My Lords, in rising to move Amendment 16, I warmly thank the noble and learned Lord, Lord Judge, for supporting this suite of amendments, which raises concerns about the breadth of the order-making powers that Ministers seek to gain from this legislation.
I start by thanking the Minister for his holding letter indicating that he is conferring with the noble Lord, Lord Caine, on responding to the questions raised on Monday. I am grateful for that and the efficiency of his private office.
The information from the Northern Ireland Executive suggests that there are approximately 14 live areas where there are subsidy controls, which operate within Northern Ireland under one element of the protocol. The purpose of my amendment is twofold: first, obviously, to raise the concern about the breadth of the power, which is in breach of international obligations, and about powers that the Government seek without formulating policy first.
Secondly, the purpose is to further probe what the Government intend the position to be with regard to subsidy control for Northern Ireland, and when they came to their conclusions. We are told that the position is grave and imminent—that is the defence of necessity for breaching international obligations. But we spent a lot of time in Committee and on Report on the Subsidy Control Bill. I moved two amendments relating to Northern Ireland, and the noble Lords, Lord Dodds and Lord Empey, and the noble Baroness, Lady Hoey, also raised these issues in Committee. Like others, I asked on a number of occasions what interaction there would be with the protocol and what difficulties operating two systems would cause. The noble Lord, Lord Callanan, reassured me that they would work together.
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That legislation is now apparently not fit for purpose and needs to be amended—in breach of our obligations, of course. We passed that legislation this year, and it came into force this spring. With seriousness, I say again that, at no stage during the passage of that Bill, which is being amended by this Bill, did any Minister say that there was a grave and imminent threat that required that we withdraw entirely from the agreement on state aid that we negotiated and secured.
In fact, the timing of this is interesting. As we have heard, the Government indicated in 2021 that the protocol was working, but we now hear that there is grave and imminent peril. We legislated during this time, and the Government said that they played no role in bringing about the circumstances of the peril. But, legislating at the time, we obviously had a role to play.
The paper that the Government published on the UK solutions, raising concerns about the operation of the protocol, relates to Northern Ireland, tax and spend, and subsidies. It says:
“The Protocol applies EU state aid rules regardless of developments since—despite the robust subsidy control commitments agreed by the UK and EU in the Trade and Cooperation Agreement, which we have built on in the Subsidy Control Act 2022”.
If we put in place robust subsidy control commitments in the TCA, that was after the protocol. I am not sure why the Government say that they are unaware of some of the consequences of the regime that they agreed and then put in place, which they considered to contain robust subsidy control commitments.
I asked questions about the Government’s position and what they were negotiating, or seeking to negotiate, with the European Commission. I asked how a dual system would operate, and, when I moved my clarity-seeking amendments, the Minister—the noble Baroness, Lady Bloomfield—said that there would be enhanced referral powers or consultation procedures for subsidies within scope, to enable EU concerns to be properly and swiftly addressed. So, when we were passing this legislation, the Government were negotiating not a removal of subsidy controls from the protocol but a more efficient approach to the operation of the two systems. The noble Baroness, Lady Bloomfield, said to me that, under the two systems, there would be “specific and limited circumstances” where EU rules would apply to Northern Ireland. I asked what “specific and limited” meant, and it seemed to be simply a more efficient way of reporting and declaring. I would be grateful if the Minister could indicate at what time and stage the Government drew the conclusion that they had to entirely remove state aid elements from the protocol.
The consequence of this is a major chill effect, because businesses operating within Northern Ireland and across the rest of the UK simply do not know what the Government’s intent will be when they are looking to make investment choices. I repeat that there are a number of live situations where this is currently in operation. So the Government are actively contributing to a state which is bringing about concern and which they cite as “necessity”.
As the noble Lord, Lord Caine, was not able to confirm to me on Monday whether the Government are formally seeking that the EU change its mandate for negotiations, in this Bill we are seeking to remove from the protocol a key part that the Government negotiated. So I hope that the Government can provide crystal clarity on this point, because it is needed for the economy of all parts of the UK. I beg to move.