Subsidy Control Bill

Public Bill Committee, 26 October 2021.

Virendra Sharma (Labour, Ealing, Southall)

Before we go further and begin, I have some preliminary announcements to make. May I encourage Members to wear masks when they are not speaking? That is in line with current Government guidance and that of the House of Commons Commission. Please give each other and members of staff space when seated and when entering or leaving the room. Hansard colleagues will be grateful if Members could email their speaking notes hansardnotes@parliament.uk. Please switch electronic devices to silent. Tea and coffee are not allowed during sittings.

Today, we will first consider the programme motion on the amendment paper. We will then consider a motion to enable the reporting of written evidence for publication and a motion to allow us to deliberate in private about our questions for the oral evidence session. In view of the time available, I hope that we can take those matters formally without debate.

Virendra Sharma (Labour, Ealing, Southall)

Copies of the written evidence that the Committee receives will be made available in the Committee Room and circulated to Members by email.

Examination of Witnesses

Virendra Sharma (Labour, Ealing, Southall)

Before we start hearing from witnesses, do any Members wish to make a declaration of interest? No.Q

We will now hear oral evidence from Steve Fothergill, national director of the Industrial Communities Alliance, who is here in person, and Dr Serafin Pazos-Vidal, head of the Brussels office for the Convention of Scottish Local Authorities, who is appearing virtually. Before I call the first Member to ask a question, I remind all Members that questions should be limited to matters within the scope of the Bill and that we must stick to the timings in the programme motion that the Committee has agreed. For this panel, we have until 10.30 am. Will the witnesses please introduce themselves?

Virendra Sharma (Labour, Ealing, Southall)

Thank you. Professor Fothergill, you have one minute for a brief statement, because time is very limited.

Seema Malhotra (Labour/Co-operative, Feltham and Heston)

Thank you, Professor Forthergill, for joining us today. I have two brief questions on your comments about the interface between the Bill and the levelling-up agenda. First, what more needs to be done to the Bill to strengthen the involvement and the achievement of the levelling-up agenda in relation to targets and policy? Should there be reporting on that? Should the Competition and Markets Authority’s report consider the geographical distribution of subsidies, for example?Q

Secondly, do you think that the UK Government and the devolved Administrations will have a common way of delivering policy goals under the subsidy control principle—on market failure and equity rationales, for example? How might that be interpreted by different levels of government? Does more need to be done for a stronger relationship between Westminster and the devolved Administrations and local government on the implementation of the measures?

Virendra Sharma (Labour, Ealing, Southall)

Q Thank you. Dr Serafin, would you wish to comment?

Seema Malhotra (Labour/Co-operative, Feltham and Heston)

Q May I follow up on how the guidance should be developed more inclusively? Where in the Bill are there gaps relating to the involvement of the devolved Administrations? Is it in the development of the guidance? Are there powers for the Secretary of State that the devolved Administrations do not have, such as the ability to call in and make challenges? I would be very grateful for your view on that.

Bill Esterson (Labour, Sefton Central)

Good morning, Dr Pazos-VidalQ and Professor Fothergill. You have talked a lot about the assisted area map, Professor, and I certainly take your points about its history and benefits, not least as an MP from Merseyside, which has benefited enormously from state aid over many years. However, there are some criticisms of the way that assisted area maps interact with area boundaries. For example, there are cases where an area that needs investment and support is inside the assisted area, yet the businesses that could deliver that support are outside. Could you say a bit about what the counter-argument is, and what the answer to those sorts of boundary issues might be? I suspect that may be part of our deliberations.

Virendra Sharma (Labour, Ealing, Southall)

Q Would you like to add anything, Dr Pazos-Vidal?

Virendra Sharma (Labour, Ealing, Southall)

Dr Pazos-Vidal, could you speak up a little bit?

Simon Baynes (Conservative, Clwyd South)

Thanks to both our witnesses for their excellent presentations this morning. I want to look at this issue of the maps from the point of view of a north-east Wales MP. That area has really missed out on a great deal of subsidy compared with west Wales and south Wales, as you mentioned, Professor. That is obviously due to the assisted area map. You raised points about perhaps questioning exactly Q how that is drawn up. As a former county council and town councillor, I feel that it is often at the council level that the areas of deprivation are properly understood, rather than at the devolved Administration level. I feel that the Subsidy Control Bill gives us an opportunity to recast the way in which we provide subsidies, so that we are more flexible and not so obsessed by area maps; you just alluded to their shortcomings. Another Member mentioned the question of how you deal with issues at the boundaries, which is always a major problem. Does the Bill gives us an opportunity to be more flexible and drill down to the local level, which is often where the knowledge lies of what should be done about areas of deprivation?

Virendra Sharma (Labour, Ealing, Southall)

A lot of Members have indicated that they want to speak now. I have the list and I will call those whose eye I have caught—I will try to call Members whom I have seen first. Seema Malhotra, do you have a question?

Seema Malhotra (Labour/Co-operative, Feltham and Heston)

I am happy to come back in later.

Virendra Sharma (Labour, Ealing, Southall)

Thank you. Could I have Stephen Flynn?

Stephen Flynn (Scottish National Party, Aberdeen South)

Thank you, Professor Fothergill and DrQ Pazos-Vidal. A lot of what we have heard from you both has been incredibly helpful, but it perhaps shows the limitations of the Bill—we are talking about is what is not in the Bill. Dr Pazos-Vidal, in your last answer you touched on the impact that the lack of detail and certainty could have. I would like to tease that out a little bit more with both of you. What impact do you think the lack of detail and certainty behind the provisions in the Bill will have on the devolved nations in the UK when it comes to making investment decisions? What impact will it have on local government and the decisions that it makes? Finally, Dr Pazos-Vidal, I think you said a wee while ago that the Bill as it stands is not reflective of the territorial constitution of the UK. Could you elaborate on that statement?

Virendra Sharma (Labour, Ealing, Southall)

I am going to request that Members are brief, because many of you wish to ask questions.

Paul Scully (Conservative, Sutton and Cheam)

May I ask some brief questions, for some brief answers, to get through this? This is a permissive structure rather than asking for explicit permission. When you ask for explicit permission from the state aid regime in the EU, essentially the assisted area maps give an exemption to having to ask for that permission in the first place and wait those months to do it. What is the purpose of the maps that you are talking about, apart from “within guidance” rather than because no exemption is requiredQ ?

Paul Scully (Conservative, Sutton and Cheam)

Q Do you agree that the reason we need to level up is that that system has not worked to date?

Paul Scully (Conservative, Sutton and Cheam)

Q My final question is whether there is any example beyond the EU that we can look to? We are flipping that approach on its head: is there any other trading bloc or country that has a wider regime than the subsidy control regime that we are proposing?

Paul Scully (Conservative, Sutton and Cheam)

Dr Pazos-Vidal, on that last question about international comparisons, do you have any view?Q

Virendra Sharma (Labour, Ealing, Southall)

Thank you. I am going to call Kirsty Blackman first, then Steve Kinnock, Kevin Hollinrake, Alexander Stafford and Mr Millar. As already indicated, and looking at the time, could we stick to brief questions and brief answers to carry on up to the allocated time?

Kirsty Blackman (Scottish National Party, Aberdeen North)

I have two questions, but the first one is a yes/no answer. The first is: has COSLA been consulted on what the forthcoming guidance is likely to say? The second question is for both of you. Schedule 1, principle F says:Q

“Subsidies should be designed to achieve their specific policy objective while minimising any negative effects on competition or investment within the United Kingdom.”

Can I ask you both if that sounds like it is meaningful, and if it is meaningful, what does it mean?

Stephen Kinnock (Labour, Aberavon)

IQ have a question for Professor Fothergill about aid intensity. As we know, under the previous state aid regimes, there were upper limits on the percentage of state aid that could be given. There is no guidance on what the aid intensity percentages should be in this legislation. Could you briefly set out what your thoughts on that are —I would certainly assume that aid intensity should be higher than was the case previously—and why that should be?

Kevin Hollinrake (Conservative, Thirsk and Malton)

AreQ you talking about the turnover?

Kevin Hollinrake (Conservative, Thirsk and Malton)

Of turnover?

Kevin Hollinrake (Conservative, Thirsk and Malton)

Q Subsidies are allowed only for enterprises. Are we missing anything out? Does that mean that social enterprises are excluded? Are the thresholds—£500,000 and £315,000—the right ones? That is pretty much mirrored in what we have already in the EU. Is that the right level? Should it be lower or higher for scrutiny purposes, and should there be a central register of subsidies, rather than those being held at local authority level?

Kevin Hollinrake (Conservative, Thirsk and Malton)

Q You do not have to report it.

Kevin Hollinrake (Conservative, Thirsk and Malton)

Q But £500,000 is not a small amount.

Kevin Hollinrake (Conservative, Thirsk and Malton)

Q There are two different levels: £500,000 inside a scheme and £315,000, accumulative, outside a scheme. Do you think those are the right levels?

Kevin Hollinrake (Conservative, Thirsk and Malton)

Yes.

Seema Malhotra (Labour/Co-operative, Feltham and Heston)

Q May I ask for some final clarification on that? Part of the question was about the reporting. If all the decisions have been made and the work has been done on a subsidy, reporting—putting an entry on the database—should not be an onerous matter. Are you objecting to that also?

Virendra Sharma (Labour, Ealing, Southall)

Dr Serafin, do you wish to add anything, briefly?

Virendra Sharma (Labour, Ealing, Southall)

I am afraid that this might be the last question.

Alexander Stafford (Conservative, Rother Valley)

On the map situation, it seems to me that you are trying to recreate the previous situation with the EU. If you mention Grimsby, you might as well mention Rother Valley. I can tell you that the previous system does not work. My concern is that if areas get more prosperous, they will be over-subsidised, and if areas get less prosperous over the next five or 10 years, they will miss out on subsidies. To me, there is no flexibility with the map. Could you talk to me briefly about how you will keep it flexible, so that when areas change financially, they can benefit or, equally, come out of the system we have in mind?Q

Virendra Sharma (Labour, Ealing, Southall)

I am afraid that brings us to the end of the time allotted for the Committee to ask questions. I thank the witnesses on behalf of the Committee.

Virendra Sharma (Labour, Ealing, Southall)

We will now hear oral evidence from Thomas Pope, deputy chief economist at the Institute for Government, who is here in person, and Professor Stephanie Rickard, professor of political science at the London School of Economics, who is appearing virtually. For this session, we have until 11.25 am. Could the witnesses please introduce themselves?

Virendra Sharma (Labour, Ealing, Southall)

Would the witnesses please give a one-minute statement?Q

Virendra Sharma (Labour, Ealing, Southall)

Thank you. I call Seema Malhotra.

Seema Malhotra (Labour/Co-operative, Feltham and Heston)

Q Thank you, Mr Sharma. I thank Professor Rickard and Thomas Pope for coming in today to give evidence. I will pick up on the issue of transparency first. What specific additions to the Bill might you recommend to increase transparency? I am also interested in your view on whether there should be some form of reporting for all subsidies under the Bill or whether there should be a threshold. Could that be done in a more streamlined way to allow for that transparency?

Could I also ask for your view on whether the six-month reporting deadline is necessary? In your view, could that threshold be reduced if decisions had already been made about the subsidy? Those questions are for both our witnesses. Finally, do you believe that the one-month challenge window is sufficient in the context of how the scheme is being designed and is likely to operate in order to make sure there can be an effective challenge to any subsidies?

Seema Malhotra (Labour/Co-operative, Feltham and Heston)

Q Can I clarify one thing, because I want it to be clear? Being below £315,000 means that the subsidy does not need to comply with the principles—does not need to be checked against those—and does not need to be reported?

Stephen Flynn (Scottish National Party, Aberdeen South)

Q Thank you both for your contributions so far. Thomas, if I picked you up correctly at the start, you made a reference to damaging schemes. Can you elaborate on that and what you are thinking in that regard?

I also have a question for both of you. Thomas, you touched on this in your remarks in relation to this being a skeleton of a Bill. We heard earlier from Professor Fothergill and Dr Pazos-Vidal about the potential implications of that lack of clarity about what sits behind the Bill and what the Government will be coming forward with: statutory instruments or secondary legislation. Do you see the lack of detail in the Bill having a consequence for the investment decisions of public bodies right across the UK?

Seema Malhotra (Labour/Co-operative, Feltham and Heston)

Q Can I ask for one quick point of clarification? Would that mean, Professor Rickard, that you would widen the definition of interested parties to include those groups explicitly?

Seema Malhotra (Labour/Co-operative, Feltham and Heston)

Q Would that include the devolved Administrations?

Simon Baynes (Conservative, Clwyd South)

Q Thank you, witnesses, for your contributions this morning. Which subsidy system internationally would you consider the best role model for the UK, and why?

Simon Baynes (Conservative, Clwyd South)

Q But is there one country, in the overall scope of what we are talking about—not just transparency but effectiveness—that you think is a role model?

Simon Baynes (Conservative, Clwyd South)

Thank you, Professor. Thomas?

Simon Baynes (Conservative, Clwyd South)

Q Is there one country that you particularly admire, and how do they do it?

Bill Esterson (Labour, Sefton Central)

Q You have both outlined your concerns about the system in relatively general terms. Do you have specific advice on what you would do differently on some of the challenges? Professor, could you speak about the challenges in self-certification and marking your own exams, which you have referred to? Mr Pope, perhaps you could address some of the timeframe points that you started to touch on?

Bill Esterson (Labour, Sefton Central)

Q Before I ask Mr Pope to answer the same question, how would you make that information more widely available and easier to find?

Bill Esterson (Labour, Sefton Central)

Q Thanks very much. I will ask you the follow-up question as well, Mr Pope: if not six months, how quickly should that information be there?

Seema Malhotra (Labour/Co-operative, Feltham and Heston)

Q To clarify, that is the maximum amount.

Kirsty Blackman (Scottish National Party, Aberdeen North)

Q My questions focus particularly on chapter 3, which is about the subsidy database and transparency. Do you have any idea what the logic is behind the tax entries in the database? It seems to me that if something relates to a subsidy measure that is taxed, it may not need to be reported for almost two years—or even longer—because it is a year past the first declaration on the tax. Does that make sense, or would it be better to have something different?

I have two more questions. In the event of cumulative subsidies, where an organisation receives various subsidies from various organisations and it takes them over the threshold of the three-year period, who is responsible for ensuring that that is put on the subsidy database? I am not clear on that.

Lastly, EU state aid rules have a number of de minimis exemptions for agriculture and various other things. Does the fact that the Bill does not include them cause problems, or is it more of a tidying-up exercise?

Kirsty Blackman (Scottish National Party, Aberdeen North)

Q To follow that up, probably with Mr Pope, it says specifically that indirect subsidies are to be included. In the event that an indirect subsidy occurs, who is responsible for ensuring that there is transparency and information about that?

Andrew Bowie (Conservative, West Aberdeenshire and Kincardine)

Thank you very much for your evidence this morning. Coming to Mr Pope first, you spoke about the domestic subsidy control regime being almost unique, and said that we were charting our own course. On balance, do you think having a subsidy control regime is a good thing?Q

Andrew Bowie (Conservative, West Aberdeenshire and Kincardine)

Q Why do other countries around the world choose not to do it?

Kevin Hollinrake (Conservative, Thirsk and Malton)

Q Professor Rickard, Mr Pope said that he felt that the level for reporting should be lower than £500,000; it should be £175,000. You agreed, but you did not specify a level. What level do you think it should be?

Kevin Hollinrake (Conservative, Thirsk and Malton)

I think it’s the EU level.

Seema Malhotra (Labour/Co-operative, Feltham and Heston)

Q I want to follow up on a couple of points, starting with the duty to provide pre-action information—primarily, clause 76. There are ways in which a public authority may refuse or suggest that it would be difficult to give information based on a number of categories—commercial sensitivity, confidentiality and so on—without it seeming to be clear how that could then be challenged. I wonder whether transparency, and being able to bring a challenge with the information needed, needs to be stronger, or whether the role of the CMA might need to be stronger to support requests for information.

Seema Malhotra (Labour/Co-operative, Feltham and Heston)

Q May I ask one further follow-up question in relation to this? I am not saying that there would be, but there may be circumstances in which accurate information is not always reported. What mechanisms do you see in the Bill—or does there need to be more on this—in relation to potential audit and checking of the accuracy of the information being submitted, and who should be doing that?

Kirsty Blackman (Scottish National Party, Aberdeen North)

Q Professor Rickard, you mentioned the subsidy database that there is already. I have had a bit of a look at that. Do you think that it is a model for how we should take this forward, or do you think that there are significant amounts of information that we need to add to it in order that it will make sense to people? You did touch on this, but could you just expand on it?

Seema Malhotra (Labour/Co-operative, Feltham and Heston)

Q I am keen to get your views on the subsidy advice unit and its role, responsibilities and powers as defined in the Bill. Do you think that the unit should have some further external voices on it, whether on the board or involved in its work? It seems to have a huge amount of responsibility, but its membership can only be drawn from within the CMA, from which panels might be appointed to undertake reviews. To give confidence, a process of review will need to be robust and have knowledge of devolved competencies, regional issues and so on. Do you think the unit will be strong enough, or do you think it needs some adaptation in order to make it the most effective it needs to be?

Virendra Sharma (Labour, Ealing, Southall)

I am afraid that brings us to the end of the time allotted for the Committee to ask questions and, indeed, for this morning’s sitting. I thank our witnesses, on behalf of the Committee, for their evidence. The Committee will meet again at 2 pm this afternoon here in the Boothroyd Room to continue taking oral evidence.

Examination of Witness

Caroline Nokes (Conservative, Romsey and Southampton North)

We will now hear from Dr Roger Barker, director of policy and corporate governance at the Institute of Directors, who is appearing virtually. We have until 2.30 pm for his evidence. Will the witness introduce himself for the record?

Caroline Nokes (Conservative, Romsey and Southampton North)

Would you like to make an opening comment?

Seema Malhotra (Labour/Co-operative, Feltham and Heston)

It is a pleasure to serve under your chairship, Ms Nokes.Q44

Thank you for giving evidence to us today, Dr Barker. I shall start with a more general question about your view of the Bill and the regime as a whole. Where do you see the opportunity for small businesses to work towards the Government’s objectives of levelling up and net zero that have been talked about?

Seema Malhotra (Labour/Co-operative, Feltham and Heston)

Q You have said this week that grants—or subsidies—made under the global Britain investment fund should have more conditionality associated with them to ensure that they support long-term commitments into the UK as well as levelling up. Do you believe that that Bill does enough to set out those goals? Is even net zero sufficiently enshrined in how subsidies should be used and their impact evaluated?

Seema Malhotra (Labour/Co-operative, Feltham and Heston)

Q In your view, how and where do you think that could be strengthened in the Bill? We have also heard from other witnesses on whether there should be an equivalent, or a successor, to the assisted areas map, which is currently used in the EU, and which we also had, in some form, as a predecessor. Do you think that, at the very least, we need something tighter around areas of economic disadvantage, and a definition of what that might be—levelling up also may be within regions, as well as between regions—to provide some clarity for businesses that may be in smaller areas of disadvantage, but in a region that is more prosperous?

Seema Malhotra (Labour/Co-operative, Feltham and Heston)

Q Do you have any concerns relating to transparency? There is a sort of de minimis threshold suggesting that under £315,000, those subsidies will not be subject to the controls in the Bill; they will not be reported. Do you have concerns about what that could mean for knowing whether subsidies have actually been implemented—subsidies that may be supporting particular enterprises without the visibility of that for other businesses?

Seema Malhotra (Labour/Co-operative, Feltham and Heston)

Q Finally, on that point, do you think that £315,000 or £500,000 as a threshold for subsidies under a subsidy scheme is too high?

Simon Baynes (Conservative, Clwyd South)

Thank you for your time this afternoon, Dr Barker; it is much appreciated. I wanted to look at the part of the Bill to empower local authorities, public bodies and central and devolved Governments, particularly the public bodies aspect. Do you see this as a welcome broadening-out of the routes by which subsidies can be brought to business, not only through central devolved Governments but through local authorities and public bodiesQ ?

Stephen Flynn (Scottish National Party, Aberdeen South)

Thank you for your helpful answers and input so far, Dr Barker. I think earlier you alluded to—those who gave evidence this morning certainly alluded to it—the lack of detail behind the Bill, the lack of guidance and the powers that sit with the Secretary of State. That prevailing Q situation is unlikely to change before the Bill comes into law. Do you think that is a help or a hindrance to businesses as it stands?

Secondly, we know that historically the UK’s spend when it comes to state aid, as it is more commonly known, has fallen well below that of European partners. Do you think the Bill will change that in any way, shape or form? Is there any indication in the Bill as it stands that it will change, certainly from a business perspective?

Bill Esterson (Labour, Sefton Central)

Good afternoon, Dr Barker. I would like to go over a few things that you said and put them back to you to see if you have answers to the questions that you put to us. You began by talking about ideally having a system that is easy to navigate with enough certainty that businesses and awarding bodies are not going to be challenged. First, what is your top priority in the legislation that you would like to see strengthened or changed? Secondly—this comes back to a point that you made a couple of times about international comparisons; you talked about what our competitors are doing—what is the top thing that you would like to learn from which is going on internationally? On your point about the subsidy advice unit, is your big concern about lack of capacity in the Competition and Markets AuthorityQ ?

Bill Esterson (Labour, Sefton Central)

Q Sorry to interrupt—I am trying to tease out the issues. That is interesting. I think that you are suggesting that this is going to evolve through practice—that is what you are looking for. Is that a fair characterisation?

Bill Esterson (Labour, Sefton Central)

Q Do you have a specific example from another country that brings this to life for us?

Bill Esterson (Labour, Sefton Central)

Q Thanks. On the point about the SAU and CMA capacity, I think you were saying that your concern there is that you want confidence that there are enough staff to answer the inquiries in a timely fashion, otherwise the whole thing grinds to a halt.

Stephen Kinnock (Labour, Aberavon)

DrQ Barker, may I ask you about your members who are based in Wales, and whether you have had any conversations with them, or feedback from them, about this new legislation? Have they raised any concerns with you about the potential confusion that might exist between the different levels of government, particularly given that they are working in areas that they have come to know as devolved policy areas where their main interface is with the Welsh Government? Have they raised any concerns about this issue with you, or has it not really come on to their radar screens yet?

Stephen Kinnock (Labour, Aberavon)

Q Do I have time for one more, Ms Nokes?

Caroline Nokes (Conservative, Romsey and Southampton North)

indicated assent.

Stephen Kinnock (Labour, Aberavon)

Thank you. It is a question about aid intensity: you will be well aware that under the European Union rules, there were ceilings for how much state aid could be put into businesses, particularly small and medium-sized enterprises, according to certain themes. If you look at the regional aid theme, for example, the ceiling for SMEs was set at a 10% to 20% supplement. Do you think that the ceilings for aid intensity should be raised in the legislation—that is obviously not in the Bill and will probably end up being in the guidelines—so that you can make the kind of contribution that would make a difference to the business choices and models that are being put in place, rather than just putting money into something that would probably be happening anyway?

Caroline Nokes (Conservative, Romsey and Southampton North)

I will bring the Minister in now—I ask him to be conscious that Kirsty Blackman also wants to come in.

Paul Scully (Conservative, Sutton and Cheam)

I am happy to let Ms Blackman go first.

Kirsty Blackman (Scottish National Party, Aberdeen North)

Thank you, Ms Nokes, and thank you, Minister. Dr Barker, you seemed to say that pretty much all of the subsidies should be declared—that there should be transparency about all subsidies. Can I check that was what you said thereQ ?

Kirsty Blackman (Scottish National Party, Aberdeen North)

Q Okay. Perfect. You are in the unusual position where you represent both those people who may receive subsidies and those who may challenge subsidies. Do you feel that the balance is right? Do you feel that, given how the Bill works, your members are likely to be able to challenge subsidies that they feel are disadvantaging them or their organisations?

Paul Scully (Conservative, Sutton and Cheam)

Q Dr Barker, you rightly mention guidance—that you want to give certainty, but not be too prescriptive. I take your point about that, and we need to make sure it works for the whole of the UK. We have a more permissive approach, with the seven principles. Assuming that we set and define subsidies that are of particular interest to your satisfaction—perhaps just the most distorting, rather than the wider definition you were worried about—will that give enough certainty to businesses and the flexibility that they need to be able to prosper in the UK without the more prescriptive system of EU state aid?

Paul Scully (Conservative, Sutton and Cheam)

Q You talked about appeals and taking things to the court. Presumably you think the Competition Appeal Tribunal is the best place for that, with the expertise that is required to hear these kinds of cases.

Caroline Nokes (Conservative, Romsey and Southampton North)

That brings us to the end of this panel. I thank Dr Barker for his evidence this afternoon.

Caroline Nokes (Conservative, Romsey and Southampton North)

We will now hear from George Peretz QC from Monckton Chambers in person. We have until 3 o’clock for this session. Could the witness please introduce himself for the record? If you would like to make a brief opening statement, please do so.

Seema Malhotra (Labour/Co-operative, Feltham and Heston)

Q Thank you for coming in. I have a couple of questions that I want to put to you. I want to understand your view of the CMA’s powers in the Bill, such as whether the CMA should have the power to instigate an investigation or report on its own initiative. Currently, it is able to act only on those that are referred to it. Would it be desirable for the CMA to have further powers and, in your opinion, why would that be beneficial?

Seema Malhotra (Labour/Co-operative, Feltham and Heston)

Q That raises quite a serious issue about possible gaps in the regime. Under clause 55, there is the opportunity for the Secretary of State to call in a proposed subsidy or subsidy scheme. Do you think that is sufficient under the scenario that you have outlined, whereby there may be an example of tax treatment that has the same effect as a subsidy but is not on the transparency database? In such a scenario, do you interpret the wording of clause 55 to be enough for the Secretary of State to call that in, or do you think the wording needs to be tightened to allow it to be clearer? For example, it might be something that appears to be a subsidy and would therefore go to the CMA, rather than what might happen under clause 71, which would be for it to go to the tribunal.

Seema Malhotra (Labour/Co-operative, Feltham and Heston)

Q May I ask a final question on that? I think that has highlighted what seems to be the asymmetry between the powers of the Secretary of State and of the devolved Administrations in being able to call in and challenge subsidies. Do you think it is important to look at amending this area of the Bill? I am thinking about the need to have an integrated and lasting four-nation settlement. What do you think the consequences of not doing that will be?

Secondly, public interest bodies that you might normally expect to be able to look at and challenge decisions are currently not defined as interested parties. How important do you think it is to revisit the definition of interested parties?

Stephen Kinnock (Labour, Aberavon)

Q I have two questions, Mr Peretz. The first is around the idea of assisted area maps; do you think there is a connection between the need for an assisted area map and the commitments that were made in the TCA? The joint declaration on subsidy control policies within the TCA says:

“Subsidies may be granted for the development of disadvantaged or deprived areas or regions. When

determining the amount of subsidy, the following may be taken into account: the socio-economic situation of the disadvantaged area concerned; the size of the beneficiary; and the size of the investment project.”

I would be interested in your view as to whether that constitutes an actual obligation to have an assisted area map, or some way of defining disadvantaged areas based on the terms of the TCA?

My other question was around article 10 of the Northern Ireland protocol; I am sure you will not be surprised to hear that, we have discussed it many times. What is your sense now of the state of play around article 10 of the Northern Ireland protocol? To what extent could it be interpreted so broadly as to effectively drive a coach and horses through this legislation?

Bill Esterson (Labour, Sefton Central)

Q Good afternoon, Mr Peretz. You have been giving a lot of the very detailed challenges and saying how some of the problems might come out and be addressed. Can I ask you to look at the Bill as presented and give an overview of what you think the Committee’s top priorities to address in the Bill might be?

Kirsty Blackman (Scottish National Party, Aberdeen North)

Q I have a couple of questions. In the event that BEIS is the granting authority, the only person, realistically, who can make a referral to the CMA to look at it is the Minister, who is in charge of the granting authority. Is there an argument for other people to be added so that a conflict of interest does not arise?

Kirsty Blackman (Scottish National Party, Aberdeen North)

Q That is helpful. I have a couple of additional questions following on from Stephen Kinnock’s question about the Northern Ireland protocol. We have heard already that granting authorities in the UK tend to be fairly risk averse. Given their risk-averse nature, would a situation where most of the granting authorities in the UK are advised that they have to apply state aid rules as well as the Subsidy Control Bill rules make it more difficult for them to put in subsidies in the way that the Government are hoping?

Caroline Nokes (Conservative, Romsey and Southampton North)

I will bring the Minister in because we will have a hard stop at 3 pm.

Paul Scully (Conservative, Sutton and Cheam)

Q When you were talking about interested parties and the two definitions, including the Secretary of State, did you define a person whose interests may be affected by the giving of a subsidy as a company boss? Is that what you were suggesting?

Paul Scully (Conservative, Sutton and Cheam)

Q But when you define that, are you restricting yourself just to a competitor and not a Minister, in a Government, in a devolved Administration?

Paul Scully (Conservative, Sutton and Cheam)

Q Sorry to cut in, but the only reason I say that is because the Secretary of State clearly might not have a direct interest, so why is he being specified—

Paul Scully (Conservative, Sutton and Cheam)

Q But a Minister in a devolved Administration could be a person whose interest is affected by the grant.

Caroline Nokes (Conservative, Romsey and Southampton North)

Order. I am sorry, but that brings us to the end of the time allotted for the Committee. I thank the witness very much for his evidence.

Examination of Witnesses

Caroline Nokes (Conservative, Romsey and Southampton North)

We will now hear from Jonathan Branton, partner at the DWF Group; Alexander Rose, director at the DWF Group; and Richard Warren, head of policy and external affairs at UK Steel. They are all here in person. We have until 3.40 pm for this session. Can the witnesses please introduce themselves in turn for the record—perhaps we will go left to right, starting with Mr Rose—and give a brief opening statement? I will then move to Seema Malhotra for questions.

Seema Malhotra (Labour/Co-operative, Feltham and Heston)

Q Thank you to our witnesses for coming in today. We are very appreciative of your time. I will ask two questions to cover the areas that you have commented on. First, I am interested to know your view on the question of transparency in the Bill around decisions that are made on how challenges might be brought if there are concerns about subsidies and their impact. Secondly, more positively, what might the opportunities be for the Bill and its regime? What would success look like in terms of how it positively affects the areas that we, on both sides of the House, are interested in, such as levelling up and the transition to net zero? Will the scheme actively support delivering them?

Seema Malhotra (Labour/Co-operative, Feltham and Heston)

Q Specifically on what is in there—I am conscious of the time—are there recommendations you would make, based on that experience, around what may need to be tightened up within the Bill? That would be quite helpful, because there are questions about the de minimis threshold, about whether an entry should take six months, and about how long things should be open to challenge.

Kevin Hollinrake (Conservative, Thirsk and Malton)

How many, sorryQ ?

Stephen Flynn (Scottish National Party, Aberdeen South)

Q Thank you all for that very helpful information. There are perhaps two different elements of discussion in relation to the Bill going on here. Richard referred to the Bill perhaps providing more of a light touch in that regard, and it may well be beneficial. We heard from individuals earlier today in relation to the lack of guidance or understanding as to how the Bill will operate. How do you get to that conclusion, notwithstanding the lack of guidance that sits behind the Bill that is due to come from the Secretary of State in future? Ultimately, do you foresee a situation where the Bill will actually provide an increase in state aid, as I am sure your organisation would like to see?

Alexander and Jonathan, if I may say so, you gave quite a devastating indictment of current practices and we would all hope that the Bill will improve on that situation. Do you think it will, as it stands?

Caroline Nokes (Conservative, Romsey and Southampton North)

Before I bring in Simon Baynes, may I remind panellists that five more Members wish to ask questions? Could we keep the answers succinct, please?

Simon Baynes (Conservative, Clwyd South)

Q One quick question. I think it was Mr Rose who said that the transparency register would be relatively easy to fix. Is there any comparable register that we could look at to learn from? This is perhaps not applicable, but from my own experience as a trustee of arts and heritage organisations, the requirements of the Arts Council and the lottery are very stringent in terms of transparency and what information you have to provide. Is that a comparable situation?

Stephen Kinnock (Labour, Aberavon)

Q Just zooming out for a second, I know that you all have an interest in this levelling-up agenda. The stated priorities of the Bill are to be able to drive forward both the levelling-up agenda and the transition to net zero. Mr Rose and Mr Branton, do you think it is possible to achieve the levelling-up agenda without an assisted areas map or some way of actually focusing resources? There is also the issue that relocations are prohibited. What impact does that have on the levelling-up agenda?

We will achieve net zero in this country only if our steel industry transitions towards it. Mr Warren, what kind of state aid support do you think would be needed for that? Do you think there should be more explicit guidance in the Bill about how to achieve the transition to net zero as part of this overall strategy?

Kevin Hollinrake (Conservative, Thirsk and Malton)

Q In terms of the thresholds for reporting—I think it is £500,000 and the minimum financial assistance threshold is £315,000—are they the right level to achieve the transparency you are looking for?

Bill Esterson (Labour, Sefton Central)

Q I want to ask Mr Rose and Mr Branton about this. You have both talked about building the framework and the additional details have to come later. Are there any elements of the additional details that you think should be in primary legislation? I think that Mr Warren has ruled that out, but he may want to comment on that.

Looking at the other things you have said, rather than saying in general terms that the reporting period should be less than six months, do you have a particular figure in mind? Similarly, do you have a figure in mind to replace the one-month opportunity to appeal?

Bill Esterson (Labour, Sefton Central)

Two lots of three months, then.

Caroline Nokes (Conservative, Romsey and Southampton North)

Order. I am sorry to have to cut you off, but that brings us to the end of the time allotted for this panel. I am sorry to those Members who did not get to ask questions. I thank the panel for their evidence, and we will move on to the next witness.

Examination of Witness

Caroline Nokes (Conservative, Romsey and Southampton North)

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?

Caroline Nokes (Conservative, Romsey and Southampton North)

Thank you. I will move to Seema Malhotra, please.

Seema Malhotra (Labour/Co-operative, Feltham and Heston)

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?

Caroline Nokes (Conservative, Romsey and Southampton North)

I think that would be very helpful, thank you.

Caroline Nokes (Conservative, Romsey and Southampton North)

indicated assent.

Seema Malhotra (Labour/Co-operative, Feltham and Heston)

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?

Seema Malhotra (Labour/Co-operative, Feltham and Heston)

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

Caroline Nokes (Conservative, Romsey and Southampton North)

I will bring in Kirsty Blackman and come back to you if there is time.

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?

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?

Kirsty Blackman (Scottish National Party, Aberdeen North)

It does, thank you.

Caroline Nokes (Conservative, Romsey and Southampton North)

Thank you. Seema Malhotra, did you want to come back in?

Seema Malhotra (Labour/Co-operative, Feltham and Heston)

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.

Caroline Nokes (Conservative, Romsey and Southampton North)

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

Caroline Nokes (Conservative, Romsey and Southampton North)

Q We now hear from Rachel Merelie, senior director for the Office for the Internal Market at the Competition and Markets Authority, who is appearing virtually. We have until half-past four for this session. Could the witness please introduce herself and give a few short opening remarks?

Seema Malhotra (Labour/Co-operative, Feltham and Heston)

Q Thank you for giving evidence today. May I ask a couple of questions on the CMA’s current powers, and whether there is arguably a case for some extension of them? In relation to the CMA not having the power to instigate a report or investigation by its own initiative, would there be circumstances in which you could see it as beneficial for the CMA to proactively undertake an investigation? For example, something may not be explicitly described as a subsidy by a public authority but seems to have the same effect and is therefore potentially in question. Secondly, what is your assessment of the additional resource and capacity that the CMA will need to fulfil its obligations under the new regime, and do you have any concerns on that?

Seema Malhotra (Labour/Co-operative, Feltham and Heston)

It was about whether there is sufficient resourcing.

Seema Malhotra (Labour/Co-operative, Feltham and Heston)

Q To follow up, in relation to the internal market and the digital services market, is their membership drawn in the same way, solely from within the CMA? Do you have the option of involving external experts to fill any gaps? I have a slightly different question: when you talk about the access to information that you might need, are there sufficient mechanisms to ensure the accuracy of information posted on the database? Do you have views about what information needs to be on the database? Should there be an auditing process, whether random or otherwise, to ensure the accuracy of the information that is being put there?

Seema Malhotra (Labour/Co-operative, Feltham and Heston)

Q May I come back on two brief points? There is not a requirement to have representation from all four nations, as far as I understand. That seems to be slightly at odds with the UKIM set-up, which has been a cause of concern for what needs to have a four-nations approach and buy-in. Would it be a concern to you if there was that requirement in the Bill? Secondly, the question I do not think I heard an answer to was, where should there be a function for either audit or checking of the accuracy of information put on the subsidy database? Would that need to be within BEIS rather than the CMA?

Kevin Hollinrake (Conservative, Thirsk and Malton)

Q If you have a monitoring requirement, you would think the obvious place for you to go to look at would be the database, yet we heard evidence earlier that fewer than half the entries on that database even have a figure for how much subsidy has been allocated. Is that not a concern to you, because how else will you gather the information other than looking at the database?

Bill Esterson (Labour, Sefton Central)

Q You mentioned the monitoring role, and I think you have just given a bit of further information there. I wonder, when you identify things that are not going right, what will you do with that information? If you could answer that, I will then come back to some other questions.

Bill Esterson (Labour, Sefton Central)

If things are not working, or you identify a problem, what will you do with the information?

Bill Esterson (Labour, Sefton Central)

Q Five years seems like a bit of a long time to wait if there are specific examples of inappropriate applications of subsidies. I wonder if there might be a way for the information you are gathering to find its way into an investigation or a challenge.

Bill Esterson (Labour, Sefton Central)

Q Sorry to continue with this, but it feels as though, if you identify something that is wrong on an individual subsidy level, that will only really get anywhere if somebody asks you about it, so they will have to identify it separately to you. It seems that your process is lacking a proactive part, unless I am really missing something.

Bill Esterson (Labour, Sefton Central)

Q That is if you have been asked to investigate, isn’t it?

Bill Esterson (Labour, Sefton Central)

Q I was asking about if you identify something when you are carrying out your monitoring role. There seems to be a gap there in you referring information. That is the concern I am raising.

Bill Esterson (Labour, Sefton Central)

Q Thanks for clearing that up; I do appreciate it. Coming to your points about the budget and the settlement, you have talked about the 2021-22 settlement, and there is a fund available for the three new functions. How much has been allocated for the subsidy advice unit?

Bill Esterson (Labour, Sefton Central)

Q Okay, so you cannot really say how much at this stage. You mentioned bringing in board members and other members of staff from around the four nations to fulfil your responsibilities; the reason for asking the question, really, is just to understand what your expectations are of the level of work as compared with your capacity to meet it. An earlier witness said that there is a concern that it could really slow things down if the workload was too high. I appreciate that it is difficult to say because you are not yet in operation, but what is your sense of how flexibly you will be able to address that concern?

Bill Esterson (Labour, Sefton Central)

Q Two final thoughts. How long do you think an investigation is likely to take? And, on your point about local authorities, have there been representations as part of the consultation from local authorities to say that they are more likely, or for that matter less likely, to make referrals?

Simon Baynes (Conservative, Clwyd South)

Q Just a quick question. We have talked rather a lot in this session about the four nations, but the terms of the Bill are such that the devolved Administrations take their place alongside local authorities, public bodies and central Government in being involved in delivering the subsidies to businesses. Therefore, do you agree that they are of equal importance in this endeavour and that, in a sense, the whole point of the Bill is that it spreads the responsibility across the UK and across different levels of government?

Kevin Hollinrake (Conservative, Thirsk and Malton)

Q On the minimal financial assistance, how are you going to monitor that? It is up to the company to record the assistance it receives. A company could receive assistance from numerous local authorities if it has premises in different parts of the country—for example, through the business rate grants that we saw last year. Those items will not be recorded anywhere. How would you monitor that?

Kevin Hollinrake (Conservative, Thirsk and Malton)

Q I realise that your primary focus is going to be very large schemes—not hundreds of thousands of pounds, but millions of pounds. Nevertheless, somebody has to monitor the smaller stuff as well to make sure that people are not abusing the system. I do not see how anybody can monitor that. To monitor that, you would have to monitor every local authority in the country and stitch all their contributions together against a certain entity.

Seema Malhotra (Labour/Co-operative, Feltham and Heston)

Q I want to come back on a couple of points. This is in relation to helping make sure that there is a regime that commands confidence and provides the information to public authorities, which are engaging with some of this activity for the first time. To what extent do you think more needs to be done to engage with public bodies and prepare them to be able to grant subsidies effectively and efficiently to enterprises under the regime? It is likely that a lot of that burden could end up with public bodies approaching the subsidy advice unit. Are you factoring that in to how you see the unit working, or do you think that some of that needs to be done elsewhere?

Seema Malhotra (Labour/Co-operative, Feltham and Heston)

Q Would you see that being done in a slightly more structured way through the guidance? Otherwise, the likelihood is that you will have a lot of approaches and potentially more voluntary referrals than you might expect, because the earlier information, advice and guidance is not helping to address some of the questions. Public bodies will engage with this—local authorities in particular give rise to concern—and will be doing this for the first time.

Seema Malhotra (Labour/Co-operative, Feltham and Heston)

Q On fast-cycle learning and the effectiveness of the scheme, do you think that there are merits in the five-year report being produced to a shorter timetable, with greater frequency—for example, three years? You may have a view on that—I am just raising it as an issue. Five years seems a long time, particularly with a new regime, in which to look at how well it is working.

Seema Malhotra (Labour/Co-operative, Feltham and Heston)

Q I am conscious that we have only two minutes so, while I can, I will ask whether you have concerns about your ability to scrutinise subsidy schemes if subsidies under those schemes are less likely potentially to be on the database. Do you have concerns about the transparency of subsidy schemes from the perspective of any single role?

Caroline Nokes (Conservative, Romsey and Southampton North)

Thank you, Ms Merelie, for your evidence this afternoon. That was beautifully timed, and we will now move on to the final panel.

Caroline Nokes (Conservative, Romsey and Southampton North)

We are going to hear from Ivan McKee, the Scottish Government Minister for Business, Trade, Tourism and Enterprise, who is appearing virtually. We have until 5 pm for this session. Would the witness introduce himself for the record and give us a few opening comments?

Seema Malhotra (Labour/Co-operative, Feltham and Heston)

Thank you very much, Mr McKee, for giving evidence to our Committee today. First, what is your overall view of the regime? Do you see any advantages in moving away from the way the EU state aid regime operates? Could there be more freedoms for devolved Administrations?Q

Secondly, what do you see as the impact of moving away from more formal assisted areas on the ability of the Scottish Government to support more deprived regions? Would you say that there could be flexibility in the Bill to enable you to make those decisions as you might wish, in line with Scottish Government objectives?

Seema Malhotra (Labour/Co-operative, Feltham and Heston)

Thank you very much for those answers. As you will be aware, concerns have been raised that the role, voice and powers of the devolved Administrations within the regime may not be strong enough, particularly for a four-nations approach. It has been suggested that that should be addressed and the Bill strengthened. Are there specific areas that you would say need to be strengthened?Q

Robin Millar (Conservative, Aberconwy)

It is a pleasure to be here with you in the Chair, Ms Nokes.Q

Welcome to this Committee of the UK Government, Mr McKee. We are discussing a UK Government instrument and within that there are provisions made for the role of the devolved Administrations. Clause 10 gives the devolved Administrations scope to set their own scheme of subsidies. Is that your understanding? Do you feel that that provides the Scottish Government with the powers to do what they need to do?

Robin Millar (Conservative, Aberconwy)

Q I will ask the question in a slightly different way, then: does the Bill give you powers to do things that you were not able to do when the UK was part of the EU?

Robin Millar (Conservative, Aberconwy)

I think the point you are making—

Robin Millar (Conservative, Aberconwy)

Q If I understand you correctly, you are saying that when we were within the EU, there was certainty that came from being told what we could and could not do. May I suggest that clause 10 gives the devolved Administrations scope to set their own subsidies? That was not a freedom that you had when we were in the EU.

Robin Millar (Conservative, Aberconwy)

Q I am grateful that you used the word “potentially” because there is not a certainty around that; it is only potential. The fact is that clause 10 does set the freedoms for the devolved Administrations to set their own subsidy schemes, so I am grateful to you for confirming that.

We have just had very interesting evidence from Mr Greenberg, who is the Parliamentary Counsel for the House of Commons concerned with domestic legislation. He said that we should not be complaining about a skeleton Bill because we should not be focused on detail so much as on ensuring that it gives us the freedoms that we want to do the things we do. I just come back to clause 10 and I wonder again what your response is to that. Do you feel that the clause gives you freedoms?

Robin Millar (Conservative, Aberconwy)

Q A final question, because I am really trying to get to the bottom of this point: would you be happier if the UK Government told you what to do?

Stephen Flynn (Scottish National Party, Aberdeen South)

Q Thank you, Ivan, for coming along this afternoon. There are a couple of points that I wish to make, if I may. First, we heard this morning from Dr Pazos-Vidal, who said that the Bill is not reflective of the territorial constitution of the UK as it stands. This afternoon, we heard some comments from George Peretz QC that alluded to the wider discussion about the fact that BEIS could ultimately seek to invest in projects, be they in Wales, England, or indeed Scotland, and that those projects could have a consequence upon the devolution settlement—they could be at odds with the intentions of the Scottish Government. Do you believe there is an issue there, given the fact that, ultimately, it will be only BEIS that has the ability to refer such matters to the CMA? Do you believe that the Scottish Government, along with the Welsh Government and the Northern Ireland Assembly, should have the ability to refer such matters, should they feel that those matters impinge upon devolution and they want to challenge the situation as it stands?

Secondly, I would be grateful if you could expand upon your concerns in relation to agriculture, because I know it has been spoken about at length.

Stephen Flynn (Scottish National Party, Aberdeen South)

Q Thank you for that, Ivan. Another question, if I may, Chair. On that income support for the agricultural sector, in the discussions—as you understand them—between Scottish Government officials and, indeed, officials from other devolved nations and the UK Government, has there been any indication that there would be a situation that arises where the UK Government would be cognisant of the concerns that the devolved nations have, and would seek to acquiesce to your request that agriculture be not included within the scope of this regime?

Paul Scully (Conservative, Sutton and Cheam)

Hi, Ivan. Good to see you.

Paul Scully (Conservative, Sutton and Cheam)

Q Very quickly on agriculture and fishing, you will be aware that 81%—I think—of respondents to the consultation said that either agriculture or fisheries should be included in the Bill in some way. Do you at least welcome the fact that existing arrangements for agriculture and fishing subsidies will remain, and that legacy schemes will not need an assessment of compliance with the principles, or to meet the relevant transparency requirements—although, of course, we will continue to talk about future schemes?

Paul Scully (Conservative, Sutton and Cheam)

Q We will continue to work with you and the other devolved Administrations to make sure that the agriculture and fisheries sector policy works across the UK. On engagement, obviously we have been working closely with you, Wales and Northern Ireland in developing the policy; I think we have had something like 34 official-to-official meetings and 12 ministerial meetings across the devolved Administrations—the quad meetings and so on. We will continue engaging throughout the parliamentary process and in the lead-up to implementation. What other engagement would you find useful?

Paul Scully (Conservative, Sutton and Cheam)

That is helpful to know. Thank you.

Simon Baynes (Conservative, Clwyd South)

Q Thank you, Mr McKee, for your time this afternoon; it is much appreciated. Do you welcome the devolution of powers under the subsidy control regime to local authorities in Scotland?

Simon Baynes (Conservative, Clwyd South)

Q Does that mean that you would rather local authorities did not have these powers under the Bill?

Simon Baynes (Conservative, Clwyd South)

Q But do you support devolving powers to local authorities in general as part of the devolution settlement?

Kevin Hollinrake (Conservative, Thirsk and Malton)

Q It seems to me, looking at schedule 1, that you are able to design a scheme that the devolved Administration in Scotland deems appropriate. I think you said that you were worried that, having done that, you might be challenged—by the Secretary of State, for example. However, under clause 70(7)(a), you could challenge another part of the UK on their scheme, too. Why does Scotland have any less discretion in challenging another part of the UK than another part of the UK has in challenging you? It seems to be exactly the same either way.

Kevin Hollinrake (Conservative, Thirsk and Malton)

Q I am sure that the Secretary of State would argue that that is because it is an umbrella scheme for the United Kingdom, but do you accept that under the Bill you have the powers to design your own scheme for your devolved Administration, and you have the same powers as the UK Government have to challenge a scheme in another part of the UK?

Kevin Hollinrake (Conservative, Thirsk and Malton)

Q That was not the question that I was asking you. I was asking whether you agree that clause 70(7)(a) gives you the same powers as any other part of the United Kingdom to challenge a scheme?

Kevin Hollinrake (Conservative, Thirsk and Malton)

Q That is not the question I asked you. I asked whether under clause 70(7)(a) or (b) you have the same powers to challenge a scheme in any other part of the UK as any other part of the UK has to challenge you?

Kevin Hollinrake (Conservative, Thirsk and Malton)

It was my point, though. Thank you.

Seema Malhotra (Labour/Co-operative, Feltham and Heston)

Q We had some discussion about clause 70(7)(a), and there is some point of clarification about the definition of “interested party”, which I do not think is fully clear in relation to the devolved Administrations, but either we agree on the need for the Bill to be taken forward, I hope with some significant improvements, or there is a view that that cannot be achieved. I want to come back on a couple of points that you made, Mr McKee, that I was not fully clear on. The first is on being prepared to be involved in discussions, the question being what outcomes would be achieved. Do you feel clear at the moment on what specific changes, whether in relation to call-in powers, an obligation to consult or consent, you would want to see inserted in the Bill to meet some of those concerns? It would be very helpful to understand specifically what they were. Perhaps that could be in writing afterwards.

Secondly, I was not fully clear on what your view was in relation to local authorities. It seemed that it was more for the Scottish Parliament to decide what local authorities in Scotland may or may not do, rather than local authorities across the UK being able to make subsidies if they felt that they were in line with the subsidy control principles, and beneficial for their area. I was slightly confused on what your view was about local authorities being able to make subsidy decisions in Scotland. Perhaps you could come back on both those points, and put in writing what specific changes you want to see.

Kirsty Blackman (Scottish National Party, Aberdeen North)

Q Nice to see you, Ivan. My question is about the priorities and the fact that we are being asked to take on trust an awful lot of the stuff that is coming forward in regulation and guidance. Given the current track record of the UK Government and their relationship with Scotland, trampling over the Scottish Parliament, do you think that it is likely that the regulations and guidance that come through will be in any way suitable or tailored to the needs of Scotland, or do you think that they are likely to be done for the benefit of the UK?

Kirsty Blackman (Scottish National Party, Aberdeen North)

Q Just one more on that. Are you aware that about one 10th of the subsidies on the UK subsidies website are from Scotland? About 50 of the 500 are Scottish subsidies. Scotland, presumably, does not do 10% of the subsidies in the UK. Do you think that the UK probably needs to pull its socks up a bit there?

Caroline Nokes (Conservative, Romsey and Southampton North)

If there are no further questions, I thank you, Mr McKee, on behalf of the Committee for giving evidence to us today.