Box in the other place, the devolved Administrations—or, indeed, any other public authority —will generally be able to apply to the CAT to review a subsidy decision where the interests of people in the areas in which they exercise their responsibilities may be affected by that subsidy. This would be a good opportunity to correct what I said on Monday: this is not exactly the same position as the Secretary of State.

The fact that the devolved Administrations are not named in this clause is by no means intended to exclude them or any other party whose interests may genuinely be affected by the granting of a subsidy. Clearly there will be limits, and the interests of the devolved Administration or local authority in a particular subsidy cannot be totally tenuous. However, the broad definition in the Bill gives the CAT maximum discretion so that, whatever the facts of the case might be, it can deem the right people as interested parties.

The reason why the Secretary of State has universal standing to challenge a subsidy, in contrast to the devolved Administrations and local authorities, is that he or she—whoever occupies that office—is responsible for the overall operation of the subsidy control regime and, as I keep saying, for the UK’s compliance with our international agreements in this reserved policy area. Neither of those reasons apply to the devolved Administrations or local authorities. It is wrong to suggest, as some noble Lords have suggested previously, that simply because the devolved Administrations exist, the Secretary of State’s horizons and duty of care are limited only to England.

It is also worth mentioning that the Government expect that the Secretary of State would use this ability only in exceptional circumstances where, in his or her view, a subsidy threatens the whole integrity of the subsidy control framework or our compliance with international agreements. It would be inappropriate to legislate that the devolved Administrations are an interested party in all cases, implying that the Secretary of State does not carry out his or her role as the responsible Minister for the subsidy control regime for everyone in all parts of the United Kingdom.

I turn now to Amendment 79, tabled by the noble Lords, Lord German and Lord Wigley. I am glad that the noble Lords referred to the recommendations of the Review of Intergovernmental Relations through the amendment. The UK Government take these co-operation mechanisms with the devolved Administrations, as set out under this review, very seriously, and we are always open to ways of strengthening these relationships. We are open to using the intergovernmental relations structures to resolve any disputes, in accordance with the IGR principles. That said, this amendment would in effect bypass a number of earlier stages in the dispute resolution process, which has already been agreed between the UK Government and all devolved Administrations. Escalation to the Council is the last resort. As I mentioned on Monday, we are also working closely with the DAs to establish a formal process for raising case-specific concerns with the department once the regime is up and running.

Let me also stress that there is no need to incorporate this provision into the Bill for disputes to be able to come under the IGR structures. Moreover, I do not anticipate that there will be any great need to refer matters of interpretation to those structures. It is important to bear in mind that there is of course a distinction between case-specific dispute, which is a matter of legality, and a public authority’s compliance with its legal obligations, for which the proper place to resolve such disputes is ultimately the CAT and a dispute or discussion between Governments on their roles and responsibilities.

There is little scope for that type of confusion over the roles and responsibilities of the UK Government on one hand and the devolved Administrations on the other in this regime. The Secretary of State for Business has responsibility for the overall operation of the regime and the UK’s compliance with its international agreements. The UK Government may also create streamlined routes to encourage subsidies that further their strategic priorities. In all other respects, UK government departments and the Secretary of State himself are in the same position as the devolved Administrations. They are public authorities within the scope of the Bill. UK government departments are treated in exactly the same way as any other public authority. All public authorities are similarly subject to the Bill and empowered by it.

As I said earlier, my officials continue to have a regular set of meetings with their DA counterparts on all subsidy control matters; these will continue, along with regular ministerial engagement. Where there is a need for dispute resolution, that dispute will come into the ambit of the agreed intergovernmental relations process.

I recognise the strength of feeling in relation to Amendment 69 in the name of the noble and learned, Lord Thomas, but I simply do not agree that either that amendment or the other would be a necessary or useful addition to the Bill. Therefore, with respect, I urge the noble and learned Lord to withdraw his amendment.

[Lord Thomas of Cwmgiedd (CB)]

I thank all noble Lords who have spoken in this short debate; I do not want to lengthen it with a long reply. I will say only one thing. The Minister has not really answered my noble and learned friend Lord Hope’s question as to the meaning of “aggrieved”. It seems to me that one area in which the devolved Administration may wish to get involved is where a decision is made that does not directly affect their interests but they feel that the decision is wrong in principle and may set a bad precedent. It is that reason—their interest as Governments in upholding the rule of law and the operation of this—that I do not believe was answered by the Minister’s statement, but I will read it carefully. In the meantime, I beg leave to withdraw my amendment.

Amendment 69 withdrawn.

--- Later in debate ---

73: Clause 78, page 45, line 15, leave out from second “of” to end of line 16 and insert “financial assistance provided, or schemes for the provision of financial assistance made, by means of primary legislation.
(2) Nothing in this Act applies to the giving of any such assistance, or to the making of any such schemes, except so far as provided for by that Schedule.”Member’s explanatory statement
This amendment clarifies that the subsidy control requirements under the Bill apply in the case of financial assistance provided directly by primary legislation only so far as provided for by Schedule 3 to the Bill.

[Lord Thomas of Cwmgiedd (CB)]

My Lords, I rise to speak to two amendments that have a relationship I shall endeavour to explain as rapidly as possible, bearing in mind the hour. Amendment 73A relates to Schedule 3 and deals with the very extraordinary powers in this Bill, giving the High Court the power to overrule primary legislation of the devolved legislatures. This is a very real problem. I shall speak largely from the point of view of the judiciary and what we are intending to do.

Before I turn to that, I would say that, if we look at agriculture or anything else where there is an attempt by the four Governments of the UK to agree something that deals with the support of subsidies, it is extraordinary that anything that is legislated for in England is exempt, but what is legislated for elsewhere is not. There is a constitutional reason for that, and I know what the Minister will say, but it is not a matter of practical reality or public perception. It is important that we consider this.

The first extraordinary part of this is that power is given not to the Competition Appeal Tribunal but to the High Court or the Court of Session in Scotland. To my mind, it is worrying that you give to a first-instance court the power to overrule a decision and an Act of a democratically elected primary legislature. Normally, these matters would go to the Supreme Court. Secondly, and much more importantly, is it right that we should put our judges in a position to make decisions about what are effectively the principles in the Bill? People may remember something called the Human Rights Act and the very broad powers it is said to give judges to make decisions. That has had a degree of criticism. Why do we want to do this in a piece of legislation where the phrases are so ill defined? I shall come to that in the second amendment I intend to speak to. We should exercise the greatest degree of care in giving judges the right to overrule the legislature. I am not certain about the extent to which there has been widespread consultation with the judiciary about this, or with others, but this is the first and very significant step.

There is an extraordinary constitutional provision that has to deal with whose rationale is looked at. I do not want to go into the details of that, because that is more a subsidiary point, and I bear in mind the time—but there is an extraordinary constitutional innovation in the clauses in this part of the schedule.

Of course, it might be said of these principles—and I think this is possibly the Minister’s line—that all of this is very vague and there are not going to be many challenges, so do not worry. However, I am afraid people have left provisions in legislation on that basis and it has come back to bite them. What would worry me about this is if something enshrined in the decisions of the Scottish, Welsh or Northern Irish Parliaments or Assemblies, is challenged by someone. What about it happening in the field of agriculture? Someone who is importing goods would have the right to initiate this sort of action, with its very serious constitutional consequences, whereby a judge would have to make a decision, quite often, I imagine, in relation to the principles that are so ill defined.

That takes me neatly to my second series of amendments, which deal with the definitions and status of guidance. I will leave the noble Lord, Lord German, to deal with the question of whether the guidance is binding. It seems unarguable to me that it is not binding.

What I am much more interested in—this highlights the difficulties caused by Schedule 3 and the construction of the Bill as a whole—is the Minister’s power to give guidance as to the meaning. Ordinarily, it is Parliament that decides what something means and, if it does not, it leaves it to the judges. Sometimes, it is put in secondary legislation. However—this is extraordinary—here we are putting the meaning of the wording into guidance.

There are two fundamental problems with that. First, we have visited the word “equity” on a number of occasions—I might call it a word for all seasons—but, even at this late hour, I feel that I ought to refer to John Selden’s famous note about equity. He said:

“Equity is a roguish thing: for law we have a measure, know what to trust to; equity is according to the conscience of him that is Chancellor, and as that is larger or narrower, so is equity. ‘Tis all one as if they should make the standard for the measure we call a foot, a Chancellor’s foot; what an uncertain measure would this be? One Chancellor has a long foot, another a short foot, a third an indifferent foot: ‘tis the same thing in a Chancellor’s conscience.”


I refer to that because it is the essence of the problem with the word “equity”. With the utmost respect, I believe that this Committee ought not to shirk its responsibilities in defining what is meant by this and how it applies in certain circumstances. It might be said, “Well, we are constrained by the fact that these are taken directly from the TCA”, but is that in fact a constraint—or do we hanker for the way in which these vague principles were left to the judges in Luxembourg? Do we want to give our judges that pleasure as well? I doubt it, but I am not sure that it has been fully thought through.

It therefore seems to me that we ought to look at this very carefully. There is the constitutional principle in relation to the Minister being able to give guidance on meaning; it plainly is not binding but he should not be giving such guidance because that is a matter for the courts or Parliament. Parliament should not shirk its responsibility to define what some of these things mean. We should not leave it to judges—unless, of course, there is a hankering for, as they do in Europe, leaving things to the judiciary in Luxembourg. This time, however, it would be the judiciary in Westminster, Edinburgh or possibly Belfast—but not possibly in Cardiff.

[Lord German (LD)]

My Lords, it is always a pleasure to talk after the noble and learned Lord, Lord Thomas of Cwmgiedd, who manages to enlighten us all with observations that might have passed us by if we had not had the wonder of his words.

In Amendment 74 in my name, which would amend Clause 79, I treat “non-binding” as a sine qua non. The reason I put it in was to allow us to have a discussion and debate about the whole extraordinary clause on guidance. All I seek, of course, is for the Minister to agree that it is non-binding. I am sure that he will do so because all the facts speak for themselves, but there is a high head of steam building up in this Committee about the way in which guidance is being used. I will come back to the spearheading on that and how it has moved on but, basically, this Bill has what we call—Parliament also uses this phrase—“have regard to” guidance. This is a problem because it places an expectation that the guidance will be followed unless there are cogent reasons for not doing so.

Subsections (5) and (6) of Clause 79 give the game away a bit. Clause 79(5) says

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

before making the guidance. What is appropriate is not specified. Clause 79(6) says:

“A public authority must have regard to guidance issued under this section.”


“Must” is very important in this respect.

Subsidy Control Bill

Lord Thomas of Cwmgiedd Excerpts

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

[Lord Thomas of Cwmgiedd (CB)]

My Lords, I will speak to Amendment 9 and I am grateful for the support of the noble Lords, Lord Ravensdale and Lord Wigley, and the noble and learned Lord, Lord Hope of Craighead. I should first say how grateful I am to the Minister and to others for the amendments they have made to Schedule 1 to bring in the words “local or regional disadvantage”, to give some concrete context to the words “equity rationale”. This is an important and considerable advance. I am also grateful for the change to Clause 18, which again takes out any argument that if you are trying to attract a business to an area of disadvantage you can be penalised by that call.

However, despite that praise, there is a problem—I see the Minister smile—and it is this: what is lacking are the standards to ensure that there is some proper objective basis for the Secretary of State, the CMA and others to assess whether the use of the subsidy for this purpose is one that is properly justifiable, proportionate to the policy objectives and complies therefore with the subsidy control principles.

The proposal does not, as the Minister may think, seek to constrain local authorities from being imaginative, from being ingenious or from thinking what is the best standard or what is the best way to spend money for their local area. It does not seek to do any of that. What it seeks to do is to set standards to ensure that there is an objective basis for judging whether these bright ideas—this local freedom, which I welcome—are actually objectively justifiable. In short, the amendment seeks first to provide for efficiency and to ensure that scarce government money is spent wisely on thought-through and justifiable schemes that are proportionate to the policy objectives.

It also has another purpose: to ensure that all parts of our kingdom which are not economically disadvantaged cannot use this rationale to grant a subsidy. Levelling up is essential and subsidies can achieve that objective. As I said in Committee—but need not repeat in the time we have available for this important Bill—there has been a lot of controversy about the way in which the shared prosperity or levelling-up fund was used. That was very damaging. It is not appropriate for us to enter into that controversy tonight, but you have to have clear and objective standards. Some say that there were standards for the way in which those funds were distributed. If so, they were not clear and they plainly did not achieve a view among most people that the funds had been well spent. That controversy shows a number of things. First, there will be close examination of the way in which the subsidies are given and whether they are being properly directed to the right areas of our kingdom and not to the wrong areas. Secondly, you will never persuade the disadvantaged that something is being done for them unless it can be objectively shown that the use of funds across the kingdom is directed to helping those who need it most. The only way to do this is to set out clear criteria, and a failure to do so will be damaging to the unity of our kingdom.

In Committee, some commented that one of the terrible issues of the past number of years is that the rich have got richer and the poor poorer. We cannot go on like that, and we must not allow subsidies to facilitate that. I advocated a map. I have listened to what was said and moved away from that. What I therefore advocate are principles, and it seems to me that these principles are simple and could easily be adopted. I will listen carefully to what the Minister has to say, because my amendment is not the only way.

This Bill is going to have guidance, and I am not going to repeat what I said about the undesirability of legislating on an important matter with guidance. It is bad enough doing things by regulation. Guidance is just a step down the road away from what we should be doing. I have to be realistic and I very much hope therefore that, when the Minister responds, he will make it clear that guidance will cover this, will set objective standards and will include the standards to which I have referred. There is a lot of research on this, but we must be very clear. If we are not, we will waste money, be inefficient and make the rich richer. That is something we must not do.

[Lord Wigley (PC)]

My Lords, I am delighted to follow the noble and learned Lord, Lord Thomas, to whose amendment I have added my name. We discussed these matters in Committee at some length. I am also delighted to see the Government’s Amendment 2, which is a step in the right direction. However, we need to address the purpose of having subsidies and how the achievement of that purpose or failure to achieve such objectives is measured, and we need some quantified basis on which to monitor and fine-tune policy.

We in Wales, unfortunately, have had far too long an experience of so many parts of our country having to depend on assistance to try and overcome economic difficulties. From the rundown of coal and steel in the 1950s and 1960s through to now, that has happened. There has been investment from the public purse to areas such as the north-west of Wales, including Anglesey, and the Gwent valleys, where the income per head is a 10th of the level of Kensington in west London; clearly, policy has failed. Objective criteria were laid down by the European Union with regard to the Objective 1 funding and the subsequent programmes we have had since 1999. They were based on areas below 75% of GVA per head being eligible for assistance. Millions of pounds have gone into programmes of that sort, but they have not necessarily solved the problem. We are looking for a mechanism that enables the economies of these areas to become self-regenerative, not to depend on handouts for ever and a day. That must be the objective. Therefore, there need to be clear criteria.

It is a good step that the Government recognise the need for there to be a regional and social dimension to this, but there needs to be a means of monitoring and fine-tuning and ensuring the growth of the economy from within. Rather than just compensation for not having that economic growth, the ability must be created among people and businesses to generate growth and economic well-being for the future. If we get it right in this Bill, it could be a very important step forward. If we fail, it will be a missed opportunity.

Subsidy Control Bill

Lord Thomas of Cwmgiedd Excerpts

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

Moved by

[Lord Thomas of Cwmgiedd]

6: Clause 10, page 6, line 31, after “Crown” insert “of his or her own accord or by a Minister of the Crown upon a reasonable request to make such a scheme addressed to him or her by the Scottish Ministers, the Welsh Ministers or the Department for the Economy in Northern Ireland”

[Lord Thomas of Cwmgiedd (CB)]

My Lords, in moving Amendment 6, I shall also speak to Amendments 58 and 64 and deal with three issues relating to devolution. I am grateful for the support of the noble and learned Lord, Lord Hope of Craighead, the noble Lord, Lord Wigley, and the noble Baroness, Lady Randerson—although obviously she is not here—on Amendment 6, and of the noble and learned Lord and the noble Lords, Lord Wigley and Lord Fox, on Amendment 64. I shall deal with those two amendments first.

I think it can truly be said that Amendment 6 is a very modest amendment because, unlike what was before the Committee, it does not seek to give the devolved Governments the power to make streamlined subsidy schemes, nor to submit them to their own Parliaments, but simply seeks to make it clear that if a reasonable request is made to the Secretary of State for a streamlined subsidy scheme by one of the devolved Governments then the Secretary of State would make such a scheme and lay it before Parliament in due course.

There are two reasons for that. First, it seems completely wrong in principle for the Secretary of State of his own accord to be able to make streamlined subsidy schemes within an area of devolved competence —I hope that is not in dispute. Secondly, there can really be no justification, if the nations of our kingdom are to be treated on the basis of equality, for the Secretary of State, having the power qua Secretary of State and Minister for England, to have the privilege of making these schemes for England that cannot be made in devolved areas of competence for Wales, Scotland and Northern Ireland. I therefore find it extraordinarily difficult to see what the objection is to this in principle, unless of course there is a commitment by the Government to provide for that in some other way.

On Amendment 64, it is a risk to claim that I am making a second move for a modest amendment, but again, when this is looked at, it will be seen to be modest. It would require the Secretary of State to seek consent from the devolved Governments in respect of some of the regulation-making powers, but not all of them, and in respect of guidance. I think we have debated long enough why guidance is so important.

This amendment is modest for a second reason: it would require the Secretary of State to consult and try to seek agreement over the period of a month. Thereafter the Secretary of State would be free, provided that, as no doubt a reasonable Secretary of State would always do, he had good reasons for not being able to obtain that consent. Again, there may be other ways of achieving that result, and I look forward with interest to hearing what the Minister has to say. It is very difficult to see what objection there could be to this measure.

Amendment 58 raises a very different point. I tabled it simply because it raises an issue of considerable constitutional importance, and one certainly treated by the devolved parliaments and Governments as such. There has been extensive debate in the devolved Governments about it and quite a lot of academic criticism. As is known, this schedule to the Bill sets out an elaborate procedure under which subsidies that have been made under the primary legislation and passed by the devolved legislatures can be challenged in the ordinary courts for breach of the subsidy control and other principles. The position of the Westminster Parliament, which may itself be able to pass legislation that breaches those principles, is of course different because of the principle of parliamentary sovereignty. There is no way this House could constrain a future House from passing a scheme in favour of England or doing something in respect of England which breached the subsidy control principles. It would simply be answerable for breach of its international obligations assumed under the treaty, but that has not always been a treaty with which the Government have accorded full and sufficient attention.

The devolved legislation originally contained principles—and all the amendments have contained principles—that, where the powers of the devolved legislatures are constrained, any issues as to whether they are in fact constrained in legislation passed are remitted to the Supreme Court. This legislation moves away from that fundamental principle, and it is important to realise the considerable concern caused by this move. It arises because, where a court decides to set aside the decision of the elected representatives of the people, considerable concern is always expressed. That concern should be dealt with by a special process, and submitting it to the ordinary courts is not right.

I am afraid that this amendment is a long and complex one and I will not attempt to go through it because it had to go through all those hoops. I have raised it because it seems quite impossible for us to pass this piece of legislation without noting what we are doing. Although I can see the hour—this is not the time for a debate on important constitutional principles—I very much hope that raising this issue now will give the Government pause to think about this and for this House to debate in future how we deal with the problem of ensuring that, when the people of Wales, of Scotland and of Northern Ireland for reasons of quite complicated constitutional doctrine have made a decision through their legislatures, that should be questioned only by a very senior court, through a process that is carefully thought through. We will need to return to that in due course.

Those are the reasons why I have put forward these three amendments, and I beg to move.

--- Later in debate ---

[Lord Callanan (Con)]

There is a difference in principle here. Subsidy control is a reserved matter. Under the memorandum of understanding, we have said that we will set up a mechanism that the Scottish Government can use to challenge schemes. Of course, any streamlined scheme would be approved by this Parliament anyway. In any practical political environment, there is no way that the UK Government will want to set up a parallel scheme to subsidise agriculture and fisheries, which are devolved competences, when the Scottish Government already have similar schemes in the same area.

As I have said, the devolved Administrations will of course continue, as they have always done, to make subsidies and subsidy schemes using the resources that they have. It is important to note that this Bill does not provide any resources for any schemes, and the court would need to look at the facts of the case on legality grounds in the light of the requirements of Schedule 3 to the Bill. This is, in my view, comparable to other circumstances in which devolved primary legislation is reviewed on legality grounds, such as the Human Rights Act or the United Kingdom Internal Market Act. Importantly, and in contrast to the review of the Competition Appeal Tribunal for other subsidies, the court could not consider common-law public law grounds alongside the requirements of the subsidy control grounds.

For all the reasons I have set out, I hope that the noble and Lord will not press his amendments.

[Lord Thomas of Cwmgiedd (CB)]

I am grateful to all noble Lords who have spoken in this debate and for the various points that have been made; I hope it is not discourteous if I try to summarise them without individual attribution.

Fundamentally, this union is not going to hold together unless there is an acceptance of equality of treatment, and this Bill drives a coach and horses through that. One illustration suffices: if this Parliament, for England, makes a subsidy scheme that infringes the subsidy control principles, then those overseas cannot challenge it, but they can challenge what is done in Wales, Scotland and Northern Ireland. That is not equality. A second, more vivid example of equality is the ability to make streamlined subsidy schemes. Part of the difficulty we face is that all of this is for future legislation, but we are now trespassing into the constitution.

What has emerged from the questions that the Minister has tried to answer is this: where are we going in areas of devolved competence? He says that no Government would want to do it, but we are a country governed by the rule of law, and the law ought to be clear as to the constitutional responsibilities of the Government of the United Kingdom and of England and the constitutional responsibilities and powers of the devolved nations. This has not been thought through, as is evident from the Minister’s reply. I do not criticise him, because we do not have the detail of the streamlined subsidy schemes so that we could see how this would work.

Thirdly, we are trespassing into dangerous constitutional areas. I am sure that many lawyers will not accept that, if the Government tried to make a streamlined subsidy scheme that infringed on devolved competence, it would be challenged, because that would be made under subordinate legislation and would not have the equivalent status of an Act of this Parliament. It is a great misfortune that we have not thought all of this through.

--- Later in debate ---

[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.

[Lord Hope of Craighead (CB)]

My Lords, I have added my name to this amendment. We should pay tribute to the noble and learned Lord, Lord Thomas, for his insight on the importance of enforcement to make the system work. His two points do not need repetition but the first, about the role of the CMA, begs a question. Why should the CMA not have the powers that are being referred to in this amendment? As far as the equality issues are concerned, the question is: why not? One point in the amendment that particularly appeals to me is the reference to interested parties. All the bodies mentioned there—the CMA and the three devolved Governments—are interested parties. It may be that, as the jurisprudence of the system works its way through the process, this will be established; but it is far better to have it made clear at the beginning, so that its position is plainly established, and the enforcement process can be put through in a proper manner. Paying tribute as I do to the noble and learned Lord, I entirely support his amendment.