Subsidy Control Bill

Jim Shannon Excerpts

3rd reading
Monday 13th December 2021 Commons Chamber

[Kirsty Blackman]

Thank you for calling me to speak in this important debate, Madam Deputy Speaker. It is a delight to be present in this incubation Chamber, where viruses from all around these islands—every corner of them—can come to mix freely, so that we can return this toxic cocktail to our constituents, constituencies and families. I am delighted to be able to be physically present at this time.

I will speak briefly to new clause 1, which is in my name and those of my colleagues, as well as the other amendments that stand in my name. My hon. Friend the Member for Edinburgh North and Leith (Deidre Brock) will fill in the rest of the details and explain more about our rationale for the new clause.

The logic behind new clause 1 is that agricultural subsidies do not fit neatly into subsidy control regimes. That has been recognised by the World Trade Organisation, which is the reason for its agreement on agriculture; it has been recognised by the European Union, which is the reason for the common agricultural policy; indeed, it has been recognised across the world. We, and the Scottish Government, still have no idea why the UK Government decided to go against the flow and include agricultural subsidies in the Bill, rather than providing a separate arrangement for them.

The new clause simply removes agriculture from the consideration. It does not mean that we should not have a control regime of some sort for agriculture, and it does not mean that we should not have rules relating to agriculture. It means that agriculture does not fit neatly here, and should not form part of the main subsidy control regime in the Bill.

Amendment 10 relates to streamlined subsidy schemes. The change for which we are asking would allow devolved Administrations to make such schemes. Given that those Administrations have devolved competences by law, it makes no sense that the schemes can only be made by the Secretary of State in the UK Government. Obviously we would like Scottish independence, but in the absence of a vote on that, we are not asking for devolved Administrations to be able to overstep their devolved competences. We are merely asking for parity—for the ability of devolved Administrations to create streamlined subsidy schemes. They would still only be able to do that within their areas of devolved competence, and they would still only be able to do it within their limited financial envelopes. We are not asking for anything strange or unusual; we are not seeking some sort of power grab; it is simply to do with parity.

[Jim Shannon (Strangford) (DUP)]

I understood from discussions I have had with the Minister in the past that the intention was to give the regional Administrations a say in this process so that their views could be taken on board if necessary, but the hon. Lady seems to be saying that that will not happen. Have I got it wrong, or have I got it right?

[Kirsty Blackman]

Some parts of the Bill give the devolved Administrations a say, but many others do not. The key part concerns the issue of interested parties, which I will explain in some detail later.

Streamlined subsidy schemes can go through a “streamlined” process rather than being made by, for instance, a local authority in order to benefit organisations. We are not asking for all granting authorities to have access to that process; we are simply asking for parity of esteem for the devolved Administrations, specifically on streamlined subsidy schemes.

[Jim Shannon]

The point that I was trying to make relates to farmers’ subsidies and environmental schemes, which are critically important to Northern Ireland, as they are to Scotland.

[Kirsty Blackman]

The hon. Gentleman is absolutely correct. We are asking for the agricultural references to be removed from the Bill because we do not think that this gives us, or any of the devolved Administrations, the flexibility we need. The Welsh Government have raised concerns similar to those raised by the Scottish Government, particularly in relation to legislative consent. As I said earlier, my hon. Friend the Member for Edinburgh North and Leith will speak in more detail about agriculture in particular, so it may be worth questioning her at that stage.

Let me now turn to the issue of tax declarations and the transparency database. There is already a subsidy control database, which is rubbish. There is very little on it because a huge amount of information is missing. The Minister has made it clear that this is a preliminary database, an interim measure, and not the final database. We have had a degree of reassurance from him that the new database will be better, but the way in which the legislation is drafted—the number of exemptions, and the length of time that authorities have to upload information—causes us great concern. and was raised a number of times in Committee.

Amendment 13 would amend clause 33 in respect of a local authority or granting authority giving a subsidy in the form of a tax measure—a tax rebate or tax reduction. To give a theoretical example, if an authority says in April 2022, “We’re going to subsidise this company by not having them pay a certain kind of tax,” it does not have to put that on the database until the year after it appears on a tax declaration. It can be made in April 2022, it can appear on the tax declaration first in April 2023, and there would be no requirement to upload it to the database until April 2024, which is almost two years after the subsidy was made. By that time, an organisation that had been egregiously damaged by the subsidy would have sunk—it would have gone under.

--- Later in debate ---

[Kirsty Blackman]

We discussed this at length, with a lot of banter, in Committee. But I have a concern that the provision does not say “directly” or “indirectly”. It does not make that as clear as it could. A clear statement from the Minister at the Dispatch Box would give me a level of comfort. I do not think that it is the intention of the Government to exclude the Scottish Government, the Welsh Government, or the Northern Ireland Assembly from making these challenges, but I think that the Bill is written in a woolly enough way that it potentially accidentally excludes them.

[Jim Shannon]

The hon. Lady has outlined the issue very well on behalf of the Northern Ireland Assembly. This has to be an equality issue. If it should happen that some other part of the United Kingdom affects businesses in my constituency or in Northern Ireland, equality is part of that. Should not the Minister and the Government address the issue of equality for all those reasons as well?

[Kirsty Blackman]

I completely agree that there is not a level of parity here. There should be because the Government recognise that the Scottish Parliament has responsibility for some things—the Government recognise that most days. They recognise that in relation to the other devolved Assemblies, too. This is not about any of those Administrations having a veto; it is simply about the right to refer this to the Competition Appeal Tribunal in order for it to be looked at. It is not about any of those authorities being able to cancel subsidies, or to veto them in any way. It is simply about being able to raise that challenge. It is something that was raised by the witnesses in the Bill’s evidence sessions, so it is not something that I have just somehow invented, or that the Welsh Government have invented, or that the Scottish Government have invented. It is a real worry for people, so the more the Minister could say on this the better.

I will not speak for too much longer. I have just one more amendment—amendment 11—to cover. There are two schedules—schedules 1 and 2—in relation to the subsidy control principles. The subsidy control principles are set in the Bill, and it is clear that they are the principles that authorities need to look to in guiding the decision making about giving subsidies. There are two schedules: one for the general principles and one for the environmental principles, which relate specifically to subsidies around energy and environmental matters.

--- Later in debate ---

I realise that this will not be of particular interest to farmers in, say, Wiltshire, but it is of great interest to those of us in Scotland who treasure the more remote and rural areas of Scotland and want them to flourish. We see support for our farmers and crofters as an investment in those communities’ futures. For every pound invested by Government, many times that is spent by farmers and crofters. That fuels jobs and our economy, and builds food security, which given the UK’s reliance on imports for, give or take, 40% of our food, and the recent impact of the disastrous Brexit on supplies, should make us all think again. We consider it vital that the Scottish Government—indeed, the devolved Administrations more widely—retain the ability to support agricultural businesses as they see fit for the foreseeable future. This, as the NFUS makes clear, relates to the proposed regime’s potential impact on policy development in a devolved area.

[Jim Shannon]

I very much sympathise and agree with the argument the hon. Lady is putting forward. In Northern Ireland we have the highest quality products, we have an export market that we want to retain, and we want to retain food security as well. She referred to the National Farmers Union of Scotland; the Ulster Farmers Union is also committed to retaining that. Does she agree that the Minister should consider this very seriously, with that in mind?

[Deidre Brock]

Yes, very much so. I agree with the hon. Gentleman because the excellent food produced in Scotland is also to be taken into account. I hope the Minister is listening carefully to what I am saying and will take it into account when he speaks. I would be interested to hear his point of view.

There is a risk that schedule 1 will constrain Scotland’s ability to tailor future policies to the needs of Scottish agriculture. There are concerns about how the regime will work for legacy common agricultural policy schemes delivering income payments and coupled support, and doubts about whether clauses 48 and 81 will allow devolved Governments to make changes where required in order to develop and progress agricultural policies in future. Additional difficulties and potential for legal challenge are created over what could effectively be the avoidable double-banking of subsidy control schemes through the application of the new regime. The Scottish Government are also concerned about the principle that a subsidy that does not unlawfully distort international law could still be challenged, as set out in our Cabinet Secretary’s letter to the Minister,

“on the basis that it does not minimise negative effects on competition or investment in the UK which is a principle that goes beyond the minimum required under the TCA”.

Apart from those numerous concerns, the inclusion of agriculture could dramatically weaken the role of what has been the agreed common frameworks process in this area, which was put in place specifically to manage policy divergence within the UK and any impacts that that might have on the UK internal market. I have been told that no other state in the world includes agricultural payments as subsidies. While I am not entirely sure that that is the case, it is certainly highly unusual. In May, the Minister indicated to the Cabinet Secretary that he was prepared to work on bespoke solutions in the regime that would recognise the particular needs of the agricultural sector, but there has been nothing so far and, I repeat, no real explanation of how it is all supposed to actually work. Perhaps it has been filed in the “too hard” bin, along with many other devolved Administrations’ concerns, or the “can’t be bothered” bin—I am not sure.

If agriculture is left in this Bill, that could create serious problems for devolved Governments in the delivery of their own policies on food production. If the Government are serious about protecting devolution, they will abandon their plans. I urge the House to hear the concerns voiced by Scotland’s devolved Government—I am sure we are going to hear from the Welsh Government as well, and potentially from the Northern Ireland Assembly—and support the inclusion of new clause 1.

Subsidy Control Bill

Jim Shannon Excerpts

Consideration of Lords amendments
Wednesday 20th April 2022 Commons Chamber

[Jim Shannon (Strangford) (DUP)]

I thank the Minister for what he is saying. He referred to the fact that there had been thorough discussions in this House and in the other place. I am wondering whether those thorough discussions involved the devolved Administrations, particularly the Northern Ireland Assembly, but also the Scottish Parliament and the Welsh Assembly. If there is disagreement, how do the Minister and the Government intend to deal with it?

[Paul Scully]

The hon. Gentleman makes a really good point. We tried to work with all the devolved Administrations right the way through the process from beginning to end, and we have continued conversations with each of them over this period. Clearly there are, and will be, differences in the process. This needs to work for the whole of the United Kingdom, so I am keen that we continue the dialogue, whether it is with Scotland, Wales or Northern Ireland, to ensure that we can do as much as we can to reach agreement, though clearly that will not always be possible; that is the nature of dialogue.

[Paul Scully]

No. However, the UK Government have a reserved power over subsidy control, so it is the UK Government who act on that reserved power.

Finally, we have introduced an amendment specifying that the Secretary of State may provide statutory guidance to public authorities on pre-action information requests—that is, the provision of information following a request about a subsidy decision to an interested party that is considering whether to ask the Competition Appeal Tribunal to review the subsidy.

I shall now move on to two amendments related to levelling up. Lords amendment 50 makes it clear that addressing local or regional disadvantage is considered to be an equity rationale for the purpose of assessing compliance with principle A. This puts beyond any doubt that a subsidy to address local or regional disadvantage can be given, provided that the other principles and requirements of the regime are met. Lords amendment 9 exempts from the prohibition on relocation those relocation subsidies that have the effect of reducing social or economic disadvantage. The subsidy must, of course, also comply with the principles and other requirements.

[Jim Shannon]

On the issue of levelling up, I know that the Government and the Prime Minister have given a commitment to levelling up all the United Kingdom of Great Britain and Northern Ireland, but I am always conscious that we want to see that actually happen, not just words. Can the Minister give me some assurance that Northern Ireland—where the cost of living is higher, wages are lower and products and consumer goods are higher in price—will, through the Northern Ireland Assembly, receive the levelling up that we should?

[Paul Scully]

Indeed, yes. Levelling up does not exclude any one area of the United Kingdom. It also does not exclude levelling up within regions; that is really important. This legislation only provides the framework; the levelling-up fund, the shared prosperity fund and other measures that can use the framework will, I am sure, benefit the hon. Gentleman’s constituency and Northern Ireland as a whole. It is really important that we get this right.

I am happy to report that we produced Lords amendments 1, 5 to 8, 10 to 12, 39 and 40 to respond to concerns about the Bill in the 17th report of this Session by the Delegated Powers and Regulatory Reform Committee. Lords amendment 1 addresses a concern with clause 10. Parliamentary scrutiny of streamlined subsidy schemes made under clause 10 has been strengthened by giving either House the ability to annul any streamlined schemes after they have been made, by applying the negative procedure.

Lords amendments 5 to 8 replace the direction-making power in clause 16 relating to the designation of marketable risk countries with a power to make regulations for the same purpose. Lords amendments 10 to 12 relate to the powers in clauses 25 to 27 to change definitions in secondary legislation. Those powers will be removed. Finally in this group, Lords amendments 39 and 40 address concerns raised by the DPRRC about secrecy regarding the financial stability direction-making power in clause 47. These amendments make it clear that such directions will need to be published in due course. In addition, the Economic Secretary to the Treasury has written to the Public Accounts Committee and the Treasury Committee to commit to notifying the Chairs of those Committees confidentially about the use of a financial stability direction.

I turn to Lords amendments 41 to 43 and 49, relating to the Competition and Markets Authority and the Subsidy Advice Unit. Although the Secretary of State could already direct the SAU to complete a monitoring report for a specified time period under clause 65(4), these amendments make specific provision in the Bill for more frequent scrutiny in the early years of the new regime. Instead of mandating a report within five years of the implementation of the regime, the tabled amendments require an initial report after only three years, to be followed up with a further report after another three years. After that, reporting will revert to a five-year cycle. The Secretary of State will retain the ability to direct that a report be made at a specified period after the publication of the second three-year report. The sunsetting provisions in clause 87(6) have been extended so that they take effect after the second three-year report. Lords amendments 2 to 4 and 48 are minor and technical in nature. They clarify definitions under clauses 11 and 82.

In summary, this substantial package of amendments represents an improved set of measures that will strengthen the new domestic subsidy control regime and make it more transparent and accountable. There will now be greater transparency of subsidies awarded, and improved oversight and monitoring of the regime by Parliament and the CMA. I am grateful to colleagues in both Houses for their hard work on, and attention to, this important Bill. They have helped to bring about these improvements, which I hope will be endorsed by Members from across this House.