UK Parliament / Open data

Subsidy Control Bill

My Lords, I shall speak to Amendments 2 and 3 and then Amendment 2A, as they seem to associate with each other.

In the speeches of the noble Lord, Lord Wigley, and my noble friend Lord German, the nub of the question is: what is a subsidy and what is it not? I see Amendment 2 from the noble Lord, Lord Wigley, as trying to unearth that definition. Later, we will discuss Clause 11, which allows certain definitions to be defined by affirmative regulation rather than appearing in the Bill. These definitions are:

“subsidy, or subsidy scheme, of interest”,

and

“subsidy, or subsidy scheme, of particular interest”.

This is the Subsidy Control Bill and it would be enormously helpful if the Government would put in the Bill what they seek to control because, at this stage, they have not revealed their hand. In this amendment, the noble Lord, Lord Wigley, seeks to delineate where a subsidy starts and finishes: the territory, as he puts it. This is a moot point and a key issue that we will talk about later. The noble Lord, Lord Lamont, talked about market failure. We need to understand what the Government understand as “the market” in the first place to delineate where a failure may or may not have occurred. Hereby lies the issue.

In a letter to my noble friend Lord Purvis, the Minister sought to help and, perhaps, to clarify. He replied:

“The geographic scope of a market depends on the goods, services and activity in question—which means geographic scope can vary.”

I think that that flies in the face of some of the words that we heard just now from the noble Lord, Lord Wigley. The letter continues:

“A key factor is the distance over which these goods or services can be supplied”—

the sandwiches of the noble Lord, Lord Wigley, perhaps—or

“the preference of customers”.

I understand the issue about distance—I can get that—but to include the preference of customers is potentially specious.

To take an international example rather than a Welsh one—although, of course, Welsh is international, if I am speaking from England—there was no market for Spanish-grown strawberries until such time as Spanish-grown strawberries were imported to this country. Then there was a market, because customers showed a market preference. So at the outset of a subsidy there may be no customer preference because there is no product for the customers to prefer. Some time after the six months have expired and the subsidy is open to challenge, the product appears on the market. How is customer preference to be applied retrospectively to subsidies as the market goes forward? I do not think that the issue of customer preference is easy to define, understand or control. If the Minister stands by the words in the letter to my noble friend, we need a much

clearer understanding of how that customer preference role will play out. Not only do we need to understand geography, but we need to understand the customers.

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Amendment 3 concerns financial assistance for public services. My understanding is that that financial assistance may go to public or private providers. I am a simple soul and I always try to resolve something out into an example. The only example I can think of—I am sure there are others; I am treading on the territory of my noble friend Lady Randerson here, so I am in danger—is in the area of transport services. If there is public subsidy of a transport link, let us imagine that one privately owned bus company receives a subsidy and another bus company does not. Where does this stand? But it extends further than that. Imagine there is also a train line that covers the same route and the train service does not receive a subsidy but the bus service does. How is all this resolved within the very small number of words and complete lack of clarity in the Bill? There is a lot of work to do. By the way, all of these provide a public benefit but they do it to a different level. So how does the public benefit aspect of this get played out and does it excuse the disproportionate subsidising of one service versus another? I think that is an example that works but I am sure that your Lordships will find another that we can play round with.

I commend Amendment 2A in the name of the noble Viscount, Lord Chandos. It is a shame that it was tabled so late—that is not a criticism; I would have co-signed it if it had come in earlier. I agree with the noble Lord, Lord Lamont. As I recall, at Second Reading the Minister avoided giving a detailed response to questions around the example of OneWeb, which a number of noble Lords brought up. There were two such questions. First, would this sort of investment be included in the constraints of the Bill? Secondly, what about the issue where a Permanent Secretary insists on being directed to deliver a subsidy? It seems to me that there are certain legal issues around this that are not handled here. The answers to those questions that were not forthcoming would be very much appreciated now.

The noble Viscount’s amendment helps to clarify the first part of this question around subsidies. I remind the Minister that the Government are already very active in the market—more active, I think, than many of us can remember a Government being for a long time. I will focus in on UK Government Investments. In its own words:

“UKGI provides expertise in asset sales, interventions, ALB set-up”—

the establishment of arm’s-length bodies—

“incubation and governance, market intelligence and analysis, transaction execution and larger scale corporate negotiations amongst others.”

Most of these services, if offered to a private sector company, could be, and probably are, subsidies to its activity or could be seen as such—versus other companies which are seeking that advice and getting it through the big banks or somewhere else, for which we all know they have to pay a great deal of money.

Furthermore, as we know, UKGI is holding the Government’s shareholding in a number of businesses. These businesses are themselves competing with private sector businesses as it stands. The banking, letter and

package delivery, transport and mapping sectors are all areas which are competed with. There is competition from a private sector point of view with a public sector company.

Finally, since March 2021 UKGI has overseen nearly £100 billion-worth of borrowing to over 230 companies across the country. This, together with the activities of the British Business Bank, has led to a degree of corporate financial activity on a scale unseen, I suggest, for generations. I think the noble Lord, Lord Lamont, referred to that as well. It seems inconceivable that some of those loans will not be converted to equity at some point and I would like the Minister to explain, in the event that they are, how that sits within the constraints of the Bill.

Type
Proceeding contribution
Reference
818 cc125-7GC 
Session
2021-22
Chamber / Committee
House of Lords Grand Committee
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