Clause 81 - Modifications to subsidies and schemes

Part of Subsidy Control Bill – in a Public Bill Committee at 12:30 pm on 18 November 2021.

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Photo of Paul Scully Paul Scully Parliamentary Under-Secretary (Department for Business, Energy and Industrial Strategy), Minister of State (London) 12:30, 18 November 2021

I am happy to formally write again to clarify the situation, if necessary, but I am pretty sure that I would be repeating what I have just said in response to the hon. Member for Aberdeen North, which will be in the Official Report.

The likelihood and unlikelihood point goes back to the fundamental issue of the regime being a permissive one. If we regimented everything, we would be recreating the EU state aid scheme, which is far more prescriptive.

On the comments about the increases in values and times, let me cover why we believe that the 25% increase is appropriate. Even the strictest subsidy control regime in the world provides for the types of permitted modifications that are included in the clause. The EU state aid regime allows for an increase of up to 20% in the original budget of an existing aid scheme before public authorities need to notify and seek approval from the EU Commission. As I have said, the regime in the legislation is a far lighter-touch regime. I do not mean to suggest that we should start benchmarking every aspect of our subsidy control framework against EU state aid rules, but it is worth noting that the amendments would make the UK’s rules on modifying subsidies far more restrictive than the previous bureaucratic rules. By providing for that level of budget uplift, clause 81 will help to reduce unnecessary processes and provide maximum certainty to public authorities and recipients of subsidies.

As I stated when addressing the preceding amendments, clause 81 allows for permitted modifications to be made for subsidies or schemes without them being treated as a new subsidy or scheme. Amendment 84 would remove from the list of permitted modifications the extension of a subsidy scheme by up to six years. Any extension to a scheme beyond the date on which it would otherwise have been terminated would therefore be treated as a new scheme.

There will be times when public authorities, in monitoring the outcomes of a subsidy scheme, decide it is beneficial to moderately prolong the length of the scheme. If a public authority incurs delays in rolling out the new scheme, for instance, it may wish to bridge the gap by extending the existing scheme. It is appropriate to provide public authorities with the ability to extend a scheme without requiring an assessment against the subsidy control requirements, as an extension of up to six years is unlikely to greatly increase any negative effects stemming from the scheme.