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output continuing to grow faster than inputs, and Departments being challenged to improve efficiency and modernise outdated processes.”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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“As the Minister said, the clause allows appeals to be made to the Court of Appeal or the Court of Session on any points of law. We support it. Question put and agreed to. Clause 7 5 accordingly ordered to stand part of the Bill. Clause 76 Duty to provide pre-action information”
“I beg to move amendment 77, in clause 76, page 44, line 21, leave out “such restrictions as it considers proportionate” and insert “the minimum restrictions that are necessary”. This amendment provides that restrictions imposed to protect the specified categories of information should be the minimum necessary.”
“Overall, although we believe that our amendments would substantially improve clause 76, we recognise the clause’s importance in allowing interested parties to make a request for information.”
“If we keep the original text, a public authority could choose unnecessarily to make public more than is proper, hampering adequate transparency measures. Amendment 78 would provide a proper route for challenge if a public authority imposed restrictions under subsection (5) that were found to be excessive. On amendment 79, we consider it proper that where restrictions have been imposed on the release of information to interested parties on the basis of, for example, commercial or legal sensitivities, there is an appeals process to ensure that the decision made was the correct one. That is essential to ensure that a public authority is not able to abuse its powers in deciding which restrictions to impose, and encourages the public authority to choose the minimum restrictions necessary or possibly face an appeals process.”
“Amendment 77 would mean that restrictions should be the minimum necessary when imposed to protect commercially sensitive, confidential or legally privileged information or information whose disclosure would be contrary to the public interest. Let us compare that with the current wording of the Bill, which is that the public authority may impose restrictions that it considers proportionate. The original wording is very ambiguous, provides too little guidance for the public authority and provides little recourse to challenge if it is determined that the restrictions imposed were in fact disproportionate. The restrictions imposed by the public authority should not be overly excessive. It is important that information that should be made public is made public to allow maximum transparency.”
“Clause 76 imposes a duty on public authorities to provide certain information to interested parties about a subsidy or a subsidy scheme. An interested party may request the information for the purpose of deciding whether to apply to the CAT for a review of a subsidy or scheme on the grounds that it failed to comply with the relevant subsidy control requirements. A request must be made in writing and the interested party must state that they are considering applying for a review. The public authority must respond to the request within 28 days and it may impose restrictions that it considers proportionate to protect commercially sensitive or legally privileged information.”
“The Minister may be coming to this point, but will he clarify the process he envisages in a case where there is suspicion that, rather than information being commercially sensitive, there is another reason for not disclosing it? Is there a way to challenge that or to appeal? We want to understand this; that is why we tabled the amendments.”
“The Minister also says that only in a small number of cases—I forget his exact words—might the provision be misused, but sometimes the point of having law is to make sure that it is there for such occasions. We cannot predict how many times a mechanism for appeal and challenge may be required, but one day, when he is, perhaps not the Prime Minister, but the Secretary of State, he might have reason as an interested party to use it. For the purpose of ensuring that there is a robust regime, it is important that we cover off this point. If such a mechanism is in the Bill, as he hopes it is, it would be good to have clarification in writing.”
“I thank the Minister for his remarks. I am not entirely sure that he has identified an alternative route. On the basis that he thinks there could be a route, and to allow time to review and test that, I will not press the amendments today, but I would be grateful if he replied in writing on one specific point. If an interested party makes a request and, under subsection (5), the public authority imposes restrictions that it has reason to believe are spurious, for example, the Minister says that JR may be available. The question is whether JR is available. I would like him to state where and how there is the equivalent of an appeal mechanism. If he does that, I would be happy to say that we feel that that important issue has been dealt with.”
“On the basis that I expect a letter from the Minister, I beg to ask leave to withdraw the amendment. Amendment, by leave, withdrawn. Question proposed, That the clause stand part of the Bill.”
“Having explained how we believe our amendments would have improved the clause, we acknowledge its importance in allowing interested parties to request information and therefore support its standing part of the Bill. Question put and agreed to . Clause 76 accordingly ordered to stand part of the Bill . Clause 77 Misuse of subsidies Question proposed, That the clause stand part of the Bill.”
“I am grateful to the Minister for his comments and to the hon. Member for Aberdeen North for her question, which is important. As the Minister outlined, the clause gives public authorities the power to recover subsidies used for purposes other than the purpose for which they were given. That is an extremely important stipulation. Subsidies should be used only as intended, in line with the subsidy control requirements, and as agreed between the public authority and the recipient. We will support the clause standing part of the Bill.”
“I thank the Minister for giving way. Last week was UK Parliament Week, but it was not our finest hour. Does he agree that, at the very least, a message from this debate must be that we work in our constituents’ interests and in the public interest, and that the use of this House to work in the private interest to the tune of hundreds of thousands of pounds will not be tolerated?”
“On that basis, we will abstain on amendment 28. We support clause 52 standing part of the Bill.”
“Although we recognise the intention and some of the arguments behind the amendment, we do not think that producing a report on a subsidy every time one is given by the Department for Business, Energy and Industrial Strategy—as a sort of blunt tool—would necessarily be the most effective use of the CMA’s time. Rather, we have argued very strongly for all subsidies, regardless of whether they are below a particular amount or given to a certain recipient, to be posted on the database to ensure sufficient transparency. We will also seek to ensure that there are greater rights on call-in powers or that the CMA can investigate itself, if it deems that there a reason to do so. We think that any assurances, which are, in part, the intention behind the amendment, could be better delivered through the Bill in other ways.”
“I am sure that the issue will come back at future stages and, at the very least, our expectation will be that the definition is published very soon after the Bill receives Royal Assent. Things that we could be dealing with now should not end up delaying the ability to make decisions and implement the regime. Although we are concerned about the definition, we support the overall importance of the measures outlined in the clause and the function of mandatory referral to the CMA, in the interests of checking compliance with the principles, bringing assurance on value for money and confirming that there will be no distortion or harm to the economy. On amendment 28, the hon. Member for Aberdeen North makes an important continuing reference to the Government marking their own homework.”
“It is a pleasure to serve under your chairship, Ms Nokes. I thank the hon. Member for Aberdeen North for her remarks. She raises a number of important and pertinent issues around scrutiny, in particular about subsidies introduced by the Secretary of State. The clause deals with the mandatory pre-award referrals to the CMA. It outlines that: “A public authority must request a report from the CMA…before giving a subsidy, or making a subsidy scheme, of particular interest, or…where directed to do so by the Secretary of State”. We have highlighted our concerns about the definitions of subsidies “of particular interest”. It is a glaring gap in our debates on the detail of the legislation. We think that the definition should be included in primary legislation, and I hope the Minister has listened to our concerns.”
“We support clause 52. I am not concerned about the detail of the clause, but how it will be effective as part of the regime. This comes back to why the rules around what can be referred under the definition of a subsidy of particular interest and who has what call-in powers will be a fundamental question to come back to. It would be a shame to have a good clause and not use it to best effect to support the best outcomes of the regime.”
“What process is he putting in place to ensure that the CMA has the necessary resource to carry out its reporting adequately and in a timely manner? We want that reporting to be to the required standard. Corners should not be cut in order to meet a deadline. We need the work to be done effectively and with the confidence of all interested parties and the public. We would also like clarity on what exactly would constitute an exceptional circumstance to allow the Secretary of State to extend the reporting period. Will the Minister provide further clarity on what might fit that definition? Despite those concerns—there may need to be some tightening up later—the clause lays out the necessity of the measures for the effectiveness of the regime. We will therefore agree that it stand part.”
“We want subsidies that are given for the right reasons to be granted, without an extra onerous delay from the reporting taking too long, so it is important that some targets and mandatory deadlines are in the legislation. We are concerned about whether the CMA will have the necessary capacity to produce the initial response within five days, and then the report within the 30 working-day period. Can the Minister offer reassurances about how the Government will monitor, review and work with the CMA on whether it has the capacity? There may be a spurt of requests, particularly perhaps earlier on in the process, as public authorities are starting to feel their way through it. They may even request, for good reason, voluntary referrals.”
“It is a pleasure to respond to the Minister’s comments. The clause sets out the CMA’s reporting period for mandatory referrals. It specifies that the CMA has 30 working days to issue a report, unless the reporting period is extended under subsections (4) or (6). There is also the important five-day period for the CMA to respond to a request for a referral. Labour Members recognise the importance of a relatively quick reporting period to give public authorities the confidence they need when granting subsidies under what is designed to be a quicker and easier system. However, it should not be without safeguards and, sometimes, extra safeguards, bearing in mind that pre-notification brings checks earlier in the process. We have to continue to be very mindful of that.”
“We support Government amendment 3, which provides clarity as to exactly when the cooling-off period ends. I will reserve my other comments on the clause for the next stages. Amendment 3 agreed to.”
“As such, we believe that it would be better for the CMA, an independent organisation whose judgment is trusted, to make that decision. Amendment 48 would make that change.”
“I beg to move amendment 48, in clause 54, page 30, line 10, leave out “Secretary of State” and insert “CMA”. This amendment provides that the power to extend the cooling off period should sit with the CMA rather than the Secretary of State. The Labour party accepts the necessity of the cooling-off period to ensure that appropriate consideration is also given to the CMA’s report. However, we do have some concerns about subsection (4) of the clause. We believe that the power to extend the cooling-off period should lie not with the Secretary of State but with the CMA. Given that the extension of the cooling-off period could have a significant effect on the granting of the subsidy and the effectiveness of its intended purpose, we should not risk it being seen as a politically charged, or political, decision.”
“This has been a very helpful debate. The Minister is right: we will discuss some contextual powers in the debates on later clauses and new clause 3. Clarifying the roles, expectations and powers for the CMA, the Secretary of State and other bodies, such as devolved Administrations, is an important point to come back to, but I will not press the amendment at this stage. I beg to ask leave to withdraw the amendment. Amendment, by leave, withdrawn.”
“I beg to move amendment 50, in clause 54, page 30, line 18, at end insert— “(5A) The Secretary of State must by regulations define ‘serious deficiencies’ for the purposes of this section.” This amendment requires the Secretary of State to define “serious deficiencies” for the purposes of directing that the cooling off period is extended.”
“It would be helpful to the Committee if the Minister could confirm how and where we will reach a definition of serious deficiencies and when we are likely to get that definition. My comments apply to both amendments 50 and 51.”
“It is a pleasure to move amendment 50 and, with that, to speak to amendment 51, to which it is related. Clause 54(4) states that the Secretary of State can extend the cooling-off period if he or she considers that the CMA’s report has identified “serious deficiencies”. The hon. Member for Aberdeen North has referred to that point. Yet again, the Bill is lacking a key detail—namely, what would constitute a serious deficiency. We have had a brief discussion on this point. Clarity is necessary for public authorities, the CMA and interested parties, in order to have confidence in the new regime and the timing of subsidies. The amendment would require the Secretary of State to define serious deficiencies for the purposes of directing that the cooling-off period is extended.”
“I am slightly surprised, because serious deficiencies is being used as a trigger for the Secretary of State to be able to use a power. I would be very surprised if there was a common understanding that was so common that even the members of this Committee, if they were to secretly write it down on a piece of paper and compare notes, would have exactly the same definition of serious deficiencies. I am not sure that suggesting there is a common understanding, as if that is fact, is the right way to address this particular point. We need this defined, and we need to know when and where it will be defined.”
“There is perhaps not the common understanding that the Minister thinks of “serious deficiencies”. I beg to ask leave to withdraw the amendment. Amendment, by leave, withdrawn. Question proposed, That the clause, as amended, stand part of the Bill.”
“That might not be a complete list, defined A to H, but it may be a broad set of guidance, for use both by the subsidy advice unit in making assessments, and by the Secretary of State in making a clearer and more transparent decision that could also be open to scrutiny. I hope the Minister will confirm to the Committee that he would be prepared at least to look at some of those areas he has outlined—perhaps there will be more and we might need to come back to this in the regulations—to provide clarity on what could be quite an important use of the power. We would hate for the use of the power to be challenged on the basis of people not agreeing that something was a serious deficiency. We do not want the process to be subject to unnecessary delays that could be dealt with by planning ahead for different interpretations.”
“I thank the Minister for his comments. I will not press the amendment to a vote, but I want to repeat this point. In light of what the Minister has said, some of the examples or scenarios that he has started to outline suggest that there is more that can be done to scope out, set out some expectations or perhaps put something in guidance so that there starts to be a sense of scope around what sorts of scenarios could result in a consideration of serious deficiencies. I say that not because I am trying to create an issue that is not there, but because where we have something in legislation that is a basis on which a power is to be exercised, it is incumbent on the Government to ensure that there is greater clarity about what the expectations might be.”
“We have no further comments other than the issues we have raised already. We support clause stand part. Question put and agreed to. Clause 54, as amended, accordingly ordered to stand part of the Bill. Clause 55 Call-in direction”
“It is likely that there will be greater demand for referrals in the earlier stages of the regime’s implementation, but as people become familiar with the process and judgments become clearer, and the CMA gets some case studies to use, the system will improve. It is important that there is clarity from Government. We may come back to some of this, but the referring public authority will also need clarity on what it will and will not get back. Guidance on that would be extremely helpful to make the legislation work effectively.”
“The clause does indeed allow public authorities to “request a report from the CMA before giving a subsidy, or making a subsidy scheme, of interest.” We have had some interesting and helpful discussion so far, but our main concern remains the lack of clear definitions in the legislation, particularly the definition of “interest”. Such clarity would provide some necessary assurance to public authorities, the CMA and subsidy recipients about how the regime will work in practice. We could have pre-empted this issue and had clearer definitions to ensure that more was done upstream by public authorities, meaning fewer referrals. More referrals will create more burden on the subsidy advice unit. Referrals will be made for good reason, however, so we absolutely need the provision.”
“The Minister is starting to go a little bit further in implying that there will be, perhaps not trade-offs, but decisions that will need to be made about whether to have the review done by the subsidy advice unit and what that might be intended for. What the clause might be intended for may not be the same as what public authorities may feel in wanting to seek a voluntary referral. Can he perhaps clarify whether, for example, undertaking a voluntary referral may be used to seek to provide reassurance so that there is less likelihood of a challenge later on? Decisions that are taken will bear some relationship to other parts of the Bill and the ability to bring challenges. What status would receiving a report back from the subsidy advice unit have? Could that be used if, for example, there was a challenge later on?”
“More efficiency also means less cost and better value for money, because it is public money that goes into the CMA and the subsidy advice unit, so we need to make sure those resources are used effectively and improve the quality of both the applications and the process. I would be grateful to understand how the Minister envisages that being done.”
“I thank the Minister for his comments on clause 57 stand part. The clause outlines the CMA’s reporting period for subsidies and schemes that are voluntarily referred to it. We have no issues with this clause, but I wanted to raise one small point in relation to subsection (6). I would be grateful for clarity about how the Minister expects any extensions of the reporting period to be reported, because we do not just need to know that it is taking longer because there is complexity: we need to know whether it is taking longer because there is a resourcing issue, or because public authorities are not completing the paperwork correctly and there is some confusion over some information that might be provided. Understanding those reasons would inevitably be useful when seeking improvements to the system and making the process more efficient.”
“We agree that in such cases, the subsidy or scheme in question should be treated as if it were part of a mandatory referral to the CMA. We have no issues with this clause, and will vote for it to stand part. Question put and agreed to. Clause 58 accordingly ordered to stand part of the Bill. Clause 59 CMA report following mandatory or voluntary referral”
“Although Labour supports the general principle of post-award referrals, there are key problems that we wish to raise about this clause, not least the asymmetry of powers between the Secretary of State and the devolved Administrations, as well as some other key details. Amendment 55 has been tabled because, in our view, the Bill fails to provide the devolved Administrations with the proportionate and fair symmetry of powers that they should have, given that the Bill will operate across the UK.”
“I beg to move amendment 55, in clause 60, page 33, line 20, after “Secretary of State” insert “, the Scottish Ministers, the Welsh Ministers and the Department for the Economy in Northern Ireland”. This amendment extends the post-award referral powers under this section to the Devolved Administrations. It is a pleasure to serve under your chairship, Mr Sharma. You beat me to it: I wish you, and all who might be celebrating, a happy Diwali and Bandi Chhor Divas today. It is a very auspicious day, and it is a pleasure to be debating the Bill on such an auspicious day. Clause 60 gives the Secretary of State the power to refer subsidies or schemes to the CMA after they have been awarded.”
“The clause gives the Secretary of State the power to make post-award referrals to the CMA but does not extend this power to the devolved Administrations. The specific purpose of the amendment is to extend the post-award referral powers in the clause to the devolved Administrations. As it stands, the Secretary of State can refer to the CMA subsidies granted in Scotland, Wales and Northern Ireland that may be perceived to damage the interests of enterprises in England. However, the devolved Administrations cannot bring forward an argument. They may in time have good reason to refer subsidies—English or others—to the CMA that they may perceive damage interests within the devolved Administration areas.”
“I thank the hon. Member for his contribution. He will see from the contributions of Opposition Members that we are not saying that exactly the same powers should be given in all circumstances to the devolved Administrations, but that there are areas in which arguments for the devolved Administrations having similar powers make sense within the context of how the regime may operate. With a view to how issues could be raised and dealt with, there may be very good reason for doing that. We propose this not for political purposes but because we seek a regime that will work effectively and with some symmetry of powers relating to the opportunity, where it would be helpful, to challenge subsidies. I will lay out a couple of reasons why.”
“Perhaps he will offer a robust argument for not allowing the devolved Administrations to make post-award referrals, because we fail to see a valid argument for that exclusion. Instead, it feels more like a lack of a fair distribution of powers, and something we should consider as the Bill makes progress. We therefore propose the amendment. We hope that the Committee sees its importance in ensuring that Scotland, Wales and Northern Ireland feel that they have a fair role in the subsidy regime. I will await the Minister’s remarks before deciding what we shall do on this amendment.”
“During the evidence session on 26 October, George Peretz QC, a barrister specialising in state aid, said: “In a situation where an English local authority, the Secretary of State or another UK Government body acting as an English Department does something that is designed to benefit England but causes serious concern in Scotland or Wales, why should the Welsh or Scottish Ministers not be able to do the same thing if the concern is with competition or investment within the United Kingdom? I find it slightly hard to see what the argument against that is.” –– [ Official Report, Subsidy Control Public Bill Committee, 26 October 2021; c. 44, Q63.] Could the Minister share his reflections on those comments?”
“Powers on subsidies and the regime overall should reside in Westminster, and we understand that it is crucial that subsidies under the regime do not distort the UK’s internal market—we would raise little concern on that, and we think it is vital that that is the case—but as such, devolved Administrations, such as the Scottish Parliament or Welsh Senedd, should have the opportunity to receive the CMA’s advice on subsidies that they consider could damage their national interest. It is not only Labour that thinks that.”
“I thank the hon. Member for her contribution in response to the challenge to us from the Government side, which I do not think is at all fair, because we have not at any point argued against this being a reserved power or the overall structure of the Bill. We have genuinely sought to amend the Bill to make sure that there is a fair and sustainable settlement that commands the confidence of all our nations.”
“I thank the Minister for his remarks. I fail to see an explanation. I understand the restatement of his position, but I feel that the argument was missing. This area is important to the effectiveness of the regime as a whole and over time, so I will press the amendment to a vote. Question put, That the amendment be made.”
“I beg to move amendment 56, in clause 60, page 33, line 27, at end insert— “(c) that there is a risk of negative effects on competition or investment between the United Kingdom and a territory or country outside the United Kingdom.” This amendment provides that a post-award referral can be made where the Secretary of State considers that a subsidy or scheme risks competition or investment between the UK and a third country.”
“We hope the Minister recognises that, as the Bill currently stands, there is a loophole whereby subsidies incorrectly not identified can escape scrutiny and transparency. Amendment 57 is an attempt to close the loophole, and I therefore hope that the Government will work with us and support it.”