Schedule 1 - The subsidy control principles

Subsidy Control Bill – in the House of Commons at 8:00 pm on 13th December 2021.

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Votes in this debate

Amendment proposed: 16, page 52, line 6, at end insert—

“(c) consistency with the United Kingdom achieving its net-zero commitments established under the Climate Change Act 2008.”—(Seema Malhotra.)

This amendment adds consistency with the UK’s net-zero commitments as a particular consideration for public authorities before deciding whether to give a subsidy.

Question put, That the amendment be made.

Division number 148 Subsidy Control Bill — Schedule 1 - The subsidy control principles

Aye: 176 MPs

No: 292 MPs

Ayes: A-Z by last name

Tellers

Nos: A-Z by last name

Tellers

The House divided: Ayes 178, Noes 292.

Question accordingly negatived.

Third Reading

Queen’s consent signified.

Photo of Kwasi Kwarteng Kwasi Kwarteng The Secretary of State for Business, Energy and Industrial Strategy 8:53 pm, 13th December 2021

I beg to move, That the Bill be now read the Third time.

I pay tribute to my hon. Friend the Minister for his leadership and diligence in steering the Bill through this House. I recognise the contribution of all the officials in my Department whose outstanding work has advanced us to this point. I thank you, Madam Deputy Speaker, and your colleagues for all the work you have done. I extend my thanks to all the House staff who have made sure that everything has gone as one might expect.

This Bill is a hugely important piece of legislation. It establishes a subsidy control system that has been designed by and for the UK. It demonstrates the Government’s clear commitment to seize the opportunities arising from Brexit. For the first time, the decision on whether to grant a subsidy will fall to the granting authority itself. At the heart of the regime is a set of clear and proportionate principles that will be underpinned by guidance.

Local authorities, public bodies and the devolved Administrations in Edinburgh, Cardiff and Belfast will be empowered to decide if they can issue taxpayer-funded subsidies by acting consistently with the principles outlined in the legislation. That includes a principle specifically designed to minimise distortions to UK competition and investment. The new regime will help to unlock potential so that all areas of the UK feel the benefits of targeted subsidies. That includes investment in skills, infrastructure, new technologies, and research and development.

With agreement, in Committee, the Government made some technical changes to the provisions to provide clarity in certain areas. Those included ensuring that the transparency requirements apply to subsidies under legacy schemes subject to certain exemptions and that the content of the CMA’s post-award report is consistent with that of its pre-award report.

There has been a thorough debate, including today, about specific elements of the regime. I welcome the recognition on both sides of the House of the need for the Bill. The new subsidy control regime will ensure that the UK maintains a competitive free market economy, which is fundamental to our national prosperity, while protecting the interests of the British taxpayer. The debate will continue through the remaining stages of the Bill as it passes to the other place and we will of course be mindful and attentive to that continuing debate. On that basis, I commend the Bill to the House.

Photo of Jonathan Reynolds Jonathan Reynolds Shadow Secretary of State for Business and Industrial Strategy 8:56 pm, 13th December 2021

It is a privilege to come to the Dispatch Box for the first time as the shadow Secretary of State for Business, Energy and Industrial Strategy. This is an important Bill. On the face of it, it is a technical matter, as our exit from the European Union and single market means that a replacement for the former state aid rules is a legal and practical necessity. However, the debate we have had about how the new regime will be used shows that it is much more important than that.

I thank all hon. Members who have worked on the Bill, particularly my hon. Friends the Members for Feltham and Heston (Seema Malhotra) and for Sefton Central (Bill Esterson) for their work in Committee. I repeat the Secretary of State’s thanks to all the Clerks and ministerial officials for getting it ready.

The current Government’s economic record sadly combines the worst of everything. Our long-term growth forecasts are low, our taxes are high, our productivity is appalling, inflation is growing and our trade is shrinking. In short, the Conservative Government have created a high-tax, low-growth economy, so the country needs a plan for growth if we are to generate the living standards and public services that the British people rightly expect. Therefore, how the powers and responsibilities that are contained in the Bill will be used is of major interest to us all.

I want to see some ambition from the Government—not just big talk, but real delivery. Throughout the Bill’s passage, we have tried to tease out the outlines of their strategy, or some indication of their plans, but we are none the wiser, mainly because they do not seem to know what they want to do. For any industrial policy to be successful, its focus must be the long term and its fundamental objectives should be cross party to give industry and firms the reassurance that they need to invest for the future.

This Government cannot even agree with what former Conservative Governments proposed and adopted as policy just a few years ago. I have still heard no clear reason from them as to why the previous industrial strategy and bodies such as the Industrial Strategy Council have been abolished. It smacks of the fundamental short-termism and lack of seriousness that infects the whole Government. That matters because for the powers contained in the Bill to work, they have to be a part of a coherent strategy. I do not believe that we have that.

I do not believe in corporate welfare; it is not the Government’s job to bail out firms that are not viable or to distort fair competition in markets. But I do believe that there is a huge role for the Government in partnering with industry to meet our national objectives, particularly on net zero. A good example of where that support is needed is our energy-intensive sector, which has a significant carbon footprint domestically but which compares favourably to the same industries in other countries when international comparisons are made. I want to see from the Government a coherent and effective strategy to use the powers in this Bill to support these industries because, without that, all we will do is offshore our emissions by making these sectors uncompetitive. At present, we have a Government who are willing to intervene, but whose approach is best described as completely scattergun. I know some Conservative Members are converts to economic intervention, but they have skipped the part where that intervention needs to be driven by purpose, rather than short-term political expediency. Michael Heseltine put it best when he said that the Government appear to have “no coherent approach” and the Prime Minister is just

“lurching from crisis to crisis.”

That is harsh criticism, but it is fair.

In many ways we will not be able to judge the success or not of this legislation until we have learnt more about how the Government intend to use it. Quite simply, the Government must do better. If they had taken our amendments, and those of other colleagues here today, on board, that would have substantially improved what we are being presented with on Third Reading. It would have given us greater transparency to show where public money is going and a commitment that any subsidies help the UK achieve the net zero targets, and ensured that the nations and regions have the powers they need to make the new regime a success. It is a real regret that those amendments are not part of the Bill, but I hope members in the other place will take these arguments up.

To return to my opening remarks, although the Bill is not the one we would have proposed, it is clearly a necessity. We will therefore not be opposing it on Third Reading. However, in the months and years ahead, it will only have meaning for the British people if it is combined with the kind dynamic and coherent policy agenda that so far has eluded this Government at every level.

Photo of Kirsty Blackman Kirsty Blackman Scottish National Party, Aberdeen North 9:01 pm, 13th December 2021

I want to start with a few thanks. I thank staff member Dr Jonathan Kiehlmann and my hon. Friend Stephen Flynn for their assistance on the Bill. I also thank—this shows the seriousness with which Scotland treats this—Cabinet Secretaries Kate Forbes, Ivan McKee and Mairi Gougeon, who have all taken an interest in the Bill and in trying to improve it. We recognise that it is an incredibly important regime and we have significant concerns about it. I wish briefly to comment on amendment 19, which we voted for. We did so not because it was perfect but because it would have made the Bill marginally better than it is currently. So the amendment is not something we would necessarily back wholeheartedly, but it is better than the current Bill as drafted. I thought it would be best to make that clear.

The three major concerns we continue to have about the Bill relate to the inclusion of agriculture. Agriculture is not included in subsidy control regimes elsewhere and I do not believe we have heard enough justification from the Minister or the Secretary of State to understand why they have chosen to include agriculture in this scheme. We believe that the scheme is not transparent enough. Indeed, John Penrose tabled a number of amendments to that effect, as did a number of other colleagues across the House. There are significant concerns about the transparency of the subsidy control database in particular, but that also applies to the subsidy regime more widely. I hope that the Government will take these things into account and will consider them as the Bill moves on to further consideration in the other place.

The last issue we have is about climate change, which should form part of the key principles. I know that the principles can be updated, including by future Governments, but, for the Bill to stand the test of time, reaching our net zero targets should have been put at its front and centre. I appreciate the Opposition tabling an amendment to that effect. The Liberal Democrats did the same, as did we. This is so important and we feel that the Minister and the Secretary of State are abdicating some responsibility on that.

Lastly, I wish to thank the Minister for his clarification in relation to interested parties. I very much appreciate him saying what he said at the Dispatch Box on the role of devolved Administrations when it comes to interested parties. That will make a difference to the operation of the Bill and I appreciate that he did that.

Photo of Kwasi Kwarteng Kwasi Kwarteng The Secretary of State for Business, Energy and Industrial Strategy 9:04 pm, 13th December 2021

I am very pleased that there have been as many contributions as there have been. I look forward to taking the Bill forward, as does my hon. Friend the Minister.

Question put and agreed to.

Bill accordingly read the Third time and passed.