Subsidy Control Bill (Second sitting)

Robin Millar Excerpts

Tuesday 26th October 2021 Public Bill Committees

[Seema Malhotra]

Q Thank you very much for those answers. As you will be aware, concerns have been raised that the role, voice and powers of the devolved Administrations within the regime may not be strong enough, particularly for a four-nations approach. It has been suggested that that should be addressed and the Bill strengthened. Are there specific areas that you would say need to be strengthened?

Ivan McKee: A four-nations approach clearly has to take recognition of areas of devolved responsibility, be that for agriculture, forestry, fisheries, environment, economic development and so on. A range of areas on which the Bill impinges are devolved under the settlement. So clearly that is a concern.

I suppose another concern about the Bill’s general operation is the lack of the option, or requirement, under the EU regime for pre-notification or advance approval. In advance of an award or a subsidy being made, that gave certainty that it was aligned with the rules in place. The absence of that in this Bill creates a great deal of uncertainty as to what is allowable and what is not in advance of any subsidy decisions being made.

[Robin Millar (Aberconwy) (Con)]

Q It is a pleasure to be here with you in the Chair, Ms Nokes.

Welcome to this Committee of the UK Government, Mr McKee. We are discussing a UK Government instrument and within that there are provisions made for the role of the devolved Administrations. Clause 10 gives the devolved Administrations scope to set their own scheme of subsidies. Is that your understanding? Do you feel that that provides the Scottish Government with the powers to do what they need to do?

Ivan McKee: No, because the Secretary of State has powers over devolved areas that Scottish Government Ministers do not have, and that impinges on the devolution settlement. That settlement is quite clear on areas that are reserved and devolved, and it is the Scottish Government and Scottish Ministers who have the power to act and operate in those devolved areas. The Bill gives those powers to the Secretary of State and the UK Government, but it does not give equivalent powers to Scottish Government Ministers to operate likewise in devolved areas.

[Robin Millar]

Q I will ask the question in a slightly different way, then: does the Bill give you powers to do things that you were not able to do when the UK was part of the EU?

Ivan McKee: As I have said before, we believe that we should be in the European Union. The scope that we had within the European Union to be able to give subsidy, within a controlled environment, was very clear. We were able to get clarity in advance of making any subsidies as to whether it complied or not. There was clarity about that process that does not exist under the current proposals.

[Robin Millar]

I think the point you are making—

Ivan McKee: To answer your question, we don’t know. We do not know until we have made a subsidy and then someone decides that they want to challenge that at some point down line. Until then, we will not know whether we have the authority to do what we think we might like to do.

[Robin Millar]

Q If I understand you correctly, you are saying that when we were within the EU, there was certainty that came from being told what we could and could not do. May I suggest that clause 10 gives the devolved Administrations scope to set their own subsidies? That was not a freedom that you had when we were in the EU.

Ivan McKee: No, because that would be open to challenge potentially further down the line, and we would not have clarity in advance about whether it was open to challenge or not, and what the conclusion of any challenge may be.

[Robin Millar]

Q I am grateful that you used the word “potentially” because there is not a certainty around that; it is only potential. The fact is that clause 10 does set the freedoms for the devolved Administrations to set their own subsidy schemes, so I am grateful to you for confirming that.

We have just had very interesting evidence from Mr Greenberg, who is the Parliamentary Counsel for the House of Commons concerned with domestic legislation. He said that we should not be complaining about a skeleton Bill because we should not be focused on detail so much as on ensuring that it gives us the freedoms that we want to do the things we do. I just come back to clause 10 and I wonder again what your response is to that. Do you feel that the clause gives you freedoms?

Ivan McKee: Again, I don’t think that that is the case, because there is no advance approval. At the moment, there are several proposals on my desk that we are considering, and have done in the past. The process is that you go through a consideration, and then assess and get clarification on whether it would be allowable, or would breach state aid rules. If we are in an environment where you go ahead and do things and then you may get called up later on it because there is no clarity in advance as to whether it complies, clearly you can say that we must do something, but if it is then ruled non-compliant at a later stage because you did not know that in advance, that is a freedom that is not worth much.

[Robin Millar]

Q A final question, because I am really trying to get to the bottom of this point: would you be happier if the UK Government told you what to do?

Ivan McKee: No, I would be happier if there were clear rules for everybody across the UK that had been agreed with all parts of the UK, so that everybody knew exactly what that level playing field was, everybody knew what the rules were in advance, and there was a process for clarification before you took very important decisions about subsidies and economic development for very good reasons: to support businesses, industries, communities and parts of Scotland. I would be happy if we knew in advance that those things were clear and allowable, and if the Bill respected the powers of the devolved Administrations with respect to the devolution settlement.

[Stephen Flynn]

Q Thank you, Ivan, for coming along this afternoon. There are a couple of points that I wish to make, if I may. First, we heard this morning from Dr Pazos-Vidal, who said that the Bill is not reflective of the territorial constitution of the UK as it stands. This afternoon, we heard some comments from George Peretz QC that alluded to the wider discussion about the fact that BEIS could ultimately seek to invest in projects, be they in Wales, England, or indeed Scotland, and that those projects could have a consequence upon the devolution settlement—they could be at odds with the intentions of the Scottish Government. Do you believe there is an issue there, given the fact that, ultimately, it will be only BEIS that has the ability to refer such matters to the CMA? Do you believe that the Scottish Government, along with the Welsh Government and the Northern Ireland Assembly, should have the ability to refer such matters, should they feel that those matters impinge upon devolution and they want to challenge the situation as it stands?

Secondly, I would be grateful if you could expand upon your concerns in relation to agriculture, because I know it has been spoken about at length.

Ivan McKee: With regard to your first point, yes, of course that is a concern. It is lopsided, it is asymmetrical and it gives BEIS powers in devolved areas that it does not give to the devolved Administrations. Those are, to say the least, problematic with regards to devolved Administrations operating in areas of devolved competency. That is clearly of significant concern. I did not hear all the earlier evidence—I dipped in and out of some parts—but I am aware that those comments you referred to were made, and that does support the view that we have. It is not just ourselves: the Welsh Government and, I believe, the Northern Ireland Executive also have concerns regarding the powers that the Bill gives to the Secretary of State in devolved areas that are not reflected with equivalent powers for Scottish Government Ministers.

With regards to agriculture, our concern is that income support mechanisms for agriculture that would have been outside the scope of an EU subsidy control regime are inside the scope of the Bill, which raises concerns about the extent to which we can apply such income support mechanisms within the agriculture sector in Scotland, and of course elsewhere. That is a concern for us: we believe that agriculture should be excluded from the Bill, and I understand that an amendment could be coming forward with that objective in mind.