Bill Esterson
MP for Sefton Central · Labour · United Kingdom
“As the Prime Minister said on Tuesday, our energy supply and our energy security are not a question of having either oil and gas, or renewables; they are about both. It is a great pity that proper process was not followed in 2022 or 2023. [ Interruption.”
“I warmly welcome my right hon. Friend’s commitment to continuing Britain’s global leadership on climate action, including by going to COP31. I also welcome his focus on breathing space for people and businesses, but, as he said, it will take a lot more than that to deliver the growth and reindustrialisation that he is so committed to.”
“Last week the Committee heard from Claire Dykta, the director of strategy and policy at NESO, who told us: “Operational decisions are taken by authorised, trained personnel only.” Her comments were confirmed by Alastair Martin, the chief strategy officer at Flexitricity, who, in the same session, said: “I do not think the idea that the he…”
“As the Minister has just said, new nuclear is essential for energy security. It is also essential as an alternative career for workers in oil and gas.”
“Paul and Susan Robinson each worked for the Health and Safety Executive for more than 40 years. They have not been able to plan for their retirement since finishing work last year; they have been living off their savings and the small loan that they have had. They are typical of the dozens of constituents who have contacted me.”
“Hudson primary school in my constituency does a brilliant job. It is a family hub, it specialises in support for children with SEND and autism, and it has a nursery, but its building, which is 80 years old, suffers from a high water table that brings damp, mould and structural problems for the building—as does occasional flooding.”
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“Amendment 46 allows the devolved Administrations to ask the Secretary of State to declare a natural disaster or exceptional circumstances so that exemptions listed in clause 43(1) applying to Scotland, Wales and Northern Ireland may apply. If the Secretary of State refuses a request for exemption, the amendment requires them to make a statement to the House of Commons. To reiterate the point I made in the last debate, we are determined to ensure that the role for the devolved Administrations in the administration of their own nations is respected and considered. Of course, we agree that the subsidy regime sits with the Westminster Government, because it is a UK-wide system, but on matters as important as states of natural disaster, devolved Administrations should always be consulted.”
“I beg to move amendment 46, in clause 43, page 25, line 16, at end insert— “(3A) The Scottish Ministers, the Welsh Ministers, and a Northern Ireland department may request the Secretary of State to declare a natural disaster or another exceptional circumstance in Scotland, Wales, and Northern Ireland. (3B) If the Secretary of State refuses a request made under section (3A), he must make a statement in the House of Commons outlining the reasons for his refusal.” This amendment allows the devolved administrations to ask the Secretary of State to declare a natural disaster or exceptional circumstances, so that the exemptions listed in Clause 43(1) applying to Scotland, Wales, and Northern Ireland may apply. If the Secretary of State refuses a request for exemption, this amendment requires him to make a statement to the House of Commons.”
“I should point out that the amendment does not seek to give the devolved Administrations the power to declare a state of emergency, which I think was implicit in the Minister’s remarks. They would ask the Secretary of State to use his or her power to do so, not have the power themselves. The hon. Member for Aberdeen North made the point about transparency well. I am satisfied that the point has been made satisfactorily and that the Minister has taken it on board, and I therefore beg to ask leave to withdraw the amendment. Amendment, by leave, withdrawn. Question proposed, That the clause stand part of the Bill.”
“The clause makes it clear that subsidies given to safeguard national security are not subject to the subsidy control regime. This is an important principle that must be interpreted without prejudice in the light of our international commitments; I am sure the Minister agrees with that. We are pleased to see it in the Bill.”
“It is no good threatening to rip up an agreement that the Prime Minister himself signed just two years ago, and certainly not without something to put in its place. Perhaps the Minister can confirm when he last discussed these issues with his European counterparts, and the timeline on which he expects there to be clarity on article 10 of the protocol and its impact on the Bill. The purpose of the amendment is to require the Secretary of State to provide a statement on “the applicability of Article 10 of the Northern Ireland Protocol to subsidies given and schemes made by public authorities in each part of the United Kingdom.” Public authorities and recipients need and deserve certainty on this issue.”
“That is a step in the right direction, although the proposals it put forward do not address the state aid subsidy issue. In contrast, on Second Reading on 22 September, the Secretary of State suggested “we have proposed the change to the Northern Ireland protocol to bring all subsidies within scope of the domestic regime.” —[ Official Report , 22 September 2021; Vol. 701, c. 338.] Here we are six weeks later, and we are no clearer about the status of the negotiations with the EU. I hope the Minister will set my mind at ease and tell us what the UK proposals are to solve the problem that George Peretz set out so well in evidence last week. Let us remind ourselves: the Government negotiated the Northern Ireland protocol and signed it, so they now have a duty to make the protocol work, just as they have a duty to make Brexit work.”
“Where a subsidy is applied in Wales, Scotland or England has consequences in Northern Ireland. George Peretz told us in last Tuesday’s evidence session, “if I am advising a client such as a local authority or a subsidy recipient, my immediate problem is that I have to look at two sets of guidance—one issued by the European Commission and one by the Department for Business, Energy and Industrial Strategy—that in some important respects tell me very different things.”—[ Official Report, Subsidy Control Public Bill Committee, 26 October 2021; c. 46, Q64.] His final assessment was: “It is all a bit of a mess.” –– [ Official Report, Subsidy Control Public Bill Committee, 26 October 2021; c. 48, Q67.] We should all note that the European Union published proposals to address problems with the Northern Ireland protocol a fortnight ago.”
“Clause 48 provides that the requirements of the subsidy control regime do not apply to subsidy schemes that are subject to the Northern Ireland protocol. The Minister will suggest, I imagine, that this gives comfort to public authorities and avoids the double jeopardy of both regimes applying to a subsidy scheme—I take that from what he and the Secretary of State said on Second Reading. If the Minister were to say that, he would be assuming that there is clarity on which subsidies and schemes are subject to the protocol. On this vital question that public authorities will need to interpret, there is no agreement between the UK Government and the European Commission. There is significant uncertainty about the extent of the reach back—that is, where EU state aid rules will continue to apply across the UK.”
“I beg to move amendment 47, in clause 48, page 27, line 6, at end insert— “(2A) On the date on which the Act is passed, the Secretary of State must make a statement to the House of Commons regarding the applicability of Article 10 of the Northern Ireland Protocol to subsidies given and schemes made by public authorities in each part of the United Kingdom.” This amendment would require the Secretary of State to make a statement to the House of Commons regarding the applicability of Article 10 of the NI Protocol on the date on which the Act is passed. The amendment would require the Secretary of State to make a statement to the House of Commons on the applicability of article 10 of the Northern Ireland protocol on the date on which the Act is passed.”
“I think the pings you just heard were all the different legal opinions on the application of the subsidy control regime on EU state aid, Ms Nokes. The Minister found a number of different ways of phrasing the same problem: it all depends, it is one or the other, or he cannot give individual examples. I am afraid that is what it all boils down to.”
“Until that is addressed, we have a real problem with the legislation and the existence of the two different subsidy regimes will cause a real problem for the effective use of subsidies to support businesses in the regions and nations of our country.”
“Member for Aberdeen North and I both said in our opening remarks? What do the Government think is going to work? What is it from their discussions with their EU counterparts that suggests a way forward? We still have not had that from the Minister and that underlines exactly why the amendment is so important in giving the Government until the day on which the Bill passes into law to address exactly how the operation will apply. To go back to the words of George Peretz, there are two sets of guidance and two sets of legal opinion. He, as a lawyer, could advise on the same situation, with the awarding body on the one hand and the business on the other, on which regime might apply.”
“My hon. Friend the Member for Aberavon uses the word shambles. It is hard to disagree given the Minister’s answer. Until that is addressed, it undermines the operation of the regime, which risks legal challenge. On the point about individual examples, businesses face the potential of legal challenge if they do not get this right. They are not going to know which regime. We were starting to get an answer there, in that if the subsidy is under the terms of the Northern Ireland protocol, it is state aid. However, even there the Minister could not be entirely clear. It goes back to my initial question: what proposals are the Government putting forward to address this? What is in the Secretary of State’s words on Second Reading, where he was extremely confident that the matter would be addressed, as the hon.”
“We have heard spectacularly from the Minister the failure of the Government to explain how the regime will operate or to come forward with answers to questions asked during the debate on our amendments. There is little to add to what has been said already.”
“I reassure my hon. Friend that we will indeed be pressing clause stand part to a vote. He is right: businesses need certainty. We are coming out of a once-in-100-year global pandemic, and they need all the support that they can get. This regime should give that support, but it cannot do so if there is that massive uncertainty at the heart of it, whether this regime or a different one should apply. The Government have not addressed that and they need to get on and address it—”
“We gave the Government every opportunity with our amendment, but they chose to vote it down. They have left us with what my hon. Friend the Member for Aberavon called a dereliction of duty, which is a good way of putting it. The clause does not do justice to businesses, awarding bodies, communities or our constituents. Those are good reasons why we should vote it down.”
“I understand the hon. Lady’s concerns, but there is such a big problem with what is set out, it is right for us to register our objection by voting against the clause.”
“The Minister had the opportunity to accept our amendment, which would have addressed the concern that he has just set out about needing negotiations, because it would have given him time for them. It is regrettable that he did not accept our amendment, but he is now in the position of having to come forward with the answers, and as the responsible Minister, it is up to him to do so. Question put, That the clause, as amended, stand part of the Bill.”
“I am interested in the answer to that question as well, given that in the last 11 years of Conservative Government we have not seen the investment in new nuclear that was needed to meet our climate obligations.”
“Indeed. The role of China in our nuclear industry is a point well made by my hon. Friend. I hope that we will see significant investment in new nuclear as a result of the regulations, if that is what the Government intend. Perhaps the Minister will give an indication of their intentions, because without investment, we will not hit our obligations. Nuclear is, of course, a longer-term project because it takes so long to get going. I remind Members that we have significant targets to hit by 2030, and unless we are talking about small modular reactors, nuclear reaches beyond that timeframe. Can the Minister enlighten us on any plans?”
“It is needed in transport, in building insulation and in agriculture; it is needed across industry. Unless this is in the Bill, setting out the requirement for net zero to be at the heart of the subsidy regime, I am afraid we as a country, and this Government as a Government, will not be doing what is needed.”
“Schedule 2 does not mention transport, agriculture or housing insulation, to name just three examples, so it is not comprehensive as currently drafted. That is why we need to go much further to meet the scale of the challenge in the subsidy control regime that we are debating putting in place. The Budget yesterday did not address net zero, and it is frankly extremely worrying that it did not, especially in the run-up to COP26. I am afraid the announcements last week did not constitute a plan and were nowhere near meeting the requirement to hit the net zero targets this country is committed to in the timely fashion that is needed, especially in terms of the front-loading we all now understand is essential in all areas except the energy industry.”
“It is a pleasure to see you in the Chair for these sittings, Mr Sharma. I completely agree with everything the hon. Member for Aberdeen North says and with what my hon. Friend the Member for Feltham and Heston said in moving the amendment. What is needed from Government is the commitment to hit net zero and the mechanisms to do so. That needs to go right across Government, in everything we do. I take on board the point the Minister has already made in today’s deliberations that not everything is in the Bill; I understand that and I accept it. However, as the hon. Member for Aberdeen North argued extremely well, there is a strong—we would say an essential—case for net zero to be at the heart of the regime put in place by this legislation.”
“Given the way the amendment is crafted, the wording, “the United Kingdom reaching its net-zero commitments”, does stand the test of time as and when things change. The challenge the hon. Member for Rother Valley makes is another reminder that we need to bring things further forward and that it has become important to do that over time. At the moment, we have interim dates to hit, with ambitions in 2030, and the Government have made some progress there, but by no means enough to do what is necessary to keep us to 1.5°.”
“The amendment, because of the way it is phrased, envisages those changes and the increasing urgency. Let us remind ourselves that, on our present track, we are looking at a temperature rise of more than 1.5 °C through the existing commitments and policy decisions not just of this country but of Governments around the world. It is important to acknowledge that we cannot do it on our own, as we are responsible for only 1% of emissions, but when we are trying to show world leadership with the presidency of COP26, it is incumbent on us to show that leadership in everything we do, and we, as Members on this Committee, have an opportunity right here, right now to support making that commitment and putting it into legislation.”
“That is a good point. The hon. Gentleman is right that this does not end when we reach net zero—that is the first point. The second point is that if we need a change, we can amend the legislation later. Right now, however, this is the crucial change that the country and the world need to make. I reiterate that we as Members of the UK House of Commons—those of us here today—have an opportunity to make a statement and a commitment and to put this change on the face of the Bill.”
“As much as the Minister defends the Government’s freeport policy, notwithstanding the analysis that I have given from those experts, and claims that local authorities will be able to sort their high streets, and despite his response to my hon. Friend the Member for Aberavon about supporting more deprived areas otherwise, I am afraid that without additional content going in at this stage, or on Report, or in the House of Lords, we will be left in a position where the framework will leave awarding bodies open to judicial review because of the uncertainty and the contradiction that will almost inevitably be left in place between the primary legislation of clause 18 and whatever he puts in guidance.”
“I am afraid that we have not had an adequate answer from the Minister on how all those circles will be squared, and how the primary legislation of clause 18, which he wants to go through unamended, will not override attempts to use subsidies to support local areas in the examples that we have given him and that he says we should not worry about. I am afraid it comes back to a point that we have made a number of times, and will continue to make, I suspect, through the Committee’s deliberations: specific statements need to be added to the Bill to provide reassurance and to make the framework a much more workable system of subsidy. Without that, things will be left wide open.”
“On the point about freeports being just about new investment, the evidence base—the report published by the UK Trade Policy Observatory, and the commentary by Adam Marshall when he was director general of the British Chambers of Commerce—shows all too clearly that they are exactly about relocation and displacement, and all the things that the Minister said that they should not be about. His point that they do not deliver displacement from one deprived area to another is undermined by the evidence base provided by the UKTPO and the British Chambers of Commerce.”
“That is the point that all Opposition Members who have spoken have tried to get to, whether with the example of the regeneration of high streets or that of freeports. The Minister talked about the justification for freeports and the support that the Government have given. My hon. Friend the Member for Feltham and Heston made the point that freeports were not part of the consultation for the legislation, and they are ruled out by the clause. It could not be much clearer.”
“It is great to see you back in the Chair, Ms Nokes. Clause 18 is crystal clear about preventing the use of subsidies to enable businesses to move from one location within the UK to another. The example of the high street is crystal clear, as is the example of the freeports. I will come back to the point about promoting new investment in freeports shortly. The Minister talked about issuing guidance to go with the provision. That is the way the legislation has been crafted, which I think we can all understand. However, guidance will always be open to interpretation, and what takes priority? Is it the primary legislation—the very clear statement set out in clause 18 that a subsidy is prohibited if “the relocation of those activities would not occur but for the giving of the subsidy”? How is that overcome by the guidance?”
“I beg to move amendment 14, in clause 19, page 10, line 29, after “exceptional circumstances” insert “including the protection of critical national infrastructure and industries of strategic national importance,”. This amendment clarifies that protecting critical national infrastructure and industries of strategic national importance may constitute exceptional circumstances.”
“The steel industry outlined how the industry was then lurching from crisis to crisis, and to a degree it still is. Over a number of years, the laissez-faire approach to the production of steel has been at the heart of that. Steel is a crucial national industry: it is critical to our national security and it is critical, or it should be, to our infrastructure production. We should be supporting that industry. That is what our amendments are about, and steel is a very important example. There are other examples of the Conservatives’ reluctance to show an interest in nationally significant businesses, such as the takeover of Morrisons by Clayton, Dubilier & Rice just recently—another business of great importance to national infrastructure.”
“However, we recognise that the Government have a poor track record on protecting and supporting industries of national importance. I am afraid that the case of the steel industry a few months ago is a prime example. Until 5 pm on the day before the trade remedies were due to expire, the Government had not intervened to overturn the recommendations of the then trade remedies investigation directorate, which right at the end came into operation as the Trade Remedies Authority. Its recommendations were to drop steel safeguards, and it took significant lobbying from the steel sector, individual businesses, trade unions, the Trades Union Congress and Labour Front Benchers to push the Government to realise what a catastrophic mistake it would have been had those safeguards been dropped at that time.”
“We broadly support the measures in clause 19 on rescue subsidies, and we want to strengthen the measures by adding, with amendments 14 and 15, the important areas of critical national infrastructure and security. Clause 19 prohibits subsidies from being given to ailing and insolvent enterprises unless the subsidy would prevent social hardship or severe market failure. In these cases, the subsidy should act only as “temporary liquidity support” to provide the enterprise with time to prepare a restructuring plan. That is exactly the right way to phrase the clause thus far, because we recognise that public money should not be used to prop up failing businesses. We are pleased that the Government are in the right place here.”
“Morrisons, as one of the big four supermarkets, is crucial to our national economy. The problem is that the Government do not show enough interest in businesses of such strategic importance.”
“I am grateful to the hon. Gentleman for intervening. I think he is rather missing the point, which I tried to explain the first time around. I am making the point that the Government showed no interest in what was going on with Morrisons, nor the merits of what was happening. Coming back to steel, the Government have belatedly woken up. Before I was intervened on, I was actually going to say that perhaps there are signs of improvement on this front. The Government have shown some interest in improving things, because there are amendments in the Budget that would give the Secretary of State for International Trade powers to overrule the recommendations of the Trade Remedies Authority. I am therefore mildly hopeful that we are seeing an improvement in policy and approach from the Government on that measure alone.”
“Not yet; let me answer my hon. Friend first before I take what I am sure will be an incredibly important and insightful intervention, as always—it does not mean he is right. It is extremely important that we take nationally significant businesses seriously, that we have a regime that enables us to support them when appropriate, and that we take on board what is in the national interest. That is the purpose of our amendment. I will take the intervention from the hon. Member for Thirsk and Malton, even though he is not wearing a mask today—he did partly on Tuesday.”
“No, not at all. I have no idea at all why the hon. Member thinks that is where my or my hon. Friend’s arguments were going. We are very much in favour of foreign direct investment to this country and investing overseas as well. Indeed, the success of foreign direct investment in the north-east of England under the Thatcher Government has been put at risk by the attitude of this Government towards the Japanese and the rather strained relations, which hopefully are beginning to repair since the UK-Japan deal. However, let us not underestimate the reputational damage that was done by the way some of that was handled.”
“Anything that is in the national interest or the interests of national security demands an additional level of support and attention, including attention to the way it is worded. Again, I am afraid we come back to the point that not having this set out in primary legislation creates weaknesses, and leaves the prospect of challenge and of the regime not operating as well as it should.”
“On the cost of steel production, he said: “If other countries are not moving at precisely the same speed or putting the same constraints on their industries, you will need some sort of intervention to correct that market failure.” –– [ Official Report, Subsidy Control Public Bill Committee, 26 October 2021; c. 57, Q77.] That is why we think there is a very strong case for putting this provision into primary legislation. More widely on the issue of net zero, this point is backed up by the written evidence from the Institute for Government, which says that it is “sensible to require some additional process to ensure that the subsidy is designed well.” That was in relation to major infrastructure that could contribute towards net zero. That is what our amendments are trying to achieve, and it is why we think they are so important.”
“In the evidence sessions, Richard Warren spoke about the costs of renewables and carbon taxes in relation to electricity prices: “The UK steel sector pays between 80% and 100% more for its electricity than its counterparts in the EU. Those exemptions have reduced our electricity prices. There is a still a big gap, but they are really important to improving competitiveness in the UK.” –– [ Official Report, Subsidy Control Public Bill Committee, 26 October 2021; c. 50, Q72.] He made the point that it was in the national interest to support the industry. He said: “Net zero or low-carbon forms of steel production will add anything from 30% to 50% to the costs of steel production”.”
“Thank you, Ms Nokes. That intervention rather makes the point that I was making in the previous debate about the need for definition in the Bill around what we mean by various terms and the need to avoid leaving things open to chance in guidance and interpretation. I take the hon. Gentleman’s point, but this is why we need a bit more clarity in primary legislation. Continuing with the steel industry, not least because we took evidence from UK Steel, if some support is not given in the short term to the UK steel sector to support its decarbonisation and reduce the massive energy costs associated with the industry, we could soon see steel, which is a vital strategic industry for the UK, facing imminent threat. I do not think anybody disagrees on the strategic importance of the steel industry at a national level.”
“I am grateful to the Minister for drawing the Committee’s attention to where the points covered by our amendments exist elsewhere in the Bill. I have reservations about the strength of those clauses, which I explained in my speech and will not revisit, but there is reference to the protection of national security in the Bill. Whether it is adequate, time will tell. I know that the Minister or a member of his team will bring these measures forward in secondary legislation. We think they are better in primary legislation and that there should be more detail at this stage, but we accept the assurances the Minister has given, and we will not push the amendment to a vote. I beg to ask leave to withdraw the amendment. Amendment, by leave, withdrawn.”
“The Opposition do not oppose this clause. Question put and agreed to. Clause 20 accordingly ordered to stand part of the Bill. Clause 21 Restructuring deposit takers or insurance companies Question proposed , That the clause stand part of the Bill.”
“Clause 22 Liquidating deposit takers or insurance companies Question proposed, That the clause stand part of the Bill.”
“The fact that subsidies should not be given to ailing or insolvent banks, insurance companies or other deposit takers unless certain conditions are met, such as that the subsidy is given on the basis of a restructuring plan that is likely to restore long-term viability, is an eminently sensible measure that we are content to see in the Bill. We also recognise that such companies should receive subsidies only when they have contributed to their restructuring costs from their own resources. We are pleased to see the clause included in the Bill. There are some concerns relating to this clause that I will come to in clause 24, but I think they are better dealt with there. Question put and agreed to. Clause 21 accordingly ordered to stand part of the Bill .”
“We are happy to support clause 22. Question put and agreed to. Clause 22 accordingly ordered to stand part of the Bill. Clause 23 Liquidity provision for deposit takers or insurance companies Question proposed , That the clause stand part of the Bill.”
“We support clause 23. Question put and agreed to. Clause 23 accordingly ordered to stand part of the Bill. Clause 24 Meaning of “ailing or insolvent” Question proposed, That the clause stand part of the Bill.”
“What is the Government’s plan on subsidies where dual use includes national security investment and non-national security investment, which is common in areas such as aerospace?”