Subsidy Control Bill

Robin Millar Excerpts

2nd reading
Wednesday 22nd September 2021 Commons Chamber

[John Penrose (Weston-super-Mare) (Con)]

I am seriously pleased to see the Bill coming forward. It is much needed, not just because, as the hon. Member for Feltham and Heston (Seema Malhotra) pointed out, it is a fulfilment of our international obligations, but because, as the Secretary of State rightly said, before we went into the EU and had any kind of proper subsidy control regime, it was pretty much a free-for-all and I am afraid that, no matter who was in government, broadly speaking, the lack of rules was terrible.

Politicians on all sides and of all stripes over an extended period have a dreadful track record in yielding to temptation, particularly when they are being lobbied hard by someone pleading desperately for this or that piece of help—it’s just one more wafer-thin subsidy, sir. We give way. We all do—it is only human—and it is a long proven fact that politicians are terrible at picking winners, but losers are really good at picking politicians. It is therefore essential that, as we come out of the EU, we have our UK-only version of a rules-based system in place. The Secretary of State is right to move towards that, even if we did not have those international obligations to deliver it.

I am also pleased to see the seven principles that are the core of the approach, backed up by various other environmental principles as well. They start with the notion that there must be a market failure before any form of taxpayers’ cash can start to be dished out. We can all think of businesses in the past—perhaps even today—that would have liked nothing better than to reach their sticky fingers into the taxpayers’ pockets and extract some cash to make their lives better, their shareholders’ lives simpler and their management’s lives easier. It is therefore absolutely right that the Secretary of State has limited his own freedom—and, more particularly, that of his successors—so that we can have, we hope, a consistent approach and we will not have open season for Government failure. We always talk about market failure in this place, but that principle is crucial for avoiding Government failure in future.

That is a point I made in the Government-commissioned report I was asked to write by the Secretary of State’s predecessor on competition policy. Self-denial is absolutely essential to make sure that we do not start splashing around taxpayers’ cash in an unproductive way and subsidising commercially hopeless cases because they have good lobbyists. The trouble is that the more hopeless they are but the deeper pockets they have and the better lobbyists they have, the harder it is to avoid that kind of temptation.

This is a welcome and necessary Bill, and it is vitally important. As my right hon. Friend the Member for South Northamptonshire (Dame Andrea Leadsom) said earlier, I do not think we should have any truck with the notion that we were not one of the most prolific users of subsidies when we were still part of the EU. We ranked relatively low in the league table against other countries in the EU in our use of subsidies, and as a free marketeer I think that should be a badge of honour. It shows that we are in general allowing capitalism to run and allowing capitalist animal spirits to move resources, investment and productive assets around our economy in the most efficient way to drive our economic growth. Ultimately, it is that economic growth that pays for the public services we all care about, and that we all need and rely on as well. So yes to capitalism and yes to avoiding distortions, discriminations and, dare I say it, potentially the risks of political favouritism if we do not have these rules in place and a rules-based system. I am delighted that this Bill is here, and it establishes some really important principles for all of us.

There is one small fly in the ointment, which I will mention now. I do not want to try your patience, Madam Deputy Speaker, by going into things that will I am sure be properly covered both in Committee and on Report. I will mention the principle at this stage—it has already been mentioned by my hon. Friend the Member for Thirsk and Malton (Kevin Hollinrake) and by others—and it is the point about transparency. The Secretary of State has made that a central point, and he is absolutely right to say that he wants to establish the UK as one of the leading examples of subsidy transparency in, I think, the world. I may be misquoting him slightly, but I am sure the principle is one he would sign up to.

That is an absolutely core piece because if we do not have such transparency—if we cannot see what these subsidies are or we cannot see what they are until it is too late—how on earth are we to know that this excellent new set of rules-based principles are being followed properly or not? Sunlight is the best disinfectant, as we all know, and exposing this to public scrutiny cannot be bad. Because we are setting up this rules-based system, we should have nothing to hide. If we are worried about transparency, that is always a bad sign in the first place. Therefore, the central principle, which the Secretary of State and his fellow Ministers have already enunciated, is entirely the right one.

My concern is therefore not with the principle that the Secretary of State has enunciated; it is whether or not this Bill will actually deliver the principle in the way he hopes. This is a technical concern, not one of principle at all, but the technical concern is real. We have left the EU, but the EU’s basic rules for disclosure required us to disclose subsidies of above €500,000. The new Bill, as we have heard, has a variety of different exemptions, but broadly speaking it requires us to disclose subsidies of above £500,000. That means we will be disclosing fewer subsidies in future than we were under the EU because the threshold is higher. It is not the only threshold; there are other thresholds. One of them is even higher still, at £725,000, for public interest subsidies of one kind or another, which I think is for subsidising things such as buses and social housing. All those things may very well need subsidies, but why are we being secretive about it? Why should we not make this public?

[Robin Millar (Aberconwy) (Con)]

There are very specific exclusions for inclusion on the central database. Would my hon. Friend extend his argument to consideration of those excluded items as well?

[John Penrose]

There are a couple of exclusions that I think make an awful lot of sense. For example, there is an exclusion about national security, which I hope everybody on all sides of this House would sign up to. However, in principle, to follow and frank the principle that the Secretary of State has rightly put across about how we want to be the most transparent about our use of subsidies—because it will show that we are following those rules, and that we are letting capitalism rip and therefore that productive assets are being used in the most effective way without distortion—in general there should be fewer exclusions, with only the minimal number of exclusions that is safe, although I completely accept that there will need to be some. There is no reason why we should worry about disclosing pretty much any subsidy, particularly because local councils, for example, already have to report anything they spend above £500. They already take records, keep notes, and publish those details, and it would be peculiar to say that although they have to declare spending above £500, they do not have to declare subsidies above £500,000. I am not sure that is terribly consistent.

The Secretary of State has rightly pointed out that when subsidies are notified they have to be turned round and approved or disapproved by the CMA within 30 days. That is entirely right. We need a prompt, nimble, and agile response in order for our economy to work in a prompt, nimble and agile way. It therefore seems odd, if I may put it politely, that we are allowing subsidies not to be registered for up to six months after they have been made. We will therefore have fewer subsidies declared, in a way that does not match what local councils already have to declare. Councils already have to keep such information and data; it is not something they will have to start doing from scratch, and all they will need to do is paste it on to a central database. They also do not have to put it out for six months. These are small technical tweaks, but they are central to delivering on the principle, which the Secretary of State rightly enunciated.

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[Stephen Flynn]

That is an entirely fair and accurate point.

[Robin Millar]

From the Opposition Benches this afternoon, we are hearing a lot about asymmetry. In particular, we are hearing about a lack of involvement and so on. I will not make any points about sovereignty—I do not wish to go down that road—but I will make a simple observation and perhaps the hon. Gentleman can comment on it. Was that not the case when we were a part of the EU? We were directed into things. We did not have the same control he seems to think that they should have now.

[Stephen Flynn]

The hon. Member makes his point in his own way, but let me be clear. How can I put this? We do not think that the system that operated within the EU was one that we should have turned our back on. What did we turn our back on it for? Let me answer that briefly, as a slight anecdote: it was for Brexit—the chaos of Brexit. Food shortages, staff shortages, trade barriers, the chaos that we see—

[Robin Millar]

Will the hon. Gentleman give way?

[Stephen Flynn]

The hon. Member has had his say, and I am sure that he will make further contributions later.

Conservative Members come to this Chamber and tell us that Brexit will solve everything, but of course it has not; it has only made things worse for working people in our society. What we have before us, in no uncertain terms, is a Bill that undermines devolution, following on from the United Kingdom Internal Market Act 2020 and the shared prosperity fund. If they want to protect their Union, they are doing a damned good job of destroying it. Do some more!

--- Later in debate ---

[Robin Millar (Aberconwy) (Con)]

Thank you, Madam Deputy Speaker. I sense a restlessness among colleagues, so my comments will be brief, and the moment we are all waiting for, when the Under-Secretary of State for Business, Energy and Industrial Strategy, my hon. Friend the Member for Sutton and Cheam (Paul Scully), gets to his feet, will be upon us shortly.

It is a pleasure to follow the right hon. Member for East Antrim (Sammy Wilson). Northern Ireland is a part of the United Kingdom, and it is only right and proper that UK law and a UK subsidy regime must prevail in that part of the United Kingdom. I hope, indeed, that they will be rejoicing on the streets. My understanding is that the Government have, in effect, made it clear that article 10 of the protocol is redundant, given that the subsequent trade and co-operation agreement establishes a framework of mutual recognition of state aid rules, with which the Bill complies. Perhaps the Minister will clarify that in his remarks.

I want to make a point about how the Bill supports devolution. We have heard Opposition Members refer—not universally, but on a couple of occasions—to how the Bill damages devolution. There is much that could be said about the gaps between the way the world is viewed by Opposition Members and the way it is viewed by Government Members, but one such gap has come through during this debate in the constant references to things that are missing. I suggest that that gap indicates different ways of looking at things: while Government Members are happy to set down principles within which business can flourish and prosper, it seems to me from the comments made today that Opposition Members are looking for a high degree of prescription about what can and cannot be done. Those are different ways of looking at the world.

Let me make it clear that I am a supporter of the principles behind devolution. I want to draw out three principles in particular: local leadership, broader accountability and shared prosperity. Sadly, the first, local leadership, has never really been fully realised in north Wales. To us, devolution has led to decision-making powers flowing south to Cardiff bay. In Scotland, too, we have seen a centralisation of powers, with decision-making powers drawn from the regions to Holyrood and reserved to the Government there.

As just one example—I could give many—we saw that in the disbursal of EU funds. Only 9% of EU funds spent in Wales made it as far as local authorities for decision making; the majority were decided on and spent from Cardiff bay. England has its own problems and challenges in this area, but, by contrast, the figure in England was 36%: four times as much money and decision making flowed out into the local authorities and the regions from Westminster. That is a telling tale, because the sense in north Wales is still that Cardiff is distant and remote—accusations that are typically laid against this place. The Bill will help to address that and give local authorities and even the devolved Administrations freedom to set up targeted, effective and practical schemes in their area.

I must say, though, that something has changed in the air in north Wales since the arrival of this Government in Westminster. The sense of alienation is starting to evaporate. Those who know the area of the world I am talking about will know that in the Conwy valley and Aberconwy, the morning mists start to roll down the valley at this time of year, and they are starting to evaporate now thanks to the Government’s involvement.

There is much that I could say about how the United Kingdom Internal Market Act 2020 has changed things, but I will not, for reasons of time. I will say, though, that the prospect of inbound UK Government funds has rapidly mobilised my own council, Conwy County Borough Council. It is engaging with communities and leaders on their thoughts and plans for delivering change, and I am grateful for the support and engagement of its leader, Councillor Charlie McCoubrey, and the economy portfolio holder, Councillor Louise Emery. For my part, I have been meeting local councils, organisations, residents and business leaders in the community to seek their thoughts and advice, and there is no shortage of them.

The second principle that I would like to draw attention to is accountability. I welcome the universal reporting database being introduced through clause 33. My hon. Friend the Member for Weston-super-Mare (John Penrose) gave a tour de force on the benefits of the transparency that it will bring and even prescribed fresh air and sunshine to bring benefits to businesses.

The different reporting systems that exist in different parts of the UK have often clouded transparency and obscured comparisons. Wales and Scotland have different reporting regimes in many different areas—we have heard reference to patient waiting lists—and during the pandemic we have seen different local responses only causing further confusion. Key universal systems avoid such inconsistency, and the database provided for in the Bill will be one of those. They allow for public transparency and comparable information about how money is being spent in the UK.

[Stephen Flynn]

Will the hon. Member give way?

[Robin Millar]

I will, as the hon. Gentleman gave way to me.

[Stephen Flynn]

I thank the hon. Member. He said at the start of his speech that he respected devolution and believed in the principles of devolution, yet throughout his speech all he has done is criticise it, to the point where he is now criticising local authorities in Scotland. Far be it from me to defend a Tory-led local authority in Aberdeen, but why is he criticising local authorities, and how does that marry with his support for devolution?

[Robin Millar]

I thank the hon. Gentleman for his intervention, but I am not sure what he was listening to. Not one word of criticism of local authorities has passed my lips. I was explicit in starting my speech by addressing the principles of devolution. I suspect that he may be confusing the principles of it with the practice of it that he sees in Scotland. Accountability is important, and it has been allowed to slip, but I believe that the Bill addresses that by supporting and encouraging it.

The third and final principle that I want to mention is shared prosperity, which the Bill will support. Aberconwy has seen an impressive recovery from the pandemic, and according to some reports Llandudno has experienced the fastest recovery of any town in the UK. I pay tribute to those who are working so hard in their businesses, from Glenn Evans and his team at the Royal Oak in Betws-y-Coed to Clinton and his team at the Blend coffee shop on Clonmel Street in Llandudno. Right across Aberconwy, it is people like them who make that economic recovery a reality. We owe them a debt of thanks and gratitude for their hard work—it is not we in this place but they who make the difference, and I am grateful to them for it. The prospect of additional funds and subsidies coming their way—coming our way, into Aberconwy, directed by local leaders and businesses—provides the potential to capitalise on that endeavour, help economic recovery and bring forward the promise of a locally delivered prosperous future.

Of course, there is much to do. Other principles set out in part 2 of the Bill ensure that our internal market operates freely and without hindrance, avoiding the subsidy race that has already been referenced between different parts of the UK. Other parts of the Bill reduce bureaucracy and—again, I make this point—enable decision making by devolved Administrations in a targeted and effective way, faster and in a way that they could never do before.

Finally, I support the Government’s hopes for the Bill that it will enable a thriving competitive economy and, in north Wales, lead to the kind of investment that we want to see in renewable energy, road, rail and broadband connectivity, and, I hope, even a freeport. It is because I believe the Bill delivers on the principles of devolution and makes possible a prosperous future in Aberconwy that I will be voting in support of its Second Reading.