Subsidy Control (Information-Gathering Powers) (Modification) Regulations 2022

Debate between Baroness Blake of Leeds and Baroness Randerson

Monday 20th February 2023 Lords Chamber

[Baroness Randerson (LD)]

My Lords, I put down this regret Motion because the purpose of this SI runs directly contrary to the points of principle that we on these Benches argued for during the passage of the Subsidy Control Bill. We argued for more consultation with devolved Administrations; instead, this SI reduces it.

In explanation, this instrument removes an obligation for the CMA to consult with the devolved Administrations when preparing or revising the policy statement in relation to information-gathering powers, which are used by the Competition and Markets Authority’s Subsidy Advice Unit under the terms of the Subsidy Control Act 2022. It also removes the requirement for the Secretary of State to consult the devolved Administrations when making regulations about penalties in relation to these powers.

The Act established a new subsidy control regime to replace the EU’s well-established state aid. The Government’s aim was to enable local authorities and devolved Administrations to deliver subsidies more tailored to local needs. The CMA, via its SAU, has a monitoring role, and there are penalties for not complying with its information-gathering powers.

The Act touches on a sensitive area of overlap between reserved and devolved powers: subsidy regulation is reserved but economic development is devolved, and, clearly, subsidies are an important economic development policy tool. When the subsidy control powers operated under the EU umbrella, DAs worked to a pretty clear and non-party-political framework of rules. On paper, the Government’s aims in making the new framework more sensitive to local needs should make economic development easier for devolved Administrations and local authorities. However, these regulations undermine the whole principle of sensitivity to local needs by removing the obligation to consult.

There are additional aggravating features to this situation. First is the lack of any previous notification that this was the Government’s intention. I can find no specific announcement during the passage of the Bill that this was how the Government intended to use their power. The Welsh Government inform me that they were first informed on 21 July, when shown a draft of these regulations. At official-level meetings prior to this date, there had apparently been none of the usual courtesies of giving advance information on the Government’s direction of travel, which would have enabled Welsh Government officials to have some input into the drafting.

Secondly, there is the opaque way in which this legislation is drafted. Although these regulations flow from the Subsidy Control Act, they implement an implied amendment to the internal market Act. Noble Lords will recollect that that Act was controversial from a devolution perspective: the DAs did not grant legislative consent, and attempts were made to amend the Bill to take greater account of the economic development responsibilities of devolved Administrations. These regulations mean that the internal market Act remains drafted as is from the textual standpoint but with an implied textual amendment which will have the effect of removing the requirement to consult with devolved Administrations. It will give the Secretary of State more discretion on penalties and give the CMA more discretion on policy relating to subsidy control. The CMA Subsidy Advice Unit already has no obligation to give due regard to DA opinions, and this is another blow to the possibility of positive relationships between devolved Administrations and the UK Government. This is a pity, as I am told that relationships between the SAU and officials in devolved bodies have been very positive, so there is no good reason to change the balance of powers. As well as removing the obligation to consult, this also removes any possibility of challenge if devolved opinions are ignored. I suspect that this is the Government’s intention here: governing always seems easier if you shut yourself away and do not listen.

These regulations will bring the duties placed upon the SAU out of line with the duties placed on the CMA’s Office for the Internal Market, suggesting that a similar retrenchment of devolved powers may be likely for the latter. Do the Government have such plans?

Further aggravating features were brought to our attention by the diligent work of the Secondary Legislation Scrutiny Committee. It expressed concern that the Government’s explanation or defence of the removal of this obligation to consult is that the CMA and the Secretary of State will still have to consult the devolved Administrations if their interests are “sufficiently affected”. The SLSC stated that, in the absence of any definition of this term, it is worried about how it will be interpreted. I hope the Minister can be very explicit on how the new rules will be interpreted.

The SLSC also drew our attention to a serious error in the Explanatory Memorandum, which said that the DAs had not objected, when in fact they had done so unequivocally. The EM has now been corrected, but this is a serious error—much worse than the usual omissions. If the views of the DAs on the regulations governing consultations are misrepresented, it is hard for us to have confidence in the good faith of the consultations that flow from them.

In summary, these regulations will impact adversely on economic development opportunities in the devolved nations and hinder the ability of the DAs to shape the subsidy regime of the future. They reinforce the view that this centralising Government are determined to take every opportunity, however small, to undermine devolution. I realise that the Government want to hold all the reins of power, not least because, in this case, carefully placed subsidies are an easy way to bolster support in chosen parts of the country. The same principle underpinned the Government’s decision to centralise the shared prosperity fund and to cut the Welsh and Scottish Governments out of decision-making. The outcome of the first round of that funding makes my point for me.

I urge the Minister to think long term. Every time the Government chip away at devolution, they persuade a few more voters living in the devolved nations to give up on devolution and move to support independence. The Government should instead be bolstering good relations with the devolved Administrations, and that means respecting their powers and opinions. The Government are in danger of making enemies out of friends. The Welsh Government are not the Scottish Government; they are not predisposed to object to everything. I am sure the Minister will seek to reassure me that consultation with the devolved Administrations will in fact continue, but unfortunately the evidence is already there that it is pretty sketchy and corners are cut on existing obligations. I thank the Minister for his prior interest in my concerns on this, and I assure him that I will listen carefully to his response.

[Baroness Blake of Leeds (Lab)]

I thank the noble Baroness, Lady Randerson, for her clear and explicit exposition of the concern here. I have read the Welsh Government’s report, and significant concerns are raised in it. As we have heard, the Secondary Legislation Scrutiny Committee, which we have to take very seriously indeed, expresses concerns.

Misrepresentation has to be taken extremely seriously. My experience is of working at a regional level, having responsibility for money coming in through the form of subsidies and navigating the area of state aid. That is significant and important in building relationships and establishing trust and transparency in an area where there are competing interests. Every subsidy will be scrutinised, and there will be questions about why one area has got one as opposed to other areas.

Professional Qualifications Bill [HL]

Debate between Baroness Blake of Leeds and Baroness Randerson

Tuesday 9th November 2021 Lords Chamber

[Baroness Randerson (LD)]

My Lords, the noble Baroness put her finger on it when she referred to the bad feeling engendered by the internal market Act. That has undermined confidence between the devolved Administrations and the UK Government. But there are also good, practical reasons why they need to be consulted. I support these amendments because it is absolutely crucial that, at the centre of this, the assistance centre truly represents the whole of the UK and can provide accurate information.

The history of this Bill is that the whole thing is a lot more complex than the UK Government originally thought. I think that the Minister would acknowledge that. The noble Baroness has played her part in pointing that out to the Government. It is not just a courtesy to seek consent. Things are different in different parts of the UK. I speak in this debate from the perspective of Wales, where our difference is partly underlined by language issues of significance. If you are looking at the clinical professions, or teaching, language is important in the delivery of those qualifications.

However, there is a key issue here in the interaction between this Bill and the United Kingdom Internal Market Act, which was designed to undercut devolved powers and which, despite some amendments, still has the power to do so. The UK Government deal internationally with what I am sure they see as the interests of the whole of the UK but, to give one example, the international trade deal with New Zealand provoked dismay in Wales because of the impact that it will have on Welsh sheep farmers. That may not be of direct relevance to this Bill, but it underlines the fact that, just because the UK Government are intending that it should benefit the UK, that does not mean that it will actually benefit the whole of the UK. The same applies with professional qualifications and the terms in which there could be an impact from an international trade deal on those qualifications.

The lack of legislative consent Motions is a symptom of the problem. Common frameworks are there and should be there to ensure harmonious working, but those of us speaking in this debate who are members of the Common Frameworks Scrutiny Committee—the noble and learned Lord, Lord Hope, my noble friend Lord Bruce and the noble Lord, Lord Foulkes, who was here earlier—know that common frameworks have been applied so far in a fairly haphazard manner in some situations, and therefore we cannot entirely rely on them yet. I am very pleased to see the amendments that relate to them, because that reinforces their importance in improving relationships between the Governments within the United Kingdom. Therefore, I support these amendments.

[Baroness Blake of Leeds (Lab)]

My Lords, I start by saying a personal thank you to my noble friend Lady Hayter for her wonderful support over the past few months. We go back many years and we have worked on some very difficult issues, so it has been a great pleasure. I thank my noble friend Lord Kennedy for stepping in as a result of the very positive news of my noble friend Lady Hayter moving on to pastures new. I know that she will continue to bring all her enormous knowledge to bear.

I also thank the Minister for his unfailing patience and his recognition of the complexities of this Bill that were not fully appreciated when it first came forward for our consideration. There have been some extraordinary contributions from all sides of the House that exposed the original drafting, which have been incredibly important.

Her Majesty’s Opposition believe that a role for the devolved authorities has been overlooked in the drafting of this Bill and recognise that there is strong concern from them, as we have heard in this debate, about the legislation. Perhaps it is not an enormous surprise, given the Government’s track record, because the experience of the devolved Administrations is that they have been excluded too many times, going right back to the Brexit negotiations, as we have heard, and the United Kingdom Internal Market Bill, with UK powers imposed over devolved competences. The noble Lord, Lord Bruce, said very clearly something which struck home very forcefully: there is a legacy of suspicion. We would all do very well to remember that.

We also remember when it came to light that the devolved authorities only saw this Bill a week before it was published. Either the Government forgot about them or something else was happening, but again that growing suspicion has permeated the discussions that we have had throughout.

The importance of their engagement was underlined in the Government’s factsheets on the Bill, which were published at the end of last week and stated that professional qualifications and experience can vary across the four nations—surely in itself a reason for this concern. As we have heard, the concern is shared across the House, as demonstrated by Amendment 10, tabled by the noble Baroness, Lady McIntosh, the noble and learned Lord, Lord Hope, and the noble Lords, Lord Foulkes and Lord Bruce, which we strongly support.

This was the formula for the engagement of the devolved authorities, which the Government accepted with the United Kingdom Internal Market Bill. It would oblige the Minister to seek the consent of the devolved authorities but would allow them to proceed, albeit with a published explanation if no consent is received within a month. It is not an absolute veto, but it starts on the assumption of working towards consent. Her Majesty’s Opposition recognise the strength of feeling from the devolved authorities and, again, as has been so eloquently expressed by the noble Baroness, Lady Randerson, that is why we have tabled Amendment 14, which would apply this consult, seek and UK Government backstop formula to all regulation-making powers in the Bill.

Why are the Government against taking this approach with this Bill, which they accepted in the United Kingdom Internal Market Bill less than a year ago? Surely at the very least we need some consistency across post-Brexit legislation. Amendment 10A also seeks to ensure that the Bill does not impact on the development of a common framework on this issue. Can the Minister confirm that this will be established and in operation by the end of the year? As I understand it, there is still some confusion about departmental responsibilities on common frameworks post reshuffle, so can he also confirm which Minister and department are now responsible for them? We accept that the mood of the House has, with some exceptions, coalesced around Amendment 10, and we strongly support it, as I have said.

I would like to hear clear commitments from the Minister that the Government remain committed, first, to continuing engagement with the devolved authorities to find a way through on this issue, and, secondly, to amending the Bill as appropriate to reflect the devolved authorities’ concerns. As the Bill starts here in the Lords, the Government have ample time to bring forward amendments in the other place. If the Minister is not able to say this today, I will seek to test the opinion of the House on Amendment 14. I will be listening very closely to his reply.