My Lords, I start by thanking the Minister for his engagement with our team and the offers of detailed briefings on this important legislation. Such openness is much appreciated. We agree with the need for this legislation and support the introduction of a subsidy control scheme that provides public authorities at all levels and in all parts of the UK with greater flexibility than they enjoyed under the EU state aid rules.
However, while the EU system came with less flexibility than the one that this Bill envisages, action, for example to support key industries, was never impossible. The UK consistently lagged behind comparable EU member states in the amount of subsidy provided, and in most cases the failure to step in and provide support during a firm’s hour of need was a political choice.
When this Bill was in the Commons, we outlined several fundamental concerns with it. It is not, as has been identified, the finished product. Key terms are not properly defined, and a significant amount of the detail will be left to statutory instruments and guidance, with the department acknowledging in its impact assessment that there are “considerable unknowns” attached to the chosen approach. As the Minister has acknowledged, when we come to talk about oversight, although there have been some improvements since the Commons stages to the public subsidy database, we believe still that it fails on the whole area of oversight.
The Government are failing to mandate clear, swift public declarations of subsidies, or proper means for authorities, including the devolved Administrations, to challenge those that may be unfair. This lack of transparency is an area that we will return to at greater length and is, I am sure, an area that my noble friend Lord McNicol will pick up as we debate these matters further. Surely this is a prime area where the Government’s stated intention to make the UK
“a world leader in subsidy transparency”
should be enacted.
We believe that the Bill lacks ambition. This is yet another framework Bill, meaning there is no clear underlying strategy beyond that of boosting flexibility. Despite stating a wish to level up deprived areas across the UK, the new scheme does not target support by allowing subsidies to target areas of economic deprivation; nor does it address the issue of putting fairness and need at the heart of decision-making. It fails to tackle the biggest challenges that we face. The Bill says virtually nothing about transitioning to net zero, and, while it does still feature some additional energy and environmental principles, they are limited in scope and would not, for example, encourage subsidies for things such as green transport projects. This misses the opportunity to enhance environmental protection, boost regional growth or incentivise research and development, all of which were at the centre of decision-making under the previous arrangements.
Better outcomes drove our decision-making when I was an LEP member for Leeds City Region. Collective decision-making, based on strict criteria and collaboration between all relevant local authorities, was the key to our investment strategy. Perhaps the Minister could inform us as to how this collaborative approach will be enhanced under the new arrangements.
This legislation is especially contentious in terms of the devolved Administrations, who, in a number of areas, are not being afforded the same powers as the Secretary of State, and will not have representation, for example, on the Competition and Markets Authority body advising on subsidy matters.
I could predict the comments made by the Minister when I say that the Government will point to dozens of meetings, held at both ministerial and official level; but, as with most of the Brexit process, it seems that Westminster’s definition of “engagement” differs from that adopted by everyone else. On some points, such as whether the DAs can establish streamlined subsidy schemes, there are probably new forms of words that can be agreed, but others raise that nagging feeling that this Government are simply not interested in devolution.
While there is a benefit to be derived from implementing a new regime sooner rather than later, it is not clear why the Bill has to be pushed through according to the department’s chosen timescale. Surely there was a clear public interest in getting its contents right from the start, rather than leaving gaps to be filled in later. Are we at risk, as suggested in the Financial Times, of sacrificing scrutiny on the altar of speed?
We will seek to make a variety of sensible changes to this legislation and hope that colleagues across the House will work with us to ensure that the Bill that eventually returns to the Commons is an improvement on the initial offering.
7.37 pm