UK Parliament / Open data

Subsidy Control Bill

Proceeding contribution from Lord Callanan (Conservative) in the House of Lords on Wednesday, 9 February 2022. It occurred during Debate on bills and Committee proceeding on Subsidy Control Bill.

I have had some expert advice from the Whips here. I thank the noble Lords for Amendments 73A, 74A and 74B, the noble Lord, Lord McNicol, for Amendment 75, and the noble Lord, Lord Berkeley, for his fascinating Amendment 80, which I will come to.

Amendment 73 is my amendment, the government amendment to Clause 78. This is a minor and technical amendment that will provide greater clarity in the Bill as drafted. It clarifies that the provisions in Schedule 3 to the Bill are to apply to subsidies in devolved primary legislation and primary legislation made by this Parliament. This is because the word “subsidy” is defined as something given by a public authority excluding a legislature. Nothing else is added into scope by this amendment; it simply makes absolutely clear how the provisions in Schedule 3 apply, for the avoidance of any doubt.

Secondly, the amendment makes it clear that it is only the provisions in Schedule 3 that apply to primary legislation made by this Parliament and devolved legislation, and not other provisions of the Bill. Again, this does not make any amendments to the substance of the Bill but just provides clarification.

Amendment 73A was tabled by the noble and learned Lord, Lord Thomas of Cwmgiedd, who wishes to probe the purposes of Schedule 3 with regard to the devolved Administrations. Clause 78 applies the provisions in the Bill to subsidies made by means of primary legislation, as set out in Schedule 3. Because of the specific nature of these subsidies, the obligations on those responsible for them need to be set out separately. To respond to the concerns of the noble and learned Lord, I will set out my belief that Schedule 3 as a whole ensures that the subsidy control regime will be comprehensive and robust, while at the same time taking into account the UK’s fairly unique constitutional make-up.

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This also implements the provisions of the TCA, which itself recognises the sovereignty of Parliament but requires us to apply the subsidy control principles to devolved legislation. We would not be compliant with our international requirements if we introduced further exemptions for subsidies in devolved primary legislation. The schedule applies to subsidy control principles, prohibitions and other requirements and exemptions made under this Bill to subsidies granted or subsidy schemes made by means of devolved primary legislation. The schedule also deals with referrals to the subsidy advice unit for both devolved and Westminster primary legislation. Notably, the provision does not include any provision for mandatory referrals. This is because of the unique legislative provision and the procedure for these subsidies. This means that there will be procedural delays or disruption to the progress of primary legislation.

Finally, the schedule makes provision for a review in the courts where a challenge is brought, as the noble and learned Lord, Lord Thomas, set out, considering that the lawfulness of provisions in devolved primary legislation is a sensitive task. Given their expertise in sensitive tasks, the appropriate courts to review such subsidies would be the Court of Session in Scotland, the High Court in England and Wales, and the High Court in Northern Ireland.

Turning to Amendment 74, tabled by the noble Lord, Lord German, Clause 79 gives the Secretary of State the power to issue and update guidance on the practical application of provisions in the Bill. This will support public authorities and businesses to understand the key elements of the new subsidy control regime. As I have already set out, the Government have published a portion of illustrative guidance to give an indication of our intentions here, and to invite feedback from your Lordships and other interested parties. This amendment would specify that the guidance issued under Clause 79 was non-binding in nature. This probing amendment raises some interesting questions around the degree to which guidance is legally binding.

Clause 79 places a duty on public authorities to have regard to the guidance when designing a subsidy scheme or giving an individual subsidy. This gives the guidance more prominence and what we consider to be the appropriate role in this regime. While statutory guidance is quite rightly not the law, public authorities are none the less used to having regard to such statutory guidance to help them understand and implement

legal requirements. Guidance cannot change the law that it is anchored to and expands upon but, in setting out what public authorities should do to comply with the law, it has an important role in explaining the legislation.

As Clause 79 states, public authorities should have regard to the guidance so far as it is applicable. In that sense, it is clear that the guidance is not binding and that public authorities may depart from it, but only where it is not applicable. However, where they do so, they must have good reason, and their reasoning may be challenged and may need to stand up to scrutiny through the courts.

In response to the question asked by the noble Lord, Lord German, on whether draft guidance will be available during the parliamentary passage of the Bill, I highlight again that the Government have provided illustrative guidance during parliamentary passage. The final guidance will be made available sufficiently in advance of the new regime’s commencement to enable public authorities to understand it and prepare for the new regime.

Amendments 74A and 74B would prevent the meaning of the subsidy control principles and the energy and environment principles from being dealt with in guidance rather than in the Bill. The power to issue statutory guidance, as is currently provided for in Clause 79, will allow the Government to offer detail to public authorities on how to comply with the subsidy control requirements. As such, the guidance will play a central role in the effective functioning of the new regime. The Committee in the other place heard from a number of witnesses highlighting this fact and the importance of public authorities having appropriate guidance to understand the practical application of the Bill. It is not the Government’s intention to change the meaning of the subsidy control or energy and environment principles through guidance. As I have said, this would not be possible. Guidance will instead have the purpose of explaining and clarifying the regime, in ordinary language, for the benefit of those who will need to use and understand the practical effect of the Subsidy Control Bill.

Amendment 75, tabled by the noble Lord, Lord McNicol, would

“require the Secretary of State to seek the consent of the devolved administrations before issuing guidance under Clause 79”.

As I have already set out, we have engaged extensively with the devolved Administrations in developing the policy for the new subsidy control regime and, of course, we will continue to do so, including for the statutory guidance. We greatly value the input from the devolved Administrations. It is in all our interests to ensure that the regime works for the whole of the UK and enables the UK’s domestic market to function properly.

I note that there is already a requirement in the Bill for the Secretary of State to consult such persons as they consider appropriate before issuing guidance. Sadly, I cannot accept the amendment. A formal consent mechanism could slow down and inhibit the issuing and updating of statutory guidance. In my view, it is important that the Government are able to update guidance quickly should circumstances change, for

instance due to the development of any new UK case law. Delaying changes would be unhelpful for public authorities and subsidy recipients alike. As I have already said, it is my view that it is simply not necessary.

Clause 79(5) places a duty on the Secretary of State to consult such persons as appropriate before issuing the guidance. These persons may include the devolved Administrations, businesses and public authorities. Amendment 76, which I have tabled, would ensure that the requirement in Clause 79(5) is met by consultation on the guidance carried out before the Act comes into force.

The Government will engage on the shape and content of the future statutory guidance in the coming months, building on the public consultation we carried out last year before the introduction of the Bill. With a view to this, illustrative guidance was published in January, which gives a sense of what the final guidance on the practical application of the subsidy control principles will look like. This is intended to enlighten stakeholders as to the proposed structure and contents of future guidance and will, we hope, act as an aid for future discussion and engagement.

I entirely agree with the view of the other place that the guidance should be made available in advance of the commencement of the regime. To this end, any consultation will necessarily need to take place before Clause 79 commences. I think it prudent to put beyond doubt that the duty under Clause 79(5) would be met in those circumstances. For this reason, I hope that the Committee will feel able to accept my amendment.

Finally, I come to the fascinating Amendment 80 from the noble Lord, Lord Berkeley. I thank him for tabling it because it opened a new area of discussion that I had not really considered before. I understand that the noble Lord intends it also to be a probing amendment; I will treat it as such. Clause 85 establishes that the Bill applies in full to the Crown. As part of this customary provision, the Crown does not include Her Majesty in her private capacity, Her Majesty in right of the Duchy of Lancaster or the Duke of Cornwall. The noble Lord, Lord Berkeley—I know that, as he said, he has a long-standing interest in the affairs of the Duchy of Cornwall—explained that the amendment has been designed to probe the application of the Bill to the Duchy of Cornwall. I can confirm to him that the Duchy of Cornwall is a possession of the Duke that provides personal revenue. The Duke of Cornwall is not a public authority unless he is exercising functions of a public nature.

Type
Proceeding contribution
Reference
818 cc475-8GC 
Session
2021-22
Chamber / Committee
House of Lords Grand Committee
Subjects
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