Advanced Research and Invention Agency Bill

Stephen Flynn Excerpts

Consideration of Lords amendments
Monday 31st January 2022 Commons Chamber

[George Freeman]

I am grateful to my right hon. Friend for that question, and he will not be surprised to know that it is one I have also been asking since coming to this role. The point of ARIA is to be a new agency for doing new science in new ways, and it has been structured specifically to avoid meddling Ministers, even those with a good idea, and meddling officials, even those with good intent, and to create an agency that is free.

My right hon. Friend asks an important question. As we appoint the chief executive officer and the chair, the framework agreement will set out, a bit like a subscription agreement, the agency’s operating parameters, which will be published in due course. Each year ARIA will have to report on its stated plans. Crucially, as is so often not the case in scientific endeavour, ARIA will report where happy failure has occurred so that we do not continue to pour more money into scientific programmes that have not succeeded, which I know will reassure him. We want ARIA to be free to be honest about that, and not embarrassed. ARIA will be annually accountable through the framework agreement.

Finally, Lords amendment 1 deals with the conditions that ARIA may attach to its financial support. This arises from a series of important discussions in the other place relating to ARIA’s duty to commercialise intellectual property that may be generated, which I am keen to address properly. However, the amendment, as drafted, does not actually prevent ARIA from doing anything; it adds examples of conditions that ARIA may attach to financial support, but ARIA already has the general power to do just that. Legally, the amendment simply represents a drafting change. As such, we cannot accept it, but we understand and acknowledge the importance of the point that the noble Lord Browne had in mind.

It is our firm belief that, although it is not appropriate at this stage to specify ARIA’s contracting and granting arrangements in legislation, we recognise the substance of the concerns underlying the amendment: namely, that ARIA should have a duty to the taxpayer to ensure it is not haemorrhaging intellectual property of value to the UK. I will outline our position on that.

The amendment focuses principally on overseas acquisition of IP relating to the principles on which the Government intervene in foreign takeovers of UK businesses, particularly where those businesses have benefited from public investment in research and development activities. The National Security and Investment Act 2021, which fully commenced earlier this month, provides just such a framework, and it marks the biggest upgrade of investment screening in the UK for 20 years.

The NSI Act covers relevant sectors, such as quantum technologies and synthetic biology, that have benefited from significant public investment, and it permits the Government to scrutinise acquisitions on national security grounds. This new investment screening regime supports the UK’s world-leading reputation as an attractive place to invest, and it has been debated extensively in both Houses very recently. We do not believe that revisiting those debates today would be productive.

Although the NSI Act provides a statutory framework, a much broader strand of work is under way. As Science Minister, I take very seriously the security of our academic and research community. A number of measures have been taken in the past few months and years to strengthen our protections. We are working closely with the sector to help it identify and address risks from overseas collaborations, while supporting academic freedom of thought and institutional independence.

Members do not need me to tell them that intellectual property is incredibly valuable and we increasingly face both sovereign and industrial espionage. It is important that we are able to support our universities to be aware of those risks and to avoid them. The Bill already provides the Secretary of State with a broad power of direction over ARIA on issues of national security, which provides a strong mechanism to intervene in its activities in the unlikely event it is necessary to do so.

[Stephen Flynn (Aberdeen South) (SNP)]

I welcome the Minister to the Dispatch Box for the first time on this Bill. He is saying that ARIA can already do this, so the Government do not need to legislate in this regard, but that the Government would, none the less, be keen to see ARIA do it. There seems to be a discrepancy in that thought process.

--- Later in debate ---

[Chi Onwurah]

My hon. Friend makes two very important points. First, many of this Government’s mistakes have been due to lack of transparency, not only in the original policy of giving contracts to friends but in the follow-up of explaining those actions. Transparency is always a very good thing. Secondly, the scientific method is about openness. That is how ideas, inventions and progress are made in science. Critically, DARPA, on which ARIA is supposedly based, is subject to the freedom of information process and finds that that helps it in its work.

To conclude, Labour welcomes ARIA. Science and research can be the engine of progress for our society, and we welcome investment in our sciences. That investment, however, must benefit the people who pay for it: the British public. Without Lords amendment 1, we have no assurances that that will happen. If the Government want Britain to be a science superpower, why will they not protect British science and tech IP?

[Stephen Flynn]

In the greatest traditions of this House, I intend to be brief, which I am sure will be to everyone’s pleasure.

The biggest issue before us is, of course, Lords amendment 1. I listened closely to what the Minister had to say, but I remain to be convinced. He has paid deference to the clause, which says, if I recall correctly, that ARIA “must have regard to”, while the amendment simply seeks to ensure that ARIA “must”. That is a strong difference to which the Minister should give cognisance, particularly given that, in effect, we could be talking about the crown jewels. We are all hopeful that ARIA will be an impressive institution that will reap rewards for all of us right across the four nations of this United Kingdom—while we remain within it, of course. I find it a little contemptuous that the Government do not want to be on that side of the argument.

The topic of equity has been raised. There are some very famous examples. For instance, though this is slightly different, the US Government provided a significant amount of money in a loan to Tesla. That money was subsequently paid back a number of years ago, prior to Tesla becoming one of the world’s wealthiest companies and, indeed, to Elon Musk becoming one of the world’s wealthiest men. There should be a lesson in that for the Government, and it is one that they should heed.

From what I have heard, the Minister seems to be in broad agreement. He thinks that what is in place will allow this to happen in any case. I hope that over the course of the remaining debate, to which I am sure there will be an extensive number of contributions, he may be swayed to agree to Lords amendment 1.

[Sarah Olney (Richmond Park) (LD)]

I, too, will keep my comments brief. The Liberal Democrats have been supportive of this Bill from the start, since its Second Reading. We very much welcome the opportunity and, indeed, the new vehicle to get funding into science and technology in this country.

I join the hon. Members for Aberdeen South (Stephen Flynn) and for Newcastle upon Tyne Central (Chi Onwurah), however, in saying that the absolute priority must be to ensure that that investment stays in this country and benefits the people, including the investors, those who may benefit from employment and, indeed, every single one of us who seeks to benefit from the new innovation for which this money may well pay. A couple of weeks ago I visited my former employers at the National Physical Laboratory in Teddington, where I saw for myself the incredible work that is taking place on battery technology and hydrogen technology. There is so much potential for the future, but this country has traditionally been really bad at converting that incredible R&D skill into entrepreneurism and innovation and at building sustainable businesses. That is why I think it is so important that we support the Lords amendment, and it is certainly why we will vote against the Government’s motion.

Question put, That this House disagrees with Lords amendment 1.

Professional Qualifications Bill [ Lords ] (First sitting)

Stephen Flynn Excerpts

Committee stage
Tuesday 18th January 2022 Public Bill Committees

[Bill Esterson]

I beg to move amendment 4, in clause 14, page 11, line 13, at end insert—

“(6) Subsections (7) to (9) apply where the Secretary of State makes regulations as the appropriate national authority under this Act which extend to the whole of England and Wales, Scotland and Northern Ireland.

(7) Before making such regulations, the Secretary of State must—

(a) consult such persons as the Secretary of State considers appropriate, and

(b) following that consultation, seek the consent of the Scottish Ministers, the Welsh Ministers and a Northern Ireland department.

(8) If consent to regulations is not given by a relevant authority set out in subsection (7)(b) within the period of one month beginning with the day on which consent is sought from that authority, the Secretary of State may make the regulations without that consent.

(9) If regulations are made in reliance on subsection (8), the Secretary of State must publish a statement explaining why the Secretary of State decided to make the regulations without the consent of the relevant authority.”

This amendment obliges the Secretary of State to consult the devolved administrations where regulations affect a regulator that covers the whole of the United Kingdom.

The amendment obliges the Secretary of State to consult the devolved Administrations where regulations affect a regulator that covers the whole of the United Kingdom, and we will be pushing it to a vote. The amendment is important because there are some regulators that operate on a devolved basis—the Law Society, for example, because of the different legal systems across the nations of the United Kingdom. Another example is the Institute of Chartered Accountants in England and Wales, which is separate from the Institute of Chartered Accountants of Scotland. Those are two regulators covering different areas of the country.

In those cases the relevant devolved Administration must be consulted before regulations that affect that nation are made. There are also regulators that govern the whole of the United Kingdom, such as the Civil Aviation Authority or the Royal College of Veterinary Surgeons. Just as the Government should consult the devolved Administrations when making regulations that affect the individual nation, so too should they consult the devolved Administrations when a regulation is made that affects the whole of the United Kingdom.

The amendment does not give the devolved Administrations the power to overrule the Secretary of State. Withholding consent does not mean new regulations will not be introduced. Instead, it allows those devolved Administrations to make their representations, and it gives them a statutory right to argue their case to the Secretary of State and try to change his or her mind. If the Secretary of State still believes their course of action is the correct one, despite representations from the appropriate devolved Administration, in their authority as Secretary of State they will, of course, still be empowered to make regulations.

The amendment adopts the formula that was adopted in the United Kingdom Internal Market Act 2020, so we are asking for the Government to follow their own lead.

[Stephen Flynn (Aberdeen South) (SNP)]

I perhaps do not share the hon. Member’s view that the UK Government should have the ability to override the devolved Administrations in respect of the concerns they have. He has mentioned that the content of the amendment is based on the United Kingdom Internal Market Act 2020. Will he be cognisant of the fact that the devolved Administrations were against the 2020 Act? Does the amendment go far enough?

--- Later in debate ---

[Paul Scully]

That is exactly why we continue to discuss ahead of further stages of the Bill. As I say, we offered an amendment to provide for the duty to consult and to publish the outcome of the consultation. That was rejected by the Scottish and Welsh Governments. A rationale for the inclusion of the current powers and the reasons why a consent mechanism would not be possible on the face of this Bill were shared with the Welsh Government on 22 September. However, we will continue to work with the Welsh and Scottish Governments and the Northern Ireland Executive on that basis, to try to do everything we can to secure an agreement.

[Stephen Flynn]

I take cognisance of what the Minister says, but the reality of the situation is that we have seen Bill after Bill introduced by the UK Government delving into devolved areas of competence. If the UK Government really had a respect agenda, they would try to solve those problems before such Bills came before the House—although the Bill has a number of other issues as well. How confident is he that he will be able to get agreement with the devolved nations in this regard?

[Paul Scully]

In terms of confidence, all I can say to the hon. Gentleman is that I will continue to try. I am keen that we do everything we can as a UK Government to stretch our arms out and to say, “We want to work with the Scottish and Welsh Governments and the Northern Ireland Executive to get the skills list.”

[Stephen Flynn]

I thank the Minister for giving way again; he is being very generous. Just for clarity, is he saying that he will try incredibly hard, but if the devolved Administrations are not happy, he will ultimately override them and force through his views?

[Paul Scully]

I think we have made it clear with the devolved Administrations that we want to get as many agreements as we can, but we need to press on with this legislation. However, that is not the same as closing down the conversation. It is important that we do everything we can to work with them.

This amendment has some similarities to the Government’s own position, in that it advocates consultation. However, as with some of the other proposals that we have discussed, the amendment is somewhat less flexible and therefore less satisfactory than the Government’s own approach.

For example, the amendment is limited to regulations that extend across all four nations. What if the Lord Chancellor wished to make regulations under the Bill, or the regulations extended to only two or three nations of the UK? The amendment would oblige the Government to seek the consent of the devolved Administrations even when legislating in the reserved area that I have talked about.

Hon. Members will be aware that the Bill now includes a duty to consult regulators, which extends to regulators in the devolved nations. In addition to the consultation that we would normally undertake with devolved Administrations, wherever appropriate we will engage directly with those closest to the issues before making regulations.

I will continue to engage, as I have said, with my counterparts in the devolved Administrations to persuade them of the merits of the Government’s approach. I do not believe that the amendment is preferable to the Government’s approach, so I ask the hon. Member to withdraw it.

Reducing Costs for Businesses

Stephen Flynn Excerpts

Tuesday 11th January 2022 Commons Chamber

[Stephen Flynn (Aberdeen South) (SNP)]

It is a pleasure to take part in this important debate, and, of course, to see so many Members on the Government Front Bench. That contrasts starkly with what we saw earlier today, when the Conservatives were seeking to defend their Prime Minister—or not, as it so happens.

Given that this is such an important debate, I for one am a bit surprised by its content so far. We heard from the Minister that the Government had done everything that they possibly could to assist businesses throughout the pandemic, but what the Minister did not say—and what the shadow Minister, the hon. Member for Stalybridge and Hyde (Jonathan Reynolds), did not seem to reflect on either—was that at the height of the pandemic, what the UK Government chose to do was leave the world’s biggest single market.

What we have not heard about at any point during the debate so far is the impact of Brexit on businesses in Scotland and, indeed, throughout the United Kingdom. It is the proverbial elephant in this Chamber. All of us, every single one of us, will have businesses in our constituencies that are facing challenges, and the vast bulk of those challenges emanate from Brexit. We all know that the headline will be our figures relating to the 4% hit to the UK’s economy. We all know about the trade deficits that we have seen, the impact on exports and imports, the problems caused by labour shortages. The right hon. Member for Epsom and Ewell (Chris Grayling) shakes his head, but that is the reality of the situation.

[Chris Grayling (Epsom and Ewell) (Con)]

rose—

[Stephen Flynn]

I am more than happy to give way to the right hon. Member.

[Chris Grayling]

May I ask the hon. Gentleman to point out to the House that this country’s trade deficit in the last few months has narrowed, not widened, as he has just suggested?

[Stephen Flynn]

I hoped that the right hon. Member was going to rise to defend Brexit, but unfortunately he chose not to do so, because the fact is that it cannot be defended. It cannot be fixed, as the Labour party seems to think it possibly can.

I talk to businesses in my constituency regularly, and hear about the challenges that they face. Goods that took a couple of days to ship to the continent now take a couple of weeks, if not a couple of months. The order book is not there. The impact is huge. Those businesses’ ability to grow has been constrained and, in exchange for that, the Government tell them they can perhaps have a trade deal with Australia instead, which will do a fraction of good in comparison to the damage being done by leaving the EU. And that is of course before we get on to the labour shortages I mentioned earlier, which are enormous. Businesses seeking to function and to grow simply cannot get the employees they were able to get before. We see some puzzled expressions on the faces of Conservative Members; perhaps that is because they have not been engaging with the hospitality sector. Would the hon. Member for Stourbridge (Suzanne Webb) like to clarify whether she is disagreeing with the fact that businesses have difficulties in terms of labour shortages? I will happily give way to her. No? Of course not, because the reality is that labour shortages are damaging businesses exponentially. She continues to shake her head, but that is the reality on the ground in hospitality, food processing, agriculture, right across the board, and that is before we get to the public sector challenges, including in recruiting staff to our care homes and hospitals.

So Brexit should be at the forefront of our debate and, frankly, I am a little disappointed that the Labour party seems to be trying to walk away from that. Notwithstanding that, a lot in the Labour motion is somewhat difficult to disagree with. It seeks to raise various topics, including businesses. I think all of us across the Chamber realise there are challenges in relation to business rates; it does not take a genius to figure that out. However, I have some concerns with Labour’s proposals, albeit not necessarily with the motion. What comes next? What does Labour want to replace this with? Coming from a local authority background, I know the huge role business rates play in funding local authorities. Unless you can say, “This is what we are going to replace it with” it is inevitable that the public will say “Where is the detail?” Without seeking to do the Conservative party’s job for it, that is a fair question to ask and Labour is going to have to answer it in due course. We in Scotland have done things slightly differently from the UK Government because in Scotland there is currently 100% rate relief for retail and hospitality, which does not exist in England at present. That is a phenomenal benefit to businesses—[Interruption.]—irrespective of what the chuntering Member, the hon. Member for Peterborough (Paul Bristow), is saying.

Beyond business rates, important though that is, the energy situation is of great concern to businesses throughout this United Kingdom and the Government are offering no solutions to that. The easier choice today would of course have been to back the earlier motion in relation VAT, but as I see it the Government have not offered any support for businesses with their energy costs. That is a wrong that needs to be righted as soon as possible, otherwise businesses, not just households, are going to face an unenviable position.

[Jamie Stone]

I can think of examples of families I know personally where the budgeting is so tight that just a pound or two either way gets them into a bad situation. If the fuel bill, or the diesel bill for the car, goes up, they spend less money shopping, and that in turn hits wee businesses in Aberdeen South, in the highlands or wherever. It is a vicious spiral in the wrong direction.

[Stephen Flynn]

Absolutely. My hon. Friend makes an excellent point illustrating the knock-on impact the economy will face as a result of the crisis before us. Before finishing, I want to reflect on two further points.

[Kevin Hollinrake]

rose—

[Stephen Flynn]

As always, I am happy to give way to the hon. Member.

[Kevin Hollinrake]

If I were running a business in Scotland, I would want to know what the hon. Member is going to do in the future, because annual economic growth in Scotland between 2013 and 2019—pre-pandemic —was 1.2%, versus the rest of the UK’s 2%. That is bad for business. What is he going to do in Scotland to grow the economy more rapidly, even to the rate of the rest of the United Kingdom?

[Stephen Flynn]

Join the single market.

I shall move on to the two biggest outstanding issues that I have not touched on. The pandemic is an enormous challenge that is still with us and we need to be cognisant of that as we move forward, but we cannot reflect on the challenge posed by the pandemic without reflecting on the fact that there are still businesses up and down this land that have not had support from the Government throughout the pandemic—those among the excluded. I spoke to one earlier today—Puls8 in Aberdeen, an innovative company that is trying to do remarkable things, working alongside some of the biggest players in the North sea oil and gas sector, but which has not had the support that it needed from the UK Government. That is deeply regrettable. We should not have a discussion about businesses without remembering that important fact.

That leads me on nicely to my final point, on perhaps one of the biggest sectors in Scotland that needs support from the UK Government—our renewables sector. Scotland has 25% of Europe’s offshore wind capacity. Scotland can be a world leader in renewable technologies, but as I said—and I am sure the Minister heard—Scotland still faces the highest level of grid charging in the entirety of Europe. We have a natural resource on our shores—and off our shores—that we should be exploiting, and this UK Government are erecting barriers to business in terms of capitalising on that.

To conclude, it is important to reflect on the fact that much of what I have spoken about is a reflection upon the failures of this UK Government. When we look at it from a Scottish perspective, certainly when I look at it from my perspective, I see the shortcomings of this UK Government and I see what more Scotland could do if it had the powers of an independent nation.

[Several hon. Members rose—]

Oral Answers to Questions

Stephen Flynn Excerpts

Tuesday 11th January 2022 Commons Chamber

[Greg Hands]

As I have mentioned, I met with Storegga before Christmas, and my hon. Friend and I also talked about this in his constituency in early December. I am looking forward to further engagement with the cluster. I also agree with what he said about oil and gas. We have a North sea transition deal, and the important thing is transition. It would be mad, particularly at this time of elevated gas prices, to do anything to close down the North sea, and it is not our objective to do so. Therefore, we should stick to the transition deal, support our key oil and gas sector in the North sea and absolutely reject a lot of the politics coming out of the SNP, which has turned to be anti-North sea, which is not holding Scotland’s best interests at heart.

[Stephen Flynn (Aberdeen South) (SNP)]

Of course, it is not just on carbon capture underground storage where the UK Government have betrayed Scotland’s interests. As the Minister will be acutely aware, Scottish renewables projects continue to pay the highest level of grid charging anywhere in the entirety of Europe. Indeed, I was speaking to an operator just recently who told me that over the lifespan of his project, he anticipates that it will pay £1 billion in grid charging; meantime, a project in East Anglia will not pay a single penny. Is that a Union of equals?

[Greg Hands]

I am always pleased to take a question from the SNP Front Bench, although I notice that the hon. Gentleman did not say anything about nuclear, the North sea transition deal or the recent announcement of a £20 million funding pot for tidal. He did mention transition charges. He will know that Ofgem recognises the importance of transition charging arrangements, which is why it is currently considering responses to its call for evidence on transition charging reform. That is already being covered, but I would like to hear from the hon. Gentleman—he may have another question—that he is going to change his mind on nuclear and supporting the North sea transition deal.

[Stephen Flynn]

Of course, the Minister’s continual deflection to Ofgem fails to meet the needs of businesses in Scotland. He will also be acutely aware that under the Energy Act 2004—section 185, I believe it is—he could take action to change the status quo, but he chooses not to, and the reason is quite clear. The National Grid is clear that in a couple of years Scottish projects will pay £465 million into the grid, while projects in England and Wales will cumulatively get a subsidy of £30 million—a renewables robbery in plain sight. Is it not the case that while Scotland has the energy as part of this United Kingdom, it does not have the power?

[Greg Hands]

I am not sure quite how to respond to that, but I remind the hon. Gentleman that there is a call for evidence on this and we are awaiting the responses to that call. Once again, I remind him of the support being given by the UK Government to renewables in Scotland: the £20 million tidal pot; the quadrupling of offshore wind capacity across the UK over the next decade; support for CCUS—all these things. It is about time he had a word with his party colleagues back in Edinburgh and got them to have a sensible energy policy when it comes to both the North sea and nuclear before he comes here and lectures us.

Oral Answers to Questions

Stephen Flynn Excerpts

Tuesday 16th November 2021 Commons Chamber

[Lee Rowley]

We know regulation has a critical part to play in ensuring that we get the frameworks right for long-term investment and support. My hon. Friend will know that one of my colleagues who was appointed alongside me was an author of that report, and the Secretary of State and I, and all Ministers, will continue to review what we can do to improve regulation over the long term.

[Stephen Flynn (Aberdeen South) (SNP)]

When it comes to manufacturing, the first thought on the mind of all Scotland fans this morning is quite how Steve Clarke and his team continue to manufacture so many brilliant wins.

Notwithstanding my necessary gloating, I have a serious question for the Minister. Does he agree and accept that to harness, safeguard and expand manufacturing jobs in Scotland’s tidal energy sector, his Government must deliver the £71 million that the industry has asked for?

[Lee Rowley]

We know there is a substantial amount of work to do to decarbonise the UK economy, including the energy sector. We are doing that in a range of ways, and I will continue to co-ordinate with the Minister of State, Department for Business, Energy and Industrial Strategy, my right hon. Friend the Member for Chelsea and Fulham (Greg Hands), to support that activity.

[Stephen Flynn]

I am afraid that answer simply does not cut it. This is a world-leading industry based in Scotland, and it has the capacity to provide 11% of the entire UK’s electricity. The Minister will be aware that the likes of Canada, France and Japan have put in place financial mechanisms to capitalise on tidal energy. Is he seriously saying that his Government would rather see jobs offshored to those countries than see them in Scotland?

[Lee Rowley]

I apologise if the hon. Gentleman did not hear my first answer. I said that the Department will continue to look at all opportunities to decarbonise the electricity grid and to ensure that, over the long term, energy can support that decarbonisation. We will continue to look at tidal, and we will bring forward the opportunities that we are able to bring forward.

Subsidy Control Bill (Third sitting)

Stephen Flynn Excerpts

Thursday 28th October 2021 Public Bill Committees

[Bill Esterson]

The amendment, because of the way it is phrased, envisages those changes and the increasing urgency. Let us remind ourselves that, on our present track, we are looking at a temperature rise of more than 1.5 °C through the existing commitments and policy decisions not just of this country but of Governments around the world. It is important to acknowledge that we cannot do it on our own, as we are responsible for only 1% of emissions, but when we are trying to show world leadership with the presidency of COP26, it is incumbent on us to show that leadership in everything we do, and we, as Members on this Committee, have an opportunity right here, right now to support making that commitment and putting it into legislation.

Given the way the amendment is crafted, the wording,

“the United Kingdom reaching its net-zero commitments”,

does stand the test of time as and when things change. The challenge the hon. Member for Rother Valley makes is another reminder that we need to bring things further forward and that it has become important to do that over time. At the moment, we have interim dates to hit, with ambitions in 2030, and the Government have made some progress there, but by no means enough to do what is necessary to keep us to 1.5°.

[Stephen Flynn (Aberdeen South) (SNP)]

The hon. Gentleman is making some salient points in response to the hon. Member for Rother Valley. However, once the Government eventually hit their net zero targets, will they not want to maintain those targets and not reverse that journey? In such case, the remarks of the hon. Member for Rother Valley would be completely irrelevant.

[Bill Esterson]

That is a good point. The hon. Gentleman is right that this does not end when we reach net zero—that is the first point. The second point is that if we need a change, we can amend the legislation later. Right now, however, this is the crucial change that the country and the world need to make. I reiterate that we as Members of the UK House of Commons—those of us here today—have an opportunity to make a statement and a commitment and to put this change on the face of the Bill.

Subsidy Control Bill (Second sitting)

Stephen Flynn Excerpts

Tuesday 26th October 2021 Public Bill Committees

[Simon Baynes (Clwyd South) (Con)]

Q Thank you for your time this afternoon, Dr Barker; it is much appreciated. I wanted to look at the part of the Bill to empower local authorities, public bodies and central and devolved Governments, particularly the public bodies aspect. Do you see this as a welcome broadening-out of the routes by which subsidies can be brought to business, not only through central devolved Governments but through local authorities and public bodies?

Dr Barker: That is potentially welcome, but now we are extending subsidy-granting powers to a large number of bodies—about 500 in total. That will create a requirement that each of those bodies understands the principles for granting the subsidy and the processes that need to be gone through. They need to have some degree of expertise to guide business through the process in a confident way. In practice, that will probably mean that the subsidy advice unit in the CMA will be called on a good deal from a lot of those bodies for advice, information and to try to get an indication of whether the process being followed is the right one.

I am slightly concerned that consulting the subsidy advice unit may become a kind of quasi-obligatory stage in the subsidy approval process. The question is, will that delay things? Will it take away the nimbleness of the system? Does the subsidy advice unit have the necessary resources to deal with the hundreds of public bodies that will be consulting it? That is an uncertainty and a concern.

[Stephen Flynn (Aberdeen South) (SNP)]

Q Thank you for your helpful answers and input so far, Dr Barker. I think earlier you alluded to—those who gave evidence this morning certainly alluded to it—the lack of detail behind the Bill, the lack of guidance and the powers that sit with the Secretary of State. That prevailing situation is unlikely to change before the Bill comes into law. Do you think that is a help or a hindrance to businesses as it stands?

Secondly, we know that historically the UK’s spend when it comes to state aid, as it is more commonly known, has fallen well below that of European partners. Do you think the Bill will change that in any way, shape or form? Is there any indication in the Bill as it stands that it will change, certainly from a business perspective?

Dr Barker: I do think that more clarity is needed around a number of the concepts in the Bill. The need for more detail increases with the number of public bodies that are being empowered to grant subsidies. To give some examples, there is uncertainty around what would constitute a subsidy of particular interest, which is a subsidy that requires much more detailed pre-assessment by the CMA. Will that apply to a significant proportion of potential subsidies, or will that be done just on an exceptional basis? The answer will affect the nature of the entire system. At the other end of the spectrum, I think we still lack detail about the streamlined subsidies that can benefit from fast-track approval.

Another area that is important, particularly for IoD members, is the extent to which this regime can facilitate the support of start-ups, particularly those companies that do not have a long-standing financial track record and are still some way from generating profit or even revenue. I think that the proposed regime in this respect is preferable to the previous European Union regime, which had a prohibition over supporting undertakings in difficulties, which really ruled out start-ups. Within this measure, the only thing that is ruled out is the support of ailing or insolvent companies, which increases the scope of what can be supported. However, we still need clarity about what kind of going-concern assessments will be conducted to ensure that a potential recipient is eligible.

To answer your first question, there is still some way to go to provide all the interested parties with more clarity about how the system will operate. With your regard to your second question—do I think that this framework indicates that we will have more state support of business?—in itself, the answer is no. As I said before, it provides a framework in which that kind of policy could be pursued, but there is nothing about it that necessarily implies that it will be pursued. As I have said previously, in certain sectors there is a need for a changed approach to match those of our key competitors. That is really how the IoD is viewing it—is it going to be useful for that purpose? The answer is that it could be.

[Bill Esterson (Sefton Central) (Lab)]

Q Good afternoon, Dr Barker. I would like to go over a few things that you said and put them back to you to see if you have answers to the questions that you put to us. You began by talking about ideally having a system that is easy to navigate with enough certainty that businesses and awarding bodies are not going to be challenged. First, what is your top priority in the legislation that you would like to see strengthened or changed? Secondly—this comes back to a point that you made a couple of times about international comparisons; you talked about what our competitors are doing—what is the top thing that you would like to learn from which is going on internationally? On your point about the subsidy advice unit, is your big concern about lack of capacity in the Competition and Markets Authority?

Dr Barker: Yes. To address your first point, the factors that will ultimately make this most predictable include, first, guidance on the principles under which subsidies will be granted. It is a tricky balance between providing guidance that is too prescriptive, which becomes difficult to penetrate and understand, and, on the other hand, principles and advice that are too sparse and which try to be nimble but leave too much uncertainty on the table in specific instances. It is about finding the balance.

Secondly, it is about the subsidy advice unit operating effectively and being really useful, informative and timely in being able to assist the various parties and point them in the right direction. The third part of the process is the tribunal. One would hope that the number of cases coming to tribunal is minimised, but at least it provides timely, transparent and understandable rulings that assist parties in future in how they assess their ability to give subsidy. Those are my answers to that question.

--- Later in debate ---

[Kevin Hollinrake (Thirsk and Malton) (Con)]

Q How many, sorry?

Alexander Rose: Two hundred and fifty seven out of 501. In order to bring a digital review challenge, you are probably going to have to spend between £25,000 and £40,000, so if you are seeing a nil value, you are very unlikely to bring a claim.

Some of those are going to be schemes, and I will bring out some of the schemes on that website at the moment. SC10261, the Tees Valley Capital Grant Scheme, is listed as having been posted on the website on 1 April 2020, but the website did not exist on 1 April 2020. SC10388 is a real estate grant of £675,000 in Girton in Cambridgeshire—I picked this one because it is the last—and that one does not have a date at all. There is no way that somebody wanting to challenge would be able to know that date unless, as I have personally done, they have been saving the spreadsheets and comparing them.

Now, essentially, what we have here, therefore, is a mousetrap that is lacking a spring. Unfortunately, the Bill does not fix that. The way to fix it is at clause 32, which relates to the database, and it must expressly say that there needs to be two things. First and foremost, that information has to be included—the date it is actually entered and/or modified. Secondly, I think you need to end up having a search function that gives you three pieces of information. You need to have the date an entry was entered or modified; the name of the funder, because that is currently not searchable; and the name of the beneficiary, which is on there at the moment. Those are the three key pieces of information. The other element is, in order to capture that scenario where people simply are not putting into the database, you need to have some sanction if you fail to put it on.

The other issue that needs to be considered is that, at the moment, you have up to six months to put that information on the database. A large enough subsidy could make a business insolvent within that six months, so it feels to me that the period needs to be shorter. Likewise, the period to challenge needs to be longer. There is no obvious reason for having a shorter period for what is rightly described as the most important piece of post-Brexit legislation than for a planning permission judicial review. It should be longer. The next point is that there should be some level of sanction if that information is not put online. For example, maybe a sensible level would be the challenge period is extended to six months.

Jonathan Branton: The challenge period is not validly started if the right information is not put online. That is one way of looking at it. If it is not validly started, it never ends.

[Stephen Flynn]

Q Thank you all for that very helpful information. There are perhaps two different elements of discussion in relation to the Bill going on here. Richard referred to the Bill perhaps providing more of a light touch in that regard, and it may well be beneficial. We heard from individuals earlier today in relation to the lack of guidance or understanding as to how the Bill will operate. How do you get to that conclusion, notwithstanding the lack of guidance that sits behind the Bill that is due to come from the Secretary of State in future? Ultimately, do you foresee a situation where the Bill will actually provide an increase in state aid, as I am sure your organisation would like to see?

Alexander and Jonathan, if I may say so, you gave quite a devastating indictment of current practices and we would all hope that the Bill will improve on that situation. Do you think it will, as it stands?

Alexander Rose: First and foremost, I think that the general structure of the Bill is good. I think it is quite sensible. My concern is in terms of those details. I think there is capacity to refine the Bill so it is better. I agree that transparency is a concern.

The other area I am very concerned about is the ability to create schemes because the schemes can then only be challenged in the period they are set up. Why that nil point is so important is that, essentially, you have got a situation where there is an unlawful aid––an unlawful subsidy––but you can only challenge it within the month the subsidy is set up. I struggle to see how an organisation could ever really know that it is going to be affected by that subsidy scheme unless it identifies the competitors who are going to get a subsidy and the amount.

Clause 70(2) needs to be amended to add some wording at the end along the lines of providing that, at the time of entry of information about the subsidy scheme on the subsidy database, sufficient information has been made available for an interested party to make an informed decision as to whether and to what extent their interest may be affected. To my mind, the transparency database and the addressing the schemes point are the two issues that will most damage the award of subsides in future if not rectified.

Jonathan Branton: I would second that. The transparency register is relatively easily fixed, I would have thought. The schemes point is a potential loophole that, if not closed, could lead to some frankly bad schemes being adopted and then being impervious to challenge on the basis that the time had passed since the scheme had been published, but the actual awards pursuant to that scheme were somehow protected.

That is at odds with the fundamental principle that interested parties ought to be able to see what is out there and affecting them so that they may challenge it, and they cannot see that until an actual award has been made to a competitor or another party in which they are interested. Until cash is parted with, they do not see that, and that is arguably at odds with at least the spirit of the TCA provisions around schemes, and I think that could be very much tightened up.

Broadly, the Bill does a good job. It will help the regime to mature and become more effective, but it must be recognised in huge part that it puts in place a framework to achieve a whole load of things that have not yet been decided. There is talk of streamlined subsidy schemes, referrals to the CMA and so on, but the Bill does not say what will be in a streamlined subsidy scheme or what will be the subject of a referral, so all those details will come in the future. I absolutely applaud the creation of the framework to be able to implement a streamlined subsidy scheme. What will matter—the proof of the pudding—will be what is actually within that scheme in due course.

A final point: a lot of people have mistaken the detail of the Subsidy Control Bill and the subsidy control framework regarding their effectiveness for remedying, levelling up, or whatever might be the question of the day. The Bill does not set the division of funding to different places and activities, which is a fundamental part of the redistribution of wealth. A lot of misconceptions suggest that the Bill should achieve all that, but the fundamental point of how the cash is carved up and distributed is not necessarily a question for subsidy control law.

Richard Warren: Just to go back to the question about problems that might arise with a light-touch approach, from our perspective the difficulties we have had with the system that we are replacing—the European system that we removed ourselves from—have been on the more prescriptive side. When we have asked the Government to introduce x, y and z, the response has often been, “The EU doesn’t say you can do it, so we assume you can’t.”

Other Governments have taken a different approach. When we proposed to the Government that they should provide an exemption from the cost of the capacity market within electricity pricing, BEIS said that as EU state aid law did not provide explicit rules on that, it could not introduce an exemption. The Polish Government took a different approach, saying, “We’ll come up with one and introduce it.” The more prescriptive approach in the EU has been limiting, certainly as the UK Government approached it, so we feel that we will be more empowered as industry to bring forward proposals with greater confidence that they will be within the UK scheme for subsidy control because, as I said in response to a previous question, everything is allowed apart from what is explicitly not allowed, so we will be in a stronger position to be confident of saying, “Actually, this is allowed by UK subsidy control rules.”

My final point is that the biggest barrier has probably been the UK’s culture of not using the power. Time and again, the reason why we cannot do x, y and z that has been given by either Ministers or officials is that the state aid rules will not allow it. We have often taken a different view, but that excuse has been an almost permanent barrier to doing things. The new regime might reveal whether the excuse has been something to hide behind, or if there is a general culture of preferring not to use state aid rules or subsidy. That is probably a more important point for the steel sector than the Bill, which broadly provides the right framework—we have no major concerns about it.

Let me briefly touch on the regional point that Jonathan made. It is valid, in that the new system opens up a huge amount of flexibility for regional development. Historically, the UK has not done a huge amount of regional development. If we look at the split of what we have spent in the past few years, barely anything has been spent by the UK on regional development in terms of state aid. The system gives us an awful lot of flexibility to redefine which areas we want to give regional development to.

Under the EU system, the map of which areas of the UK were considered to be category A was pretty limiting. One of them happens to be where Port Talbot is based, but it has been a slightly moot point because it has not received a lot of regional aid anyway. The point is: the Government can redesign it, and that will be a key element if they are to use their new subsidy control regime to the maximum flexibility to pursue their levelling-up agenda.

[The Chair]

Before I bring in Simon Baynes, may I remind panellists that five more Members wish to ask questions? Could we keep the answers succinct, please?

--- Later in debate ---

[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.

[Stephen Flynn]

Q Thank you for that, Ivan. Another question, if I may, Chair. On that income support for the agricultural sector, in the discussions—as you understand them—between Scottish Government officials and, indeed, officials from other devolved nations and the UK Government, has there been any indication that there would be a situation that arises where the UK Government would be cognisant of the concerns that the devolved nations have, and would seek to acquiesce to your request that agriculture be not included within the scope of this regime?

Ivan McKee: The proof of the pudding will be if an amendment comes forward in that regard and is accepted. We have not had confirmation that such an amendment would be accepted, so we will see where that goes. In answer to your question, we have not had confirmation from the UK Government that they would accept the exclusion of agriculture from the Bill at this point in time.

[Paul Scully]

Hi, Ivan. Good to see you.

Ivan McKee: Hi, Paul.

Subsidy Control Bill (First sitting)

Stephen Flynn Excerpts

Tuesday 26th October 2021 Public Bill Committees

[The Chair]

Thank you. Could I have Stephen Flynn?

[Stephen Flynn (Aberdeen South) (SNP)]

Q Thank you, Professor Fothergill and Dr Pazos-Vidal. A lot of what we have heard from you both has been incredibly helpful, but it perhaps shows the limitations of the Bill—we are talking about is what is not in the Bill. Dr Pazos-Vidal, in your last answer you touched on the impact that the lack of detail and certainty could have. I would like to tease that out a little bit more with both of you. What impact do you think the lack of detail and certainty behind the provisions in the Bill will have on the devolved nations in the UK when it comes to making investment decisions? What impact will it have on local government and the decisions that it makes? Finally, Dr Pazos-Vidal, I think you said a wee while ago that the Bill as it stands is not reflective of the territorial constitution of the UK. Could you elaborate on that statement?

Professor Fothergill: Could I emphasise that the Bill settles remarkably little? It deals with the basic principles that will underpin the UK subsidy control regime. Those principles are very sound—they are not out of line with what we previously lived within and they do make sense. It settles the principles and some of the mechanisms legally, but it does not actually tell us what you can or cannot do. That is all going to come forward in the secondary legislation—the statutory instruments, is that the term? Ministers will be able to issue the secondary legislation within the framework of the Bill. From the point of the view of the devolved Administrations, for example, the passage of the Bill will still leave them pretty much in the dark as to what they can and cannot do. The important element in all of this is the guidance that will be issued subsequently. Quite what that guidance will say or is required to say is not specified in detail in the Bill.

Dr Pazos-Vidal: Absolutely, I completely agree. The Bill provides a good skeleton to start working on the guidance. In an ideal world, that would be enough—everybody would have the same understanding and there would be a very cohesive set of ideas on what needs to be done, what the priorities are and so on. Some countries in northern Europe are like that—they are very consensual democracies. I think the UK is a bit more complicated than that and therefore there should be a bit more detail. The UK is complicated and asymmetric, and therefore some of the provisions ideally need to be in the Bill. It is not about being too prescriptive—that is not the UK way —but about marking the direction of how the secondary legislation should be carried out.

In respect of the territorial constitution, it is just an academic expression. Quite clearly, the internal market Act could be considered part of the constitution because of the way it repatriates EU powers and the way it treats common frameworks. Irrespective of that, the Scotland Act always recognised that the UK level—Westminster Ministers—has powers over the internal market. That has always been the case, but in a way the internal market goes a step further. At the same time, public authorities, devolved Administrations and local government have competencies on local economic development, provision of public services and so on. Those powers also need to be recognised. Ideally, and this goes back to the point I made earlier, the Bill needs to be reflective of the powers of the UK Westminster Government and the internal market of the UK, and of the specific powers that local authorities and the devolved Administration Parliaments have in those policy areas. At the moment, the territorial element—the devolved and local element of the Bill—is limited, to put it politely. It would be helpful for the coherence of the system and to avoid problems of political interpretation in the future if some of that is put into the Bill. It does not have to be very detailed, but some improvements to the Bill would be helpful for the scheme in the long term.

[The Chair]

I am going to request that Members are brief, because many of you wish to ask questions.

--- Later in debate ---

[Seema Malhotra]

Q Can I clarify one thing, because I want it to be clear? Being below £315,000 means that the subsidy does not need to comply with the principles—does not need to be checked against those—and does not need to be reported?

Thomas Pope: Yes, that’s right. The purpose of having a de minimis threshold is that we are worried only about subsidies that are likely to distort competition or investment. The judgment has been made. It is quite hard to know exactly what the right level there is. I think a bit higher than the EU level, which was €200,000, seems about right, so £315,000 certainly seems reasonable.

My view is that there is a benefit to more transparency. Therefore, it is worth having a lower threshold for publishing to the database than for someone having to think about whether they are complying with the regime and all its principles. There are a couple of reasons for that.

First, I think we want to understand how the system is actually working and the impact of different decisions that we are making in the system. One of the big policy levers we are pulling in the system is the £315,000 de minimis threshold, and we want to understand how influential that is. Are lots of subsidies bunching at £300,000 or £310,000 so as not to comply with the system? That is not necessarily a problem, but we want to understand what impact the system is having on how subsidies are offered. If we censor everything so we see only the stuff above £315,000, we have a less good sense of how the system is operating.

Likewise, with the £500,000 threshold for subsidies that are approved under a scheme, we want to understand how often a scheme is being used and how much public authorities are going down that route. Again, we want to know whether a £400,000 subsidy is being approved under a scheme. I do not think that means we should pull the transparency limit down to £500 or £1,000.

Personally, I think a public authority also has to ask the question, “Is this a subsidy?” With quite big amounts of money, such as £100,000 or £200,000, they will be thinking about that. For £1,500 here or there, I imagine that would be quite a big additional burden. Realistically, we are never going to move the de minimis threshold down to £1,500 or £50,000. A level on the transparency database of around the EU level or a bit lower—about £175,000; I know that was in the original consultation as a possibility—would be a reasonable compromise between those two concerns. We could even have fewer things that needed to be put on the database if the subsidy was below £315,000, although we might want it on the database somewhere.

Professor Rickard: I will give a few examples of things that could be changed to help to improve transparency. The first would be to lower that threshold and report subsidies even if they were below £350,000 over three years. Report subsidies that were included in a scheme, even if they were less than £500,000. Report subsidies even if they were subsidies for the public economic interest.

I would shorten that time for reporting; I think six months is too long. If it is a tax break for 12 months, after 12 months a competitor might be out of business, so I certainly think that there would be scope to shorten the time to reporting. I would increase the time to challenge. One month is too short, particularly if someone is learning about a subsidy only through the public reporting and the database. Remember, for subsidies not publicly reported in the database, how will we know about them? Where will we learn information about them? I would increase the time that people had, or people with interest had, to challenge a subsidy.

I would maintain the information on the subsidy for longer than six years. Six years is mentioned in the Bill. I do not see a good justification for deleting information after six years, particularly if we want to analyse how the regime is working. We need this over-time data, this long-time thing, to ask, is the regime working? Are we achieving what we want to achieve with our subsidies? Are we getting good value for money? Are we helping disadvantaged areas? Are we helping to create economic activity? To assess that, we need to have this information and we should not delete it after a certain time.

I would ensure that certain types of information were reported. At the moment, the Secretary of State is given the discretion to ask for certain types of information, but I would want to see as much information as we could possibly get, while protecting commercially sensitive information.

Finally, I would look to make sure that all the information was self-contained in the database, without having links to local councils or other information. As we know, links break and information gets lost. I understand that there is this concern about putting a burden on granting authorities. One possibility may be to ask the recipients themselves to help to provide some of the information, so we could cross-reference and make sure that we had the correct information from the granting authority and the correct information from the recipients.

Those are just some ideas that would help to improve transparency. Through transparency, we can get better compliance and better value for money, and we can help to ensure that the subsidies that are being granted meet the goals that we are setting out to achieve.

[Stephen Flynn]

Q Thank you both for your contributions so far. Thomas, if I picked you up correctly at the start, you made a reference to damaging schemes. Can you elaborate on that and what you are thinking in that regard?

I also have a question for both of you. Thomas, you touched on this in your remarks in relation to this being a skeleton of a Bill. We heard earlier from Professor Fothergill and Dr Pazos-Vidal about the potential implications of that lack of clarity about what sits behind the Bill and what the Government will be coming forward with: statutory instruments or secondary legislation. Do you see the lack of detail in the Bill having a consequence for the investment decisions of public bodies right across the UK?

Thomas Pope: On schemes, my specific concern—and this links to the one-month challenge window—is that a scheme gets added to the database or is set up. There is then a 28-day window where a potential interested party—someone who might be damaged by a subsidy that could be offered under the scheme—has a chance to appeal and to ask for more information and go through the process as set out in the Bill. Once that challenge window has passed, the scheme is approved and subsidies that fit with that scheme can then be offered with no opportunity to challenge.

The risk is that, if I am a competitor business and a business I am competing against is going to get a subsidy under a scheme, but has not yet got that subsidy at the point when the scheme has been set up, I will probably not know that the scheme is here and the clock is ticking. Here is this subsidy that will come later, and I am an interested party because a subsidy could go to my competitor. It is not even clear that that business would be an interested party, so my concern is that there is a benefit to using schemes in that you do not need to go through a separate process for every subsidy, but there is a corresponding risk that if there is not sufficient scrutiny of the schemes when they are set up, there is almost a sort of free pass if a scheme slips through the net and it allows you to give quite damaging subsidies. Once the time limit has passed, there is nothing you can do about that.

In terms of the Bill being a skeleton, there is a trade-off here. We want to be flexible and we want to be able to update elements of our regime over time. Things that are set in primary legislation are harder to change, but at the same time there are bits of the Bill where there is a lot of power given to the Secretary of State, with very little indication about how he or she might need to, for example, decide what constitutes a subsidy of interest or of particular interest. Those are subsidies that would have to be sent to the Competition and Markets Authority before they could be offered. More detail there would be good.

As to whether it will actually cause uncertainty and affect investment decisions, I do not talk directly to public authorities in the same way that some of your other witnesses will. To the extent that you can write very good guidance and have clear secondary legislation, that need not be a major issue. There are other ways that legal certainty can be provided. There probably is an extent to which this system will take a bit of bedding in. It is not clear how the Competition Appeal Tribunal is going to treat appeals and what the burden of evidence will be, or how easy it will be to challenge a subsidy subject to the principles. Probably that means there will be a bit of caution, at least initially while that beds in, because there will be legal precedent that will build up as well. Again, I do not think that will be a permanent feature necessarily.

Professor Rickard: I will weigh in briefly on the streamlined routes that have been proposed. The Government could propose a streamlined route, and they would bring it to Parliament, so there would be some room for scrutiny, but once that streamlined route or scheme is set up, granting authorities can just designate that subsidy as falling within that scheme, and then it is assumed to comply. That is a potentially interesting situation where you have a scheme and granting authorities say, “Yes, the subsidy is part of the scheme.” If we then assume compliance and do not see these subsidies showing up in the database, that potentially allows some leeway for subsidies that are not fully compliant with all of the principles. That would be one potential way in which the streamlined scheme would lay on top of the individual subsidies.

It is a route, of course, for the Government to set priorities and say, “This is an area in which we would like to see subsidies.” They are signalling a policy direction in which they would like to go. Of course, when you get a new Government, you might get new schemes. That would be right and proper. In a democratic system, you have a new Government with a new platform, and the voters have chosen that platform, but it does set up, potentially, a situation where you would have a streamed route scheme full of subsidies, and when there is a new Government there is a new streamed route scheme for subsidies. I am thinking about how to transition between them and the potential uncertainty generated for both businesses and granting authorities.

I want to pick up on one thing that Mr Pope said about who can challenge a potential subsidy. This is an area that would benefit from additional scrutiny. Thinking about who has a particular interest in challenging those subsidies, there may be good reasons to expand the potential set of challengers to ensure that it includes not just competitors but maybe also employees, trade unions, taxpayers or interest groups. That would give us more eyes on the subsidies to ensure that they are complying with the principles, ensuring value for money and achieving the economic outcomes that they set out to achieve.

[Seema Malhotra]

Q Can I ask for one quick point of clarification? Would that mean, Professor Rickard, that you would widen the definition of interested parties to include those groups explicitly?

Professor Rickard: Yes. In my opinion, that would be a good strategy. The benefits of ensuring increased scrutiny of how these subsidies are being allocated and how taxpayers’ money is being spent would outweigh any potential costs.

Supporting Small Business

Stephen Flynn Excerpts

Tuesday 19th October 2021 Commons Chamber

[Stephen Flynn (Aberdeen South) (SNP)]

It is a pleasure to follow the hon. Member for Islwyn (Chris Evans), who gave a very impassioned speech about his constituency.

I have been somewhat struck by much of the debate, which has rightly focused on non-domestic rates. In that regard, we know that non-domestic rates is a devolved matter in Scotland and that the Scottish Government have made the decision that the retail and hospitality sector will continue to have a full exemption from rates until the end of this financial year, in contrast to the supposed party of business on the Government Benches. However, there is one huge issue—a massive elephant in the room—that I was astonished that the shadow Chancellor did not talk about. Indeed, very few Members in this Chamber have spoken about the issue: the obvious difficulties caused by Brexit. We have businesses up and down Scotland, and up and down the entirety of the UK, that cannot recruit staff and cannot get their hands on the goods they need to sell to their customers to keep themselves going.

Small businesses that want to export are facing exponentially longer delays in comparison with what happened before. I spoke to those at a local business in Aberdeen recently. They exports their goods, which is what they want to do—they want to grow their business, which is everything we want to see in our local community—and it has gone from taking a couple of days to almost six weeks to export a good to the European Union. If we are talking about challenges for small businesses and the really big issues that face them, yes, non-domestic rates is undoubtedly one of those—it needs to be addressed, and I think all politicians of all parties agree on that—but we cannot ignore Brexit or simply pretend that it is not happening, although that is what it feels is taking place in this Chamber. It is quite astonishing.

Beyond Brexit and beyond non-domestic rates, we also see small businesses having to deal with the rise, or the proposed rise, in national insurance contributions. They cannot get hold of the staff and they cannot get hold of the goods, and when they try to export it takes much longer than it should—and their non-domestic rates are an issue, particularly it appears for those in English constituencies—but they also now have an additional tax burden for the staff they employ, yet this Government still try to keep up the guise of being one that supports small businesses.

There is one more issue that is extremely pertinent that I do not feel has necessarily been discussed or given the full attention of this House that it deserves, which is the energy price crisis. We know that households right across Scotland and the UK are facing exponential rises in their energy bills. However, it does not just stop at households; it affects businesses too, particularly small businesses. This is something they did not expect to happen, yet this Government have come forward with absolutely no support for them whatsoever. We have tax rises, we have Brexit and of course we have an energy price crisis. It is a perfect storm of challenges facing our high streets, and I would respectfully suggest that the Government should have done better on each and every one of those issues.

That takes me to my final point, which is on bricks and clicks. It is about how we get rid of the difficult situation of having online retailers not having a physical presence within the local community and the benefit they reap from doing so. How we solve that has been discussed in this Chamber at length throughout my time in this House, but what I really struggle with is the Government simply saying that the digital services tax was enough and that that was the way to resolve the problem. Quite clearly, that was not sufficient, and it was never going to be sufficient.

While we have a situation in which someone can sell their goods online cheaper than they can in a store, ultimately businesses will move online. As my hon. Friend the Member for Stirling (Alyn Smith) rightly put it, that is not just a challenge that faces Scotland or the UK, but a much bigger challenge, and all the pandemic has done is to accelerate the difficulties in that regard. We cannot sit here and moan about the challenges facing our high streets if we are unwilling to take that issue head-on.

Net Zero Strategy and Heat and Buildings Strategy

Stephen Flynn Excerpts

Tuesday 19th October 2021 Commons Chamber

[Greg Hands]

Upskilling is very much part of the Government’s agenda. On how the heat pump ready programme will be operating, if I understand it correctly, that is a Northern Ireland-only scheme, but we have seen that scheme in operation and it will help to inform the England and Wales scheme. The scheme will also support the Government’s target of 600,000 installations a year by 2028, which also covers Northern Ireland.

[Stephen Flynn (Aberdeen South) (SNP)]

In 2015, the UK Government pulled the plug on £1 billion of carbon capture and storage investment in Peterhead. Today, they have repeated that same mistake—a betrayal of the north-east of Scotland—by pulling the rug out from underneath the Acorn Project. The Minister knows that Scotland cannot meet its net zero ambitions without carbon capture and underground storage, so why is he shafting Scotland?

[Greg Hands]

The hon. Gentleman might have been here at the beginning of the statement; if a Member wishes to participate in a statement, it is common practice to be here at the start. As he was not here at the beginning, he missed me explaining the basis behind the decision. Government policy has always been clear that there would be two industrial clusters by the mid-2020s, but four by 2030 at the latest. We have announced the Acorn cluster as a reserve. I praise the scheme for meeting the eligibility criteria. It also performed to a good standard against the evaluation criteria. We remain absolutely committed to track 2.

[Stephen Flynn]

Shame on you.

[Mr Deputy Speaker (Mr Nigel Evans)]

I thank the Minister for his statement and for answering questions for over an hour. I do not like the words that you used, Mr Flynn. We have talked about a kinder, gentler politics, and that certainly was not it.