Clause 80 - Power to suspend exemption for supplies used in recycling processes

Finance (No. 3) Bill – in a Public Bill Committee at 1:45 pm on 9 June 2011.

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Question proposed, That the clause stand part of the Bill.

Photo of Kerry McCarthy Kerry McCarthy Shadow Minister (Treasury)

I have a few questions about the process that led to clause 79—

Photo of Kerry McCarthy Kerry McCarthy Shadow Minister (Treasury)

I do not want to talk about clause 79, Mr Gale. I promise that you will understand if I continue for a moment.

Clauses 79 and 80 are to do with the European Commission and state aid approval. The Government withdrew clause 79 because the Commission has granted permission for the exemption to continue, but that is not the case with clause 80, which is why the Government are not withdrawing it.

What difference is there between the processes for the two clauses, which resulted in delay but the eventual success of our request for state aid approval in respect of transport supplies under clause 79, and is the Minister continuing negotiations with the Commission on clause 80? If so, what stage have they reached?

Photo of Justine Greening Justine Greening The Economic Secretary to the Treasury

The shadow Minister has set out some of the background as to why clause 79 is redundant. As she said, in some respects it is linked to clause 80, and we are in a not dissimilar process with the EU. Our officials are engaged in a continuing dialogue with representative bodies of the sectors concerned, so that we can obtain and present data to support the case for approval. The stronger the economic data, the better. I shall briefly set out the sectors that will be affected by the clause, and why we need the power to suspend the exemption.

Clause 80 is similar to clause 79, but it applies to an exemption that benefits certain steel and aluminium recycling processes. State aid approval has not yet been received; as I said, officials are busy working with the sectors concerned to build a case that we can take the EU to get the exemption put back in place. In the meantime, the clause, supported by resolutions, will give the Treasury the power to suspend the metal recycling exemption and to reinstate it later through secondary legislation. The changes made by the clause will not have substantial economic impact, provided that the exemption is suspended for only a short time and reinstated with retrospective effect from 1 April, as we hope to be able to do.

The hon. Lady is clearly concerned about the impact of the provision, but we expect that fewer than 30 businesses will be affected. The industry appreciates the Government’s legal position; we have been engaged with the Commission to secure re-approval since last summer. It has been a long and involved process, but we are working closely with the industry and the Commission to ensure that we secure state aid approval. We had hoped to achieve it prior to the expiry of the previous exemption, but that did not prove possible given the timelines to which the Commission is working. However, we remain hopeful that we will be able to give backdated approval soon.

To remain compliant with European law, we had to suspend the exemption on 1 April while we continued to seek state aid re-approval for the recycling exemption. The suspension will be revoked if and when the approval is received, which I hope will be soon. I hope that that answers the hon. Lady’s question.

Question put and agreed to.

Clause 80 accordingly ordered to stand part of the Bill.

Clauses 81 and 82 ordered to stand part of the Bill.

Schedule 21 agreed to.

Clause 83 ordered to stand part of the Bill.

Schedule 22 agreed to.