Subsidy Control Bill

Baroness Bennett of Manor Castle Excerpts

2nd reading
Wednesday 19th January 2022 Lords Chamber

[Baroness Bennett of Manor Castle (GP)]

My Lords, I heard state aid described this morning as something that people do not get very interested in, yet the range of speakers in this debate, starting at such a ridiculously late hour, puts paid to the claim that there is a lack of interest. Indeed, there could hardly be anything more crucial than what the Government support or do not support—and that, indeed, is a decision not to support. As the noble Lords, Lord Purvis of Tweed and Lord Whitty, pointed out, Governments have often tried to suggest that it was the EU’s fault that the UK Government were not providing support, but that claim does not stand up. That lack of support has given us industries, sectors and communities that are struggling to get a decent quality of life for their members, while living within the boundaries of this one fragile planet. It is something we are far away from today, be it the level of child or pensioner poverty, or the way our society collectively consumes the resources of our share of three planets, when we have only one.

My noble friend Lady Jones of Moulsecoomb will later in this debate be looking at the issues of environment and the lack of a strategic direction here, as in so much of the Her Majesty’s Government. It is hard to have a strategic direction when the ship of state is being tossed around by a party whose members are running to and fro on leadership manoeuvres. My speech is going to focus on the democratic and structural concerns about this Bill, of which many have already been clearly set out, and I shall seek to add to that rather than repeat.

One issue that has not yet been raised is the Bank of England’s monetary policy activities, which are explicitly exempted from the subsidy regime in Clause 46. The Explanatory Notes do not give any explanation or justification for this. This is significant, because we are talking about billions of pounds frequently supplied in cheap credit. It could be used in a positive way, for environmental or social objectives, and the Bill could give direction to that effect. But of course, there is also the problem, which I have often raised in other contexts, of what is known as “too much finance”. One reason why we are in that situation today—the threat to our security that the over-large financial sector presents—is the massive government subsidies of the past, including guarantees for banks that remain “too large to fail”.

I want to pick up the point made by a number of noble Lords, notably the noble Baroness, Lady Humphreys, about the reduction in the publication threshold and the removal of legal controls. Rather than a central pre-approval of subsidies, the system will now rely on challenges from rival businesses to stop harmful subsidies. But with very high levels of subsidies, rather than the £500 that is so often the public sector norm, how can anyone challenge a subsidy that they do not know exists? There is effectively no control at all. Given the issues with government contracts—issues that have been so well-aired that I hardly need go into detail—here we have another potential huge concern about lack of transparency.

We have already talked a lot about the devolved Administrations, and I will not go over the same ground. But I will note that one of the reasons why Scotland is particularly concerned about agricultural subsidies is that it has made far more progress on land reform and has retained far more small land holdings—a very different agricultural structure from what we see in much of England. These crofts and small land holdings are a hugely valued part of Scottish agriculture, community and society and surely require special arrangements and support.

Finally, many noble Lords have covered the issue of how, oddly, the Government’s levelling-up agenda seems to be missing from the Bill. There is actually a levelling down from the EU regional aid system, which permits higher aid ceilings in less developed areas.

As we have heard from every part of your Lordships’ House, we are in a total muddle. This Bill does not hold together, and it is asking a lot of your Lordships’ House to try to pull it together. All I know is that we will try.

Subsidy Control Bill

Baroness Bennett of Manor Castle Excerpts

Committee stage
Monday 7th February 2022 Grand Committee

[Baroness Bennett of Manor Castle (GP)]

My Lords, I rise briefly to offer Green group support for all these amendments, to which we might well have attached our names were we not caught in this massive legislative pile-up. I should declare my interests as a vice-chair of the LGA and of the NALC. With the amendments having been so comprehensively and effectively introduced by the noble Baronesses, Lady Blake and Lady Humphreys, I shall make just a few additional points.

One of the most popular hashtags in my rather busy Twitter feed is #LandofCronies. There is grave public concern about corruption, cronyism and the nature of decision-making on government spending. Indeed, I put it to the Minister that these amendments collectively could be a great protection for Ministers in future, enabling them to say, “Here’s the transparency. What we’re doing is very clear and very obvious.” I note that in the other place such diverse and broadly respected organisations as the Centre for Policy Studies, the Adam Smith Institute and Transparency International backed similar amendments and that the Financial Times has warned that the new planned flexible regime could pose a “significant risk” and

“On the altar of speed, it has sacrificed scrutiny”—


it being the Government.

We are in a very interesting situation whereby the subsidy regime, having been under the control of EU rules and the UK having traditionally provided much less public funding than most other countries—around £8 billion a year—is now about to increase dramatically just as the controls utterly fall away. This is about showing people what is done; it is democracy and transparency in action. There is broad support for these amendments, so I would be delighted to hear the Minister express that the Government are moving in this direction.

[Baroness Altmann (Con)]

My Lords, I support these amendments. I support the aim of a more flexible scheme than the EU has, and I welcome the Government’s commitment to introduce transparency to their new subsidy scheme, but, as others have explained, this Bill potentially reduces transparency.

The amendments in this group had strong support in the other place, not least from our honourable friends John Penrose and Kevin Hollinrake. I also thank the Centre for Public Data, which has worked with them to provide information to help the Government achieve what they want to achieve perhaps in a better way, which is what these amendments may enable to be done.

I support the use of subsidies to achieve the levelling-up agenda and the net-zero agenda. I think that we all realise that regional growth and infrastructure need an extra boost now. However, can the aim of reducing central control of subsidies and relying on transparency, so that interested parties can challenge subsidies that they believe are unlawful, be achieved by a process whereby those interested parties will not know that there is a subsidy unless it is more than £0.5 million and there could be a series of subsidies just below that which could amount to quite substantial sums? It would help me understand how this aim could be realised if the transparency that I think we could rely on cannot be achieved because the database does not include a record of those very subsidies that are meant to be challenged. I suggest that this seems somewhat illogical, and I urge my noble friend either to bring back his own amendments on Report or to consider accepting these amendments.

Subsidy Control Bill

Baroness Bennett of Manor Castle Excerpts

Lords Hansard - Part 1 & Report stage
Tuesday 22nd March 2022 Lords Chamber

[Lord Whitty (Lab)]

My Lords, I shall also say a few words about Amendments 51 and 61 in this group. I do so in lieu of the noble Baroness, Lady Boycott, who, unfortunately, has to be at a funeral this afternoon. I declare my interests as set out in the register but in particular a very new one, which is that I have become a director of Peers for the Planet.

This amendment is pretty straightforward. It says that our climate change strategy, our net-zero strategy, about which the Government have been very clear, should be taken into account in their subsidy policy. It is odd that it is not in the Bill, either in Schedule 1, which we are discussing, or virtually anywhere. However, we are lucky tonight because the Minister is of course also Minister for many aspects of net zero. I therefore assume that my amendment will be received with acclaim by the Government Benches. They might think they have a better form of words that they want to bring forward later, but I think my form of words is fairly clear.

We are on Schedule 1 to the Bill, which is headed “The Subsidy Control Principles”. That a flagship policy of the Government which has been said by Ministers time and again should apply across all government policy is not included in that schedule is very odd indeed, and it must surely be an oversight. Even more surprising, it is not referred to in Schedule 2, which relates to energy and efficiency principles, because that is mainly about energy policy. There is a reference which could be said to be relevant, which is to subsidies directed towards the reduction of carbon use and to help decarbonisation, but those are specific subsidies. What my amendment is concerned about is that all subsidy schemes should take into account their implications for our target zero policy and climate change objectives.

I would find it difficult to think the Government could reject that. Ministers have said on many occasions that it is one of our most important policies and strategic commitments. The Public Accounts Committee has recently said that all government departments must take it into account, and that includes new legislation. This is substantial new legislation which may not obviously directly affect climate change, but everything indirectly affects it. Subsidies after all, whatever their form, are about interfering with the market to get a different outcome. It would be odd indeed if the Government did not accept that, if the market was moving in the direction which was more or less in line with our climate change agenda, we should not intervene with a subsidy which reversed it or at least offset it. We are not saying that every subsidy has to be directed at climate change, but the implications have to be taken into account when considering the validity of that subject.

I am expecting a positive response from the Government. I do not think it would cost them a lot in terms of the overall nature of the Bill, but it would give credibility to the overall policy that our net-zero targets should be followed through across the whole of government and all public authorities. If the Government reject it, I will find that very difficult to accept, and I think we would wish to test the opinion of the House. I hope that the Government will be reasonable and either come up with their own wording or just accept the wording which the noble Baroness, Lady Boycott, and I are proposing. I beg to move.

[Baroness Bennett of Manor Castle (GP)]

My Lords, I rise with great pleasure to follow the noble Lord, Lord Whitty, who has powerfully and clearly introduced this group of amendments. I will offer the Green group’s support for Amendments 3, 51 and 61. Were we not in a state of continual juggling of different Bills, I am sure that we would have attached one of our names to them.

Amendment 3, on which the noble Lord indicated he is likely to test the opinion of the House, is particularly important in considering the negative effects. I am influenced in that view by a visit I made yesterday to a village called North Ferriby and a site threatened with the development of an enormous Amazon warehouse, with significant environmental effects. From those environmental effects flow effects to people’s lives and well-being. It is the absolute reverse of levelling up in that it is making people’s lives much worse. It is clear that, when talking about economic development, there is inadequate consideration of local environmental effects and the broader effects on the state of our world.

However, I rise chiefly to speak to Amendment 5 in my name. Rather than trying to stop damage, this amendment is trying to lead the Government in a positive direction, which could help them deal with some of the issues facing them today and will be tackled by the Chancellor tomorrow.

Amendment 5 is all about helping small-scale community energy projects to make a big impact in the energy system. In Committee, the Minister suggested that community energy is not within the scope of the Bill, but I hope we might see a broader response today, and at least a positive response and acknowledgement from the Minister that this is a huge lacuna in government policy that desperately needs to be filled.

This amendment adds community energy to the list of circumstances that may be used to determine a subsidy, where the generator is a community energy project. What we see is that the rural community energy fund is soon winding down, despite its success. The Minister and I have, in another context, discussed the lack of any other community energy schemes, despite the Government’s promises to deliver them.

You might ask, “Why would subsidies be needed?” The fact is that community schemes often need early-stage seed funding to get them to the stage where they can seek investment. Without that, many communities, desperately keen to set up their own scheme, are never able to get one off the ground. What we are talking about is perhaps something like an electric car club, where a community can generate its own energy. I saw this in Stroud a few years ago: solar panels on the roof of a doctor’s surgery powered an electric car club car. This had all been supported by community investment and was run by the community, with the nature of the project being chosen by the community.

It is clear that this can unlock more than £64 million in private capital investment. It is an incredible opportunity for public money to kick-start a community-led green revolution. Importantly, thinking about the levelling-up agenda, this means that communities with money can put it into their local community and get the money circulating around that community. This is a cost-effective way of unleashing the possibility of many new green jobs.

I am not expecting the amendment to pass today, but there is a huge opportunity here. The crisis the Government are facing is clear: the cost of living crisis and concern, particularly in the context of the tragic situation in Ukraine, about energy self-sufficiency. But there is energy all around us: energy from the sun, the wind and people within communities desperate to help tackle the climate crisis and meet the needs of their own communities. Let us make sure that we have a subsidy scheme that can support all that physical and human energy and put it to good purposes to improve the lives of us all and our environment.

[Baroness Sheehan (LD)]

My Lords, I rise to speak to Amendments 3, 51 and 61, to which I have added my name. I have checked with the Public Bill Office that my name is on those amendments—it is online but it has not made it to the printed copy. I should also add that I am a director of Peers for the Planet.

The reason I have added my name to these amendments is that I feel strongly about this. I hope that the noble Lord, Lord Whitty, will be press Amendment 3 to a Division if the Minister is unable to meet us half way or come some way towards what we are looking for, which is some recognition of an alignment with our climate change and natural environment concerns.

Just last month the IPCC published its sixth report, which is full of dire warnings about the climate. Time is running out and we are fast approaching a 1.5-degree rise. The raw science tells us that we really have to act now. The concentration of carbon dioxide in the atmosphere is at an unprecedented 419 parts per million; it has never been at that level, records show, in the last 800,000 years. It is going up in a straight-line vertical trajectory at the moment, so we really need to act as quickly as we can. The NASA website shows that many other of the planet’s vital signs are moving in the wrong direction and those adverse changes are accelerating.

A Bill laying out a new subsidy regime is an important policy lever to meet our climate ambitions. However, as things stand, there is a deafening silence on climate and nature alignment in the Bill. Amendments 3, 51 and 61 seek to fill that void, not in a prescriptive manner but by allowing the Government to determine how the aims should be achieved. Notwithstanding what the Minister’s response will be to the amendments, I hope that nevertheless he will confirm from the Dispatch Box that the guidance to the Bill will specifically include how public authorities should approach climate and wider environmental considerations with respect to subsidies. The Minister said as much in his letter to my noble friend Lord Purvis but it would be good to have it reiterated on this occasion.