Seema Malhotra
MP for Feltham and Heston · Labour (Co-op) · United Kingdom
“Public sector productivity is improving, with the latest Office for National Statistics figures showing output continuing to grow faster than inputs, and Departments being challenged to improve efficiency and modernise outdated processes.”
“I was proud to support the Feltham Convening Partnership’s young leaders summer programme last month. What struck me was their ambition for themselves and their community, as well as their call for more work experience opportunities.”
“We will be working to commence the socioeconomic duty on public bodies in section 1 of the Equality Act to require public authorities to put addressing socioeconomic disadvantage at the heart of their strategic decision making. There will be more on that to follow. Let me again thank my hon.”
“For generations, the message to those who want to enter public life or elite professions has been that if they want to get on, they must sound like everybody else. When Margaret Thatcher became leader of her party in the 1970s, she famously underwent intensive elocution lessons with a tutor from the National Theatre.”
“Whether a young person chooses a degree or a trade, their journey must be determined by merit and their potential—never by whether they have to change their voice or pretend to be someone else to fit in.”
“Interestingly, studies also regularly show that regional accents such as Welsh or Yorkshire are rated by the public as trustworthy, warm and honest. Yet when those same studies measure perceived intelligence or employability, standard southern English and received pronunciation invariably top the metrics.”
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“We broadly support clause 91, which sets out which parts of the Bill will come into effect and when. We recognise the need to establish when and how various parts of the Bill will come into force. However, at the same time, we want to ensure that this important new regime is not implemented unnecessarily slowly, because the implementation of legislation can sometimes get delayed when it is not at the forefront of Parliament’s attention. The Bill is fundamental to supporting the levelling-up agenda, which is of great concern to us all, and net zero implementation. That is still a disappointment—I am sure we will come back to the need for net zero to be more explicit in the principles. It is important that we move forward as quickly as possible to ensure certainty in the subsidy control regime, and that we support research and investment.”
“I thank the Minister for his remarks. Amendment 87 is a probing amendment, and I hope he will be able to lay out a broad timetable as to what will happen after Royal Assent and what we can expect. I am sure that officials will be starting to map out the necessary activity. It would be helpful to know what may come out and in what order. I beg to ask leave to withdraw the amendment. Amendment, by leave, withdrawn . Question proposed, That the clause stand part of the Bill.”
“We support the clause. Question put and agreed to. Clause 91 accordingly ordered to stand part of the Bill. Clause 92 Short title Question proposed, That the clause stand part of the Bill.”
“It is an excellent title, and we support the clause. Question put and agreed to. Clause 92 accordingly ordered to stand part of the Bill. New Clause 1 Subsidy Control Principles: statement to Parliament “(1) Within six months of the opening of a new Parliament, the Secretary of State must make a written statement to Parliament on the subsidy control principles. (2) The statement must include details of— (a) any legislation the Government intends to bring forward to change the Subsidy Control Principles; and (b) any changes the Government intends to make to guidance under section 79 of this Act.”— (Kirsty Blackman.) This new clause requires a new Government to make a statement to Parliament about any changes it intends to make to the subsidy control principles. Brought up, and read the First time .”
“I do not wish to push new clause 3 to a vote today. New Clause 4 “Secretary of State and Devolved Administrations: requirement to report ‘(1) The Secretary of State, Scottish Ministers, Welsh Ministers and Northern Ireland Department of Economy shall each report annually on subsidies and schemes which they have made. (2) All reports made under subsection (1) shall be published.” . — (Seema Malhotra.) This new clause would require the Secretary of State and d evolved Administrations to report annually on subsidies and schemes they make . Brought up, and read the First time .”
“We will not necessarily press the new clause to a vote today, partly because we think that the issues raised by it could be absorbed within the discussions that we had about the role of the CMA in its reporting and the discussions that we had about the Minister, I think, putting in writing what he would see and how the reporting cycle might work. There may be ways to deal with some of these concerns—depending on what the Minister says—in the rounds of those discussions that we have talked about. I will just mention also the way we see the CMA having a role. I have not moved new clause 3 today because I think we will want to bring that back. There will be ways in which we look in the round at the role of the CMA and its powers on decision making, advice and reporting. I look forward to the Minister’s response.”
“Over the past few weeks, the Minister will have seen all too much, I am sure, both in the Chamber and in the news, the concerns in relation to whether public funds have been used in the way they should be, how contracts have been allocated and so on. I am sure that there will be a keenness to prevent any perceived or potential misuse of public funds or lack of transparency and to ensure that there can be adequate reporting of decisions that are made, particularly on larger subsidies by Administrations.”
“I beg to move, That the clause be read a Second time. New clause 4 would provide for greater transparency under the new regime by mandating the Secretary of State and each of the devolved Administrations to publish annual reports on the subsidies and schemes they have made during the previous year. In our view, that would ensure that interested parties and the public generally are made aware of how their ruling bodies are using public money through subsidies and for what purposes. I am sure that the Minister recognises that transparency is important and that he will agree with Professor Rickard, who said that through transparency we can get better compliance and better value for money, and we can help to ensure that subsidies that have been granted better meet the goals that we are setting out to achieve.”
“On the basis that there will be further discussion, that we do not want there to be administration that is more time-consuming than it needs to be and that we will revisit the way we can have a very efficient reporting regime, I will withdraw the motion. I am not sure whether I will be speaking again—I am not sure of these final few stages—but perhaps I can take this opportunity to echo the comments from the hon. Member for Aberdeen North by thanking you, Ms Nokes, and Mr Sharma, who also chaired the Committee; all hon. Members who have contributed and been part of our deliberations; and the Clerks, Hansard and so on for helping to make the process extremely efficient. I beg to ask leave to withdraw the motion. Clause, by leave, withdrawn . Question proposed, That the Chair do report the Bill, as amended, to the House.”
“I echo the Minister’s thanks to our witnesses. They gave us very good evidence at very short notice. I also thank both the Whips. We have hugely appreciated how they have managed time well. I also thank our staff—on our side, in particular, Francesca Sellors and Dan Jones—who have helped to ensure that we have had everything in time for the Bill proceedings, because it has been a journey. Question put and agreed to . Bill, as amended, accordingly to be reported .”
“The Minister has just said that there would be a review of what information is available that is “within scope”. Will she just make it clear to the House what she understands to be within scope?”
“I hope the Minister recognises why five years is too long a reporting period, takes on board the comments of the hon. Member for Aberdeen North and her party and those from Labour, and perhaps offers some feedback to the Committee on why five years was suggested. Does the Minister recognise our arguments, and would he be prepared to include a review in the later stages of the Bill?”
“As a minimum, that is a more appropriate timeframe for reviewing the new regime. I would be grateful to know whether deciding on five years followed discussions with the CMA. If those discussions did happen, what was the CMA’s feedback? Engaging with the CMA is important, and there may be the need for challenge if Parliament has a different view. As well as giving Governments more opportunity to make changes to the regime, including legislative changes and process improvements, any problems with the regime would be resolved considerably earlier because, let’s face it, if we have five years to do something, it may be left until the last minute. We want to ensure that Parliament is also responsive to any changes and plays its part in ensuring that the regime, and any changes, can be reviewed effectively every three years.”
“Five years would effectively provide for one report per Parliament, assuming that we have a five-year Parliament. What is more, five years is a significant amount of time to have passed before the first review of the effectiveness of the operation of the regime. There could be significant inefficiencies that cause substantive negative effects within that timeframe, and Parliament would be none the wiser without that informed view and assessment from the CMA. Labour tabled amendments 61 and 62 to reduce the reporting period laid out in clause 65 to every three years, which would allow for enough data to come through and for a cycle of meaningful reports that could take into account recommendations for change and assess how effectively the intended outcomes had been delivered.”
“For example, there may be a learning curve for public authorities, businesses and the Government alike, so it is important that the regime is subject to this regular review. It is good practice and it is important for value for money, for accountability to the taxpayer and to assess the effectiveness of the regime and make any necessary changes. It is important that the regime is subject to regular review. I think we are joined here in the view that five years is not regular enough, particularly given the very good example of having three elections in five years. Politics is not always certain, yet we want that certainty to be in place. We want the learning to be fast cycle; it is good practice to learn in a more fast-cycle way. Perhaps the Minister could clarify why this time period was selected.”
“The Secretary of State may also direct the CMA to prepare a report in respect of a specified period. I am not fully sure whether that allows for some flexibility if issues are identified; perhaps the Minister can respond to that point. However, the review is important because the new regime contains many significant differences from the EU state aid rules in the processes that we will follow. Those processes, which I think have the support of the House, require safeguards to be in place, because they are not in place in a system in which some of the review and scrutiny is done up front. We cannot embark on this without making sure that there are safeguards on the use of public funds, adequate scrutiny measures and a system for learning what works well and what may not.”
“It is a pleasure to serve under your chairship, Mr Sharma. I thank you for continuing to turn up to our ongoing and extensive deliberations. I thank the hon. Member for Aberdeen North for her comments. She is right that we have tabled a coincidentally similar amendment to hers. I support all the arguments she made. She is right that the Opposition amendment suggested slightly greater flexibility than the SNP amendment, partly because of our thinking on how long it might take to actually get the information to be able to add more meaningful assessments and recommendations to the monitoring of and reporting on subsidy control. The clause rightly requires the CMA to undertake a periodic review of the effectiveness of the Bill’s operation and its impact on competition and investment in the UK.”
“More frequent reporting at three years, which is not too onerous—it is as long as it takes to complete a common degree—would make a difference and allow for changes to be brought through.”
“I thank the Minister for giving way, and I appreciate his comments. However, he has not explained whether periods of time other than five years were assessed, and has not yet explained—perhaps he will—whether the CMA was involved in the discussions. Given the work of the subsidy advice unit and all the other work going on, producing a report every three years will not be too onerous if it is part of business as usual. What consideration has been given to other time periods? Perhaps the Minister can also clarify something. Does he see that if a report arrives in year four of a Parliament and some legislative changes are required and then we have an election, that would not be a sensible way of running a regime that requires some interplay between Parliament and the devolved Administrations?”
“I beg to move amendment 63, in clause 65, page 37, line 16, at end insert— “(4A) In preparing any report under this section, the CMA must consult— (a) the Secretary of State; (b) the Scottish Ministers; (c) the Welsh Ministers; and (d) the Department of Economy in Northern Ireland.” This amendment would require the CMA to consult with the Secretary of State and Devolved Administrations before preparing any report under this section.”
“There have been fewer occasions on which Labour has wanted to increase the voice of the Secretary of State under the legislation, but clause 65 is one place where we think that might be important. The amendment would therefore require the CMA to consult both the Secretary of State and the devolved Administrations before issuing a periodic review of the regime. In particular, the CMA would find the inclusion of their voices helpful as it deliberates the impact of the regime on competition and investment across the UK.”
“Daniel Greenberg, Parliamentary Counsel for Domestic Legislation, said in the evidence session that “when you are dealing with international obligations of the UK, that has to be dealt with by central Government but, again, doesn’t that have to be done in consultation with the devolved Administrations? Of course it does. With co-ordination with the devolved Administrations? Of course it does. With mechanisms for encoding that co-ordination and consultation into the way the Bill operates? Of course.” –– [ Official Report, Subsidy Control Public Bill Committee, 26 October 2021; c. 61, Q80.] The Labour party agrees completely with that, which is why we have consistently sought to amend the Bill to increase the role and voice of the devolved Administrations.”
“In fact, given that Scotland, Wales and Northern Ireland will have to implement not just what is in the Bill, but the many future regulations to be made by the Secretary of State, it is equally important that all voices are heard. Already, the devolved Administrations will not be included in defining many regulations; will not be able to call in subsidies or make post-award referrals; will not have automatic standing to challenge subsidies before the Competition Appeal Tribunal; and may not even be represented on the body that oversees the new regime—unless the Government are enlightened by discussion in Committee and the main Chamber, and with what is happening with the Office for the Internal Market. Will the Minister explain what role he sees the devolved Administrations playing in the new regime and in the monitoring and review?”
“We return to a familiar theme, which is the absence of any clear role for the devolved Administrations and the failure to recognise the need for a truly four-nation approach. Yet again, the clause fails to provide a role for the devolved Administrations in the CMA consultations and report. The Government seem not to have quite grasped the fact that the new subsidy regime will affect not just England, but Wales, Scotland and Northern Ireland. All nations should contribute to the review of the effectiveness of the regime and its impact on competition and investment within the UK, as all four nations will be affected.”
“Amendment 64 would require the CMA to put a copy of its report before the Scottish Parliament, the Welsh Senedd and the Northern Ireland Assembly, which would provide each of the legislatures with a clear ability to scrutinise the CMA report and therefore the effectiveness and impact of the regime.”
“I thank the hon. Member for her support. Speaking to amendment 64, once the CMA has prepared its report, clause 65(7) requires the CMA to arrange for a copy of it to be laid before Parliament. We welcome the opportunity that that will provide for the UK Parliament to scrutinise the reports. Given the impact of the regime on the devolved Administrations, however, why will the report not also be laid before the devolved Administrations of Scotland, Wales and Northern Ireland, thereby giving them the opportunity to undertake detailed scrutiny? There might be a technical reason for that, but certainly the feedback that we have received is that laying reports before the Administrations would enable more formal scrutiny of them. I would be grateful for the Minister’s comments on that.”
“Making sure at key stages that the voice of the devolved Administrations, and indeed of the Secretary of State, are formally heard will add significant insight to what will be in that report. We want that report to be the best it can be. Question put, That the amendment be made.”
“I thank the Minister for his comments. The devolved Administrations are distinct from other institutions because they are democratic institutions. For a regime that has to be accountable, it is important that the voice of those bodies and of Ministers, and others who may well have a view, are consulted. It is important to distinguish democratic institutions from others. The Minister is right that there will be a whole range of people who may want to contribute their views, and I am sure that the CMA will find a mechanism for seeking views. I want to push amendment 63 to a vote because if this is something that should be done anyway, we want to ensure that it is done.”
“That is why we have tabled amendment 65, which states that within 30 days of the report being laid under clause 65, the Secretary of State must make a statement to the House explaining what their response is and what action may be taken to address any deficiencies highlighted in the report. That would ensure that any issues with the new regime were not only raised, but actively considered. As the regulation currently stands, problems identified by the CMA may continue undebated and unaddressed.”
“It does not take a genius to recognise that reviews alone are not enough; they need to be acted on. Yet there are no provisions in the Bill that we have seen that require the Secretary of State to act in response to the findings of the CMA’s reports, or even to consider whether action is necessary to remediate any deficiencies in the regime identified by the CMA. Does the Minister agree that this seems to be a significant gap? If the report and reviews under clause 65 do not trigger at the very least an obligation for the Secretary of State to consider and have due regard to its findings, are we not missing quite an important step in the overall process of review and improvement of the regime?”
“I beg to move amendment 65, in clause 65, page 37, line 27, at end insert— “(7A) Within 30 working days of a report being laid under subsection (7), the Secretary of State must make a statement to the House of Commons explaining what action will be taken to remedy any deficiencies in the effectiveness of the operation of the Act or impact of the operation of the Act on competition and investment within the United Kingdom identified by the CMA.” This amendment would require the Secretary of State to make a statement to the House of Commons on the CMA’s findings and any remedial action required. I will keep my comments brief. This amendment would require the Secretary of State to make a statement to the House of Commons on the CMA’s findings and any remedial action required.”
“I thank the Minister for his comments. On the basis of some of the discussion, and the suggestion about what role Select Committees might play, issues with the report are perhaps something we can review and discuss offline with the Minister. On that basis, I beg to ask leave to withdraw the amendment. Amendment, by leave, withdrawn. Question proposed, That the clause stand part of the Bill.”
“This is an important clause and we support its standing part of the Bill. Question put and agreed to. Clause 65 accordingly ordered to stand part of the Bill. Clause 66 CMA Annual Report”
“We have proposed that the annual report should set out “the number of extensions to the reporting period” for mandatory notifications that the CMA has made, the duration of those extensions, “the number of voluntary referrals made”, and how many of those the CMA has and has not prepared a report on. The CMA has a key role in ensuring that subsidies and schemes meet the principles and do not distort the market. If it is unable to carry out its responsibilities effectively, there will be a real risk that damaging subsidies continue without challenge or review.”
“Does he agree that subsidies can be used and could make a significant impact by supporting and aiding deprived areas? Including information on the geographical spread of subsidies could be quite an effective and efficient way of providing some insight about whether the resources under the regime are working to reduce inequality, which would surely be of help to the Government in achieving their stated goals. We believe that the CMA’s annual report should include information that would allow the CMA’s resourcing, capacity and effectiveness to be evaluated.”
“The new regime, and subsidies generally, can provide an important opportunity for channelling resources to deprived areas and reducing regional and intra-regional inequality. As the Bill currently stands, however, there are no regulations in place that actively allow for that. As Professor Fothergill, the national director of the Industrial Communities Alliance, explained: “In certain places, if we really are serious about levelling up, we have to put more resources into that effort, and we have to use state aid as one of the tools for delivering new jobs.” –– [ Official Report, Subsidy Control Public Bill Committee, 26 October 2021; c. 11, Q7.] Does the Minister recognise that the contents of the Bill do not currently match up with the levelling-up rhetoric?”
“Thirdly, the report should include information on the geographical spread of subsidies that the CMA considered in the last reporting period, as well as information on the value of subsidies that have been awarded to enterprises in each region, nation and local authority in the UK. We are used to statistics and information being available at a fairly granular level. This is important and significant, given that, despite our best attempts, the Bill currently provides no information or regulation on how subsidies and schemes will work to reduce economic inequality across the United Kingdom. If the Government really believe in levelling up, they need to take action to match what they say.”
“In doing so, the review would provide an assessment of how successfully public authorities are meeting their statutory obligations under the legislation. Secondly, the report should include information on the subsidies and schemes that the CMA reviewed and found risked having a negative effect on competition and investment within the UK’s internal market. That would ensure that not only the House but the taxpayer and the devolved Administrations are made aware of what, where and how subsidies are putting pressure on the UK’s internal market, if that is happening.”
“This amendment would require the CMA to include the additional specified information in its annual report. Clause 66 sets out the information that the CMA must include in its annual reports. It is connected in some regards to the debate that we have just had. Although we support the mandating of specific information to be included in the annual reports, the information required feels too high-level and not sufficiently detailed or useful. The clause envisages the CMA simply listing the subsidies and schemes in relation to which it has prepared reports. The Minister may explain what he expects in the annual report. We believe that, first, the annual report should include information on the number of subsidies and schemes in relation to which the CMA found that public authority assessments required improvements.”
“I beg to move amendment 66, in clause 66, page 37, line 40, at end insert— “(d) the proportion of subsidies and schemes in each of paragraphs (a), (b) and (c) in relation to which the CMA found that the public authority’s assessment under section 52(2)(d) or 56(2)(d) required improvement; (e) the proportion of subsidies and schemes in each of paragraphs (a), (b) and (c) in relation to which the CMA identified a risk of negative effects on competition or investment within the United Kingdom; (f) information on the geographical allocation of subsidies, including the total value of subsidies subject to mandatory and voluntary notification in the preceding 12 months that have been awarded to enterprises in each nation, region and local authority within the United Kingdom; (g) the number of extensions to the reporting period made under section 53(6) at the request of the CMA and the average number of days of those extensions; (h) the number of voluntary referrals made under section 56(1);and (i) the number of those voluntary referrals in relation to which the CMA has given notice under section 57(2) that it has decided not to prepare a report.”.”
“We talked about the number of voluntary referrals, and those for which the CMA decided not to prepare a report. It is important to ensure that our proposals are understood. I take on board what he said, I think in the debate on clause 65: that he would welcome suggestions from the Opposition, and perhaps from his own side, about what information would be useful. We all want to ensure that there is an effective and efficient regime. None of us wants to see unnecessary costs incurred, but we need transparency and the right information to inform the right decisions and the best response.”
“I thank the Minister and the hon. Member for Aberdeen North for their comments. I intended to press the amendment to a vote, but on the basis of some of the discussion I will not do so. However, I will challenge a couple of things the Minister said. We are all aware of where there could be burdens for the CMA or others in producing reports, but it is important to ensure that we have an X-ray view that provides insight into what is happening across the system as a whole. Where the CMA should have information that would be relevant, it may be useful to include it in the annual report. The Minister talked about eligibility for voluntary referral, about which the CMA would not have information. We did not intend to include any wording around eligibility, and I do not think that we did.”
“It would be helpful, in the light of our conversation, if we could start with the Minister’s expectation. He may well have reflected on the discussion we have had today. That may a good and efficient way for us to come back with suggestions of what else might occur, or perhaps there will be full, total agreement on what we want to see in the CMA’s annual report; we do not know. I beg to ask leave to withdraw the amendment. Amendment, by leave, withdrawn. Question proposed, That the clause stand part of the Bill.”
“Notwithstanding the comments we have made in the ongoing discussion, we support the clause stand part. Question put and agreed to. Clause 66 accordingly ordered to stand part of the Bill. Clause 67 information-gathering powers Question proposed, That the clause stand part of the Bill.”
“The clause applies sections 41 to 43 of the United Kingdom Internal Market Act 2020 for the purpose of assisting the CMA in carrying out its functions on subsidy control. The clause means that the CMA will be able to give an information notice or require the production of a document by an individual, business, or public authority. We recognise the importance of allowing the CMA to give an information notice, so that it can monitor the subsidy regime effectively. We therefore support the clause standing part of the Bill. Question put and agreed to . Clause 67 accordingly ordered to stand part of the Bill . Clause 68 Subsidy Advice Unit”
“I beg to move amendment 67, in clause 68, page 38, line 39, at end insert— “(3A) The Chair of the CMA Board may appoint up to three non-executive members to the Subsidy Advice Unit established under subsection (1) in order to ensure that the Unit includes least one person with relevant experience in relation to each of Wales, Scotland and Northern Ireland.” This amendment would allow the CMA Chair to appoint up to three non-executive members to ensure that the Unit includes at least one person with experience in relation to each of Wales, Scotland and Northern Ireland”
“If there is an intention to have such representation anyway, why not formalise it as part of the structure, and put it on the face of the Bill?”
“They seek to ensure that information and insights are considered in the round and together, and that the new regime is more effective across the whole of the UK. It is not just Labour that recognises that representation is important. To choose just one comment that we heard in evidence, Thomas Pope, deputy chief economist at the Institute for Government, said: “I certainly think that the CMA and/or the subsidy advice unit should have a membership and input reflecting its four-nation role in the UK”. –– [ Official Report, Subsidy Control Public Bill Committee, 26 October 2021; c. 31, Q43.] We think that that should be formalised as part of the structure, so that things are less likely to go wrong or be overlooked.”
“They would ensure that the Bill works as well as we want it to, and as well as we need it to for Scotland, Wales and Northern Ireland, as well as for England. Amendment 67 would allow the chair of the CMA board to appoint up to three non-executive members to the subsidy advice unit if the board felt that there was a gap. That would ensure that the CMA could include at least one person on the unit with specific, recent experience that was relevant to Scotland, Wales and Northern Ireland. Amendment 69 states that the CMA must seek the consent of the devolved Administrations before making an appointment to the subsidy advice unit. The amendments would ensure that the guidance and reports issued by the CMA are not too England-focused, and take into account, in a more equal way, the views of all the UK regions.”
“Does the Minister not feel that it is important for the devolved nations to be represented on this significant body? Doing so would enhance the Government’s reaching out and their ongoing connection with the devolved Administrations, ensuring genuine four-nation input in its work. As Dr Pazos-Vidal, head of the Brussels office for the Convention of Scottish Local Authorities, said, the Bill “is too general and not reflective of the territorial constitution of the UK as it stands.” –– [ Official Report, Subsidy Control Public Bill Committee, 26 October 2021; c. 8, Q4.] The lack of specific representation for the devolved Administrations on the advice unit is a stark example of that. Labour proposes two amendments to change that lack of representation.”