My Lords, I have added my name to Amendment 63 but I want to say a couple of things about Amendment 62 because, as we proceed through this Committee, it is clear that there is a bit of fuzziness about what exactly the role of the CMA is. Historically, the CMA and its predecessors have reported effectively on the nature of competition across the British economy but, of course, the issue of state intervention has been left to the European level. Some of us were slightly concerned that the CMA would take over that function after Brexit; in the end, I was sort of convinced that it should, rather than creating a whole new body, but it has to do a number of different things. It has to look after our trade obligations not only to the EU but in all the other trade agreements we have reached, in which we agreed that we will not unreasonably subsidise goods that are traded so as to undercut our trading partners. So, we have a big international obligation—one that can lead to retaliation and all sorts of problems arising with the WTO and other international bodies.
We have all that, but we also have the area of subsidies in the UK. This includes the delicate relationship between the UK Government and the Secretary of State acting for England, the devolved authorities and local authorities. It is a very complex area, and all this is to be landed on a new body within the CMA: the SAU. It is not yet clear whether it will have the resources, expertise and personnel to do that. We have gone along with this, but we need to be clearer on, for example, whether it is a regulator or an overseer and reporter on the activities of the public authorities that are giving subsidies and quasi-subsidies. As we debated earlier in the Bill, this involves a range of things—for example, preferential procurement. At the end of my contribution at Second Reading, I asked the Minister whether my county would be able to give preferential treatment to a local firm because it provided local
employment, or whether it had to make sure that the neighbouring county of Wiltshire was not thereby being undercut.
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Admittedly, there is a minimal level, but a lot of public authorities’ activities, in public procurement and their other regulatory functions, will be affected like this. We need an authoritative body that can say whether this is in order with the principles that we set. Effectively, Amendment 62 says that we must have a running report on whether the SAU and the CMA are actually doing the job we thought they would do when we gave it to them, or whether there are problems between the various authorities and various levels of authority affected by this.
I will move on to what I was supposed to be speaking about, which is Amendment 63. As the noble Baroness, Lady Boycott, said, in earlier debates we considered amendments that would have added a requirement to take environmental considerations into account, in particular whether a subsidy does or does not undermine the principle that the polluter pays or makes it easier for a provider or manufacturer to produce in a way that creates environmental harm, or whether any intervention makes issues such as decarbonisation better or worse. This amendment attempts to make sure that the CMA reflects this itself, not only in its individual decisions and views on particular subsidies but in its overall impact. I guess some reflection would have to be added to the CAT, as well
I would like to see a provision such as this written into all regulators’ requirements. Maybe there ought to be a standard form of words in the annual report on what their net contribution to or effect has been on the achievement of decarbonisation, net zero and the trend to reduce greenhouse gases. It is important that the CMA’s individual interventions and views take this environmental consideration into account. Of course, the most important environmental consideration, to which the Government are utterly committed, is towards net-zero carbon and carbon-equivalent emissions. If we do not do that, there is the difficulty that the intervention, which will primarily be made on economic grounds, will have an environmental effect on emissions that far outweighs any economic advantage that was the original intention of the subsidy.
We have to write this into the Bill and make sure that there are people in the SAU and CMA who understand these issues more generally and are capable of making these assessments. At the moment, I am not convinced that is the case and I hope the Minister can give us some reassurance on that front. The seven principles in Schedule 1 do not directly refer to any environmental consequences, and the reference to energy and environmental effects in Schedule 2 is limited. It relates principally to the energy sector and industrial activities.
Actually, any subsidy or preferential procurement could impact on carbon emissions. Whether it relates to transport, public services, digitalisation or whatever, it can have an effect that is not primarily environmental, but with a fairly devastating environmental side-effect. We need to make sure that the regulation of our subsidies reflects the need to focus on that at every
level. We need to get the CMA to report the aggregate outcome of its activities of the previous year. I strongly support the amendment from the noble Baroness, Lady Boycott.