My Lords, this Bill is highly unusual. It may be unique in the world because I do not think any other country has a national system of subsidy control. The United States does not; the EU does, but of course it is a collection of countries. I think this is the only national system of subsidy control. Of course, we had to have a national system because it was part of the negotiation with the EU on the TCA. The EU, understandably, had fears that Britain, having been subject to the EU system of subsidy control, was going to be free of all control. There therefore had to be a negotiated settlement, the seven principles of which are what is in the Bill.
I read the speech of the Secretary of State in the House of Commons very carefully and listened to the Minister’s speech today. It seems that the Government have, if they will forgive me saying so, something of a Janus-like stance on the Bill. On the one hand, it is a Brexit dividend: there are going to be hints of largesse and more spending, while the money will come more quickly and flexibly. On the other hand, this is also going to control subsidies. Well, which is it? There is an obvious conflict between the two.
It has been said several times, although I think Ministers in the Commons said it more than my noble friend did, that our system will be very much preferable to the slow, inflexible and obstructive system that they had in the EU. I am bound to say, as a Minister who dealt a lot with the EU—admittedly, a very long time ago—that that was not my experience of the EU system. It was a system, incidentally, largely designed by the UK and often operated by UK officials. Most of the applications for subsidies went through the EU through the block exemption. Most of them were approved, and relatively quickly.
There were, however, difficult negotiations over very large state aid projects, such as the motor industry in this country in the 1980s or the steel industry, but it was quite right that the EU took a long time to consider those. Let me put it this way: the EU acted as a discipline upon us, and we have to view a system of subsidy control as not just something permissive but something that imposes a discipline on Governments. That is the point of it but, of course, it poses questions as to how effective this will be compared with the EU system.
I put it to the House that the key difference between what is proposed now and the previous system is that, under the EU, no subsidy was legal until it was approved. Under this system, it is legal until it is struck down after legal proceedings in front of the Competition Appeal Tribunal. What worries me about this system—I say this as someone who, like my noble friend Lord Forsyth, believes profoundly in the merits of competition and market forces—is that there is no enforcer of the regime. The subsidy advice unit is really weak. It has no power to block and, instead of an enforcer, we have to rely on citizens to police this system and take legal proceedings. There is a degree of self-assessment. The question is whether that is enough to discipline and control the Government.
My noble friend may think I am being rather unfair to the Government, but this Government have made some curious subsidy decisions in their life. I never thought I would quote John McDonnell, the former shadow Chancellor, but he said the other day that this Government were the biggest nationaliser since Harold Wilson. That may be a slight exaggeration, but we have had the curious investment in the bankrupt satellite company OneWeb—how would that be dealt with under the Bill?—the bailing out of Bulb and the nationalisation of part of the steel industry. Then we have the Chancellor’s future fund, which subsidises everything from manufacturers of cannabis to dating agencies. There are serious questions to be asked about the Bill and whether it really will be the self-discipline that the Government say it will.
There are also a number of detailed points. I agree with what was said about thresholds—why should they be higher than in the EU? I shall wait with interest to find out the difference between a “subsidy of interest” and a “subsidy of particular interest”. It is a disgrace that these points are not made clear.
Subsidies distort, misallocate resources and often slow down inevitable and necessary change. However, provided that the Government stick to their principles of a competitive, market forces driven economy, I shall give the Bill at least two cheers.
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