Examination of Witness

Subsidy Control Bill – in a Public Bill Committee at 3:00 pm on 26th October 2021.

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Daniel Greenberg gave evidence.

Photo of Caroline Nokes Caroline Nokes Chair, Women and Equalities Committee, Chair, Women and Equalities Committee 3:40 pm, 26th October 2021

We will now hear from Daniel Greenberg, Counsel for Domestic Legislation at the House of Commons. We have until 4 pm for this session. Will you introduce yourself, Mr Greenberg, and perhaps outline which areas you are able to talk on for us, please?

Daniel Greenberg:

Chair, thank you. Yes, I am Daniel Greenberg, Counsel for Domestic Legislation. I was given an indication that the Committee would like me to talk about some of the technical aspects of the devolution interest in the Bill. I am happy to give that and any other technical analysis that the Committee would find helpful. Obviously, I am not here to defend or attack the policy of the Bill in any way.

Photo of Seema Malhotra Seema Malhotra Shadow Minister (Business, Energy and Industrial Strategy)

Q Thank you, Mr Greenberg, for coming to give evidence. We have had some representations to suggest that there could be an incompatibility between, for example, the economic competence of devolved Administrations and the way in which the Bill’s regime is set out. What is your view of the schedules, the interpretation of economic competence and, in schedule 3 I think, the application of principles and the definitions of what is included in primary legislation—which can obviously be more than Westminster—in relation to devolved Administrations and the Bill?

Daniel Greenberg:

Thank you. Chair, would it be convenient if I answered that question by contextualising it in the overall structure of the Bill and said a few words about how devolution appears in the Bill not on the surface, but underneath it, and requires to be brought in in relation to the principles mentioned?

Daniel Greenberg:

Where I would like to start is to look at the shape of the Bill by reference to the concept of subsidy as set out in the Bill. I hope that the Member who asked me the question forgives me: this is an answer to your question. It will be slightly long, but I am hoping that at the end I will have answered most of the questions on devolution that Members have.

To take you back to what a subsidy is, we can see in clause 2 that the focus of the Bill is inevitably on things that affect the United Kingdom as a whole, or things that go on within the United Kingdom between the different components and parts of the United Kingdom. If we look at subsection (1)(d)—page 2, lines 16 to 21 —it explains a lot about the shape of everything that follows in the Bill.

I keep mentioning “shape”, because I want the Committee to understand that the Bill inevitably reflects macroeconomic policy. That is what it is there to do. Inevitably, there will be lots of connections, co-ordination, consultation and interaction of lots of different kinds—I will come back to some specifics soon—under the surface of the Bill. It may be that the question I have just been asked and other questions on devolution arise because, on its surface, the Bill is arguably a little short on explanation of some of the systems and mechanisms that will inevitably be required to go on underneath the surface in order to reflect the economic competencies of the devolved Administrations and the devolved legislatures.

To put it in a nutshell, everything that is required by way of accommodating, reflecting and understanding those devolved competences and powers is capable of taking place with the shape of the Bill as it is now, but it perhaps needs to be brought out more, either on the face of the Bill or in the explanatory materials.

Chair, I hope I am not yet trespassing on your patience. Am I still close enough to the question to be allowed to continue?

Daniel Greenberg:

I mention explanatory materials because I expect that as well as the principles in schedule 3, you may want to ask me about the relationship between the United Kingdom Internal Market Act and this Bill, and indeed the relationship between this Bill and the Northern Ireland protocol, all of which are key devolution areas. It is arguably surprising that the relationship between the Bill and the internal market Act is not addressed more expressly on the face of the Bill, but whether or not it is addressed expressly, the shape of the Bill allows it to be accommodated. I do not know whether as a Committee, as you move forward, the interplay between the sides will encourage the Government to put more of this on the face of the Bill, but what I do think is that all members of the Committee may consider whether the explanatory notes could helpfully be enlarged to explain how these different mechanisms fit together.

Coming back to the specifics of the question, because the shape of the Bill is about subsidy that is macroeconomic, it has to focus on international obligations, and international obligations are obligations of Her Majesty’s Government. That brings us to the next point: throughout the Bill, you see “Secretary of State, Secretary of State, Secretary of State”—all powers of HMG—and you think, “Hold on, the devolved institutions are also public authorities. They appear in the list of public authorities in clause 6, so why is it that they do not also share Secretary of State powers?” The answer is very simple: when you are dealing with international obligations of the UK, that has to be dealt with by central Government but, again, doesn’t that have to be done in consultation with the devolved Administrations? Of course it does. With co-ordination with the devolved Administrations? Of course it does. With mechanisms for encoding that co-ordination and consultation into the way the Bill operates? Of course.

At the moment, I am absolutely sure that the Government intend that to work under the Bill, and it can work under the Bill. Whether that could be shown more on the surface of the Bill or in the explanatory notes is a matter for the Committee. Does that help at all?

Photo of Seema Malhotra Seema Malhotra Shadow Minister (Business, Energy and Industrial Strategy)

Q Yes, that is very helpful. Just coming back to the specific point that we have heard from the Welsh Government about whether there can be interference with the economic competence that the Welsh Government have—that is one example—is your view that it need not be incompatible, but that needs to be made clearer?

Daniel Greenberg:

The extent to which it needs to be made clearer is obviously for the Committee as it proceeds through the Bill. That is why I specifically mention explanatory material, because I would remind the Committee that it is so much easier to have things made clear in explanatory notes, explanatory memorandums, memorandums of understanding, quasi-legislation generally and explanatory material than it is to secure an amendment to the shape of the Bill, particularly because the simple answer to the question you were implying—“Could these powers be used to interfere with devolved autonomy?”—is “Of course they could. No question.” The question for you, therefore, is “Are there mechanisms by which they will not be used to do that?” Clearly, this sits alongside the United Kingdom Internal Market Act. It does not repeal that Act. It sits alongside the Northern Ireland protocol. Clearly, the Government expects and intends for them to operate in unison. The question for you is: can that dovetailing be addressed more expressly?

Photo of Seema Malhotra Seema Malhotra Shadow Minister (Business, Energy and Industrial Strategy)

I had a question about the Northern Ireland protocol, but I am conscious of the time.

Photo of Kirsty Blackman Kirsty Blackman Scottish National Party, Aberdeen North

Q You spoke about the generalities of where it says Secretary of State quite regularly in the Bill, Daniel. Clause 70 specifically talks about interested parties and those people who are able to call in a subsidy; it mentions the Secretary of State, but also persons

“whose interests may be affected”.

In your view, could we ensure that Scottish Ministers, Northern Irish Departments or Welsh Ministers have that ability by amending that section, by the Minister saying in Committee that that is the case, or by changing the explanatory notes? Would those all be routes that would allow those three authorities to have the ability to refer as well?

Daniel Greenberg:

From a purely technical perspective, I think that is on the cusp of the things that I would be comfortable encouraging you to simply put in the explanatory notes. It either is an interested party or it is not. If it is not, saying in the explanatory notes that you hope it is may not be enough to get you over the line, in contrast to the Minister helpfully saying so to the Committee.

If I may briefly speak about the difference between explanatory notes and a Pepper v. Hart statement, Chair? The official explanatory notes are a source that the courts will have regard to in determining doubts and questions about the law. A Pepper v. Hart statement is the law: it is part of the legislative intention when the Act is passed, so it is more powerful.

However, if the Act says “dog” but the Minister says to the Committee, “We meant cats as well”, that will not help. You can have all the ministerial statements you like, but if it don’t go woof, it isn’t covered. However, if you have a clear understanding that it is expected that interested parties are to include the devolved Administrations, then the Minister saying that that is the Government’s legislative intent in using that phrase gets you well over the line. Would you then need an amendment? No.

Photo of Kirsty Blackman Kirsty Blackman Scottish National Party, Aberdeen North

Q Another additional question on that—the other thing that has concerned me, as well as a number of the witnesses today, is the amount of stuff that is in regulation and guidance, not in primary legislation. Do you feel that the balance has shifted towards more things being done by guidance and regulation in recent years? Do you feel that there is a significant portion of the Bill that is being done by regulation and guidance, rather than through primary legislation, or even by affirmative procedure?

Daniel Greenberg:

Yes, okay, there is a bit of a shift, but it has been quite slow. People have been complaining about the increase in skeleton Bills by successive Governments since I started in public service 150 years ago. So, there is an increase, but it has been gradual.

However, if I may say so, you should not be complaining about that here. My whole point is that this is inevitably a Bill about structure and shape. Those of you considering the devolved institutions and other interests want to ensure that you have the flexibility to move forward while balancing everybody’s interests. The best way to do that without having to come back to Parliament each time is to ensure you have powers with a mechanism for consultation and co-ordination. Then, you know that that process of co-ordination will have the powers necessary to give effect to it through subordinate legislation and quasi-legislation. You should not be complaining on this occasion, because the Bill needs to be skeletal in order to give the flexibility for the ongoing relationships between the different powers concerned by the substance of the Bill. Does that help?

Photo of Seema Malhotra Seema Malhotra Shadow Minister (Business, Energy and Industrial Strategy)

Q I did. You referred to one of the contextual pieces of legislation. There is the Northern Ireland protocol as well. There has been some debate about whether the Bill is compatible and whether there could be legal challenges to subsidies, particularly in Northern Ireland, and whether that could have an impact on subsidy schemes that are UK wide. I would be grateful for your interpretation of the legal framework on that.

Daniel Greenberg:

You are not asking me for a compatibility opinion, and I would not give you one, but I will draw your attention and the attention of the Committee to a point for your consideration as you go forward, which is to be sure that you understand the focal points of the protocol in relation to this Bill.

Primarily, we have to have regard to article 6 of the protocol and remind ourselves that the protocol is designed to ensure that it does not prevent market access within the UK and that the international requirements and commitments are protected. One of the issues about article 6 is that it does have the kind of mechanism that we were discussing before, because the protocol has of course the Joint Committee, which is going to be very significant.

So you start off by looking at article 6. You ask yourself, “Will those protections be consistent with this Bill, and how will the Joint Committee be capable of applying its mechanisms in a way that join up with the mechanisms that you develop in relation to the Bill?”

Then we move to article 10, which in substantive terms is the key article for you, because it deals with state aid. The question to ask in relation to compatibility is this: is there anything in the Bill that insists upon a measure, in respect of measures that affect trade between Northern Ireland and the Union, that being the test in article 10? As I have already said—I am perhaps slightly risking something close to an opinion here—I do not see anything, because the mechanisms of the Bill are deliberately so wide.

Perhaps it is helpful to say that we often have this in law. You look at something and you say, “Hold on—the Minister could exercise that in a way that is incompatible with human rights and the protocol.” That does not matter—that is not the question. The question is, “Would the Minister be obliged to exercise it in a way that is incompatible?” If the Minister would not be obliged to exercise it in a way that is incompatible, then in itself it is not incompatible, and your next question is, “Do we have mechanisms built in to make sure that the powers are only exercised in the way that is compatible?” That is article 10.

Finally, on the article 16 safeguards and the exception, which was of considerable controversy earlier on this year, that looks at economic, societal or environmental difficulties that are liable to persist and allows unilateral action as safeguarding measures in relation to those difficulties. I think you will want to ask yourselves, not is this compatible—it clearly is—but how continued compatibility would be assured in a case where the article 16 safeguards were being invoked. For me, that is the more interesting question for you.

Photo of Caroline Nokes Caroline Nokes Chair, Women and Equalities Committee, Chair, Women and Equalities Committee

Thank you very much for your contribution, Mr Greenberg. That brings us to the end of the session.