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output continuing to grow faster than inputs, and Departments being challenged to improve efficiency and modernise outdated processes.”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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“Ivan McKee : First, for the record, it is well known but it is worth stating that leaving the European Union was a mistake and we look forward to the day, hopefully in the not-too-distant future, when we can rejoin the European Union and all the advantages that it gave to Scotland and, frankly, the rest of the UK. As for the specifics of the Bill, given that we are where we are, we recognise the need for a Bill, notwithstanding the concerns I have raised already. Many of the specifics have still to be nailed down. As we see the final shape of it emerge, we will comment on the specifics. As for being able to support different parts of Scotland, given that we have responsibility for economic development in Scotland, clearly we are keen to be able to do that.”
“Q 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? 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?”
“I suppose another concern about the Bill’s general operation is the lack of the option, or requirement, under the EU regime for pre-notification or advance approval. In advance of an award or a subsidy being made, that gave certainty that it was aligned with the rules in place. The absence of that in this Bill creates a great deal of uncertainty as to what is allowable and what is not in advance of any subsidy decisions being made.”
“Q 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? Ivan McKee: A four-nations approach clearly has to take recognition of areas of devolved responsibility, be that for agriculture, forestry, fisheries, environment, economic development and so on. A range of areas on which the Bill impinges are devolved under the settlement. So clearly that is a concern.”
“In broad terms, it centres around, as I said, the requirement to not have the Secretary of State able to operate in devolved areas, as per the devolved settlement, and for the Scottish Government and Scottish Ministers to be able to do that. For us to have equivalent powers as it refers to devolved areas would be the ask, in broad terms. I have outlined some of that verbally, but I am very happy to come back to the Committee in writing with the details on specifically what that means. Local authorities have always been able to grant aid within the rules that exist, so effectively nothing changes there. What changes with regard to the Bill is the authority that it gives the Secretary of State that it does not give in devolved areas to Ministers in the devolved Administrations. That is our concern.”
“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. Ivan McKee: On the specifics of what our asks would be, I am very happy to put that in writing.”
“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?”
“Mr Speaker, the Minister said at the beginning that he respected you and this House, but does he not accept that the reason that we are here now, having this urgent question, is precisely because the opposite has happened? When he answers that question, perhaps he can also enlighten us: has he had discussions with the Welsh Government about the UK shared prosperity fund in the way that he has with the editors of the national newspapers?”
“The hon. Member will know the context in which we are having this debate. It is a time of great economic uncertainty. Thousands of aviation workers in my constituency have been affected by this issue, whether at Heathrow airport, British Airways, Dnata catering or others. Thousands of them are living on incomes reduced by up to £8,000 a year, which is having a massive impact. Other employers behave differently. Has she made an assessment of her proposals to come to a view about whether that practice, which has had an impact on my and her constituents, and those of others, will be prevented by her proposals?”
“More than that, however, it is necessary to protect the UK’s internal market and to ensure that public funds are being made available to businesses with the appropriate safeguards in place. That is why we will not be opposing the Bill tonight, but we are seeking to address significant gaps of concern during the passage of the Bill.”
“To turn to the Bill, let me start by thanking the Secretary of State for his opening remarks, in which he laid out the subsidy control principles and talked about the need for autonomy, transparency and accountability in the new regime. Labour recognises the need for subsidy control legislation which establishes the framework for the UK’s post-Brexit regime. As of 1 January this year, EU state aid rules largely no longer apply in the UK. The EU-UK trade and co-operation agreement requires that the EU and the UK maintain their own independent systems of subsidy control. The UK also has to continue to comply with the World Trade Organisation’s subsidies and countervailing measures agreement. The Bill is therefore necessary for us to comply with our international obligations.”
“Let me start by saying that it is good to see the Secretary of State still in his place after last week’s reshuffle. I also wish to congratulate the new Ministers in his team on their appointments. However, I am sure I am not the only Member of this House who has noticed that there are now no female BEIS Ministers. While businesses across the country recognise the importance of balanced leadership at the top of their organisations, it is remarkable that BEIS seems to be moving in the opposite direction, and overlooking the important contribution that women Ministers make to ministerial teams and indeed to our economic debate.”
“For example, in 2019 the UK spent just 0.38% of GDP on state aid, far lower than Germany, which spent more than three times that or Hungary and Denmark. Indeed, we were seventh lowest in the EU. The Secretary of State does not have the strongest record on industrial strategy, given that he scrapped his predecessor’s plan and wound up the Industrial Strategy Council in March.”
“In March last year, the regional deprivation fund highlighted that clearly, which led to considerable debate in the House. The Government appeared to direct money not to areas that needed it most, but to areas that seemed to serve their interests. If the Government are truly committed to their levelling-up agenda and their plan for growth, they need to show it. The Secretary of State should publish their plans and detailed guidance on how the subsidy control regime will direct public funds to the communities and businesses that need it most, in the interests of genuinely levelling up in deprived areas and our wider economy. We also know that the UK has historically spent far less on subsidies than its international counterparts.”
“As the Minister for Finance and Local Government in the Senedd asked in her letter to the Government: “If areas that have suffered historical economic disadvantage will no longer have the right to greater flexibility of subsidy over other regions… what alternative approach does the Government propose to ensure that disadvantaged areas can compete on a level playing field?” Is the equivalent to an assisted areas policy implied under the seven principles, for example, equity rationale or specific policy objectives? In that case, will the Government make that clear in the guidance? Public authorities that will transition to the new regime in our devolved Administrations need that clarity. Parliament is right to be concerned that the Conservatives are more interested in levelling-up rhetoric than in actually levelling up.”
“Transparency is also severely lacking in the case of some subsidies, putting the country at risk of allowing damaging subsidies on the scale of hundreds of thousands of pounds, and allowing the use of public money to continue unknown and therefore unchallenged. Although the Bill may propose a quicker subsidy regime, we want to understand further how the Government plan for those subsidies to be used, what will be brought forward from the contributions to the Government’s consultation and the response to it, and how that will manifest in the guidance to come. We have heard the concerns about support for assisted areas or key British sectors and foundation industries, such as steel.”
“Labour is in favour of a subsidy system that backs British businesses and our economy, but it must operate in the context of a strong UK-wide industrial strategy, which for all intents and purposes is not nearly where it needs to be. Furthermore, there is no clear plan for how the new subsidy control regime will be used to support national priorities such as net zero. Much more needs to be joined up and coherent in the new regime. Secondly, the Bill in its current form does not provide a fair role for devolved Administrations—we have heard that in hon. Members’ interventions—in developing and implementing the new regime. We believe that changes must be made. Thirdly, we are concerned that the Bill does not strike the right balance between efficiency and oversight, particularly regarding the role of the Competition and Markets Authority.”
“The Bill offers the potential of a quicker system where subsidies are not required to be approved in advance of being implemented, but are subject to a review and appeal system. We want this regime to be robust and to stand the test of time, but the new system will work only if it provides transparency, oversight and scrutiny, and there are key areas of the Bill where those are missing. First, there are huge gaps in the Bill and crucial aspects are yet to be defined. The Bill may establish a regulatory framework of subsidy control, but it fails to provide any clear indication as to how and where the Government plan to see those subsidies being spent and at what scale.”
“I thank the hon. Member for his comments. I will be making a considerable contribution on the issues associated with devolution and our grave concerns about this Bill, which we would want to see corrected. They need to be addressed because we want legislative consent to be given and the concerns being raised by devolved Administrations to be addressed. Much in this proposed regime reflects EU state aid rules, including the definition of a subsidy, the prohibition of unlimited state guarantees and the condition that subsidies should be justified on public interest grounds. Where the Bill significantly differs from the EU’s rules is in its departure from a pre-notification system, where subsidies had to be approved before they were granted.”
“Such definitions are to be determined not now, but through secondary legislation, in respect of which Parliament is given less opportunity to scrutinise the Government’s decisions. To aid scrutiny, which I believe the Secretary of State will want to be to the standards we would want in this House for a regime that will stand the test of time, he should set out the timeline for consultation on and the publication of secondary legislation that covers critical aspects of the new system.”
“The Government’s own impact assessment says: “There are considerable unknowns—because key features of the regime will be defined later in secondary legislation or statutory guidance. The analysis of the regime’s impact is also based on historical data when UK public authorities had to comply with the EU State aid regime.” The impact assessment also says: “We should expect the behaviour of public authorities”— perhaps the Secretary of State was alluding to this when he talked about culture change— “and the resulting distribution of subsidies to change under the new regime—although it is not possible to forecast how this will change.” We are yet to hear how the Government plan to define categories such as subsidies “of interest” and “of particular interest”—categories that will determine which subsidies are voluntarily or mandatorily referred to the Competition and Markets Authority.”
“Labour has also said that we must buy, make and sell more in Britain, as called for by our shadow Chancellor, my hon. Friend the Member for Leeds West (Rachel Reeves). That is part of how we can ensure resilience in our economy—the need for which has been highlighted only too starkly by the gas-price challenge and the CO 2 challenge of the past week. The Bill lacks in not only vision but key details and scrutiny. The Institute for Government has expressed concerns about the ability of this House and the other place properly to scrutinise the new subsidy control regime, given the important issues that are being left to secondary legislation or guidance. The Institute for Government claims that the gaps left in the Bill by the Government “could deny Parliament a proper chance to scrutinise how the new system will work”.”
“Last week, the Confederation of British Industry urged the Government to “build an economy of the future through catalytic public investments” and to re-find its “role as market maker”. On research and development, innovation, regional growth and hydrogen—on which, perhaps, a strategy has since come forward—the CBI said that further action was needed for the UK “to remain internationally competitive against peer nations where business investment levels–and public spending…far outstrips our own.” Sufficiency of strategy is important here; it is not just about the publication of a document. There has been feedback on that, too. We want to see well-designed, proportionate subsidies as part of the wider industrial strategy that we need to grow the businesses and industries of the future and to invest in our transition to net zero.”
“I will just leave the right hon. Lady with the Institute for Government’s feedback on the Government’s plan for growth, which was that it seemed more like a shopping a list than a prospectus. If those who independently look at what the Government are producing in terms of a plan and our industrial strategy make such comments, the Government would be wise to heed some of that feedback, in the interests of our country. I would like to be having a different debate. I would prefer to have a debate that was much more about content than on whether there is a clear plan. Let me come back to my speech. We recognise the debate about whether the Government have a strong record on industrial strategy.”
“Twelve months ago, the shadow Secretary of State stood at this Dispatch Box and warned the Prime Minister of the risks of undermining with policy decisions the devolution settlement that has been part of our constitution for two decades and is vital to our Union. However, on the evidence of the legislation before us, it appears that a shift in mindset and thinking has not been a part of how the Government have brought forward this legislation, and we hope that they are going to listen to the concerns that we and other Members are raising.”
“I am sure the Secretary of State will agree that we will want to see some decisions being made in the interests of how we recover and how we are to grow our economy for the future. On the important issue of devolution, most importantly of all we are concerned that the Bill has not taken the four-nations approach that is essential for an effective UK-wide subsidy control regime. For example, the balance of the power to challenge between the Secretary of State and the devolved Administrations is asymmetric. I am sure that the Secretary of State has heard those representations made to him directly.”
“I have been involved in extensive discussion with my colleagues, and they will want to make significant contributions in Committee to address the gaps in the Bill. We continue to work on that. As I was saying, the Secretary of State should set out the timeline for consultation on and the publication of secondary legislation that covers critical aspects of the new system. I know the House will want to see that in good time. Public bodies have faced significant difficulties since the start of this year precisely because of the lack of guidance on how to interpret the subsidy control principles agreed in the trade and co-operation agreement, so clarity on how public authorities should demonstrate that their subsidies comply with those principles will be an important part of the subsidy regime.”
“The hon. Member will have heard my earlier remarks; although we have considerable concerns, we believe that the Bill is vital to us meeting our international obligations and we want it to pass. However, there are significant gaps and issues that must be addressed in Committee. I hope that he will work with Labour on those matters, so that the regime that comes out of this process is one that reflects the four-nations approach that I just articulated.”
“Perhaps the hon. Member will allow me to continue with my remarks, because he has not quite represented our position. It is important that we continue the debate and detailed scrutiny of the Bill. The remarks that I am about to make may provide him with some reassurance on this issue.”
“It is imperative that the devolved Administrations be involved in the development of secondary legislation and in the amendments to the Bill. Even more worryingly, the powers given to the Secretary of State and First Ministers are significantly asymmetric. Although the Secretary of State is explicitly able to challenge Scottish, Welsh and Northern Irish subsidies that may damage English interests, no complementary power is given to First Ministers. Unlike the Secretary of State, the devolved Administrations seem unlikely to be able to challenge English subsidies that may be perceived to be causing harm to Scottish, Welsh and Northern Irish interests. Will the Secretary of State clarify whether this is correct, or is it his intention that First Ministers would be considered as interested parties for the purposes—”
“They are not even required to be consulted beforehand on advice given by the Secretary of State on the implementation of subsidies. Under the legislation, the Competition and Markets Authority’s new subsidy advice unit will play an important role in protecting the UK’s internal market, yet the Bill provides no formal role for the devolved Administrations in appointing members to the new unit. Remarkably, the Bill is even less generous than the United Kingdom Internal Market Act 2020, which at least requires the Secretary of State to seek the consent of the devolved Administrations before making an appointment to the Office for the Internal Market. Can the Government not see how this flies in the face of a four-nations approach?”
“The right hon. Member makes an important point. I will make some points in that regard later in my remarks. As I was saying, on the evidence of the legislation it appears that the Government have not reflected in the Bill a true four-nations approach in order that we have a UK-wide subsidy regime that commands the confidence and support of all parts of the UK. We do not contest that subsidy control is a reserved matter, but we recognise and support the requirement on public authorities to consider the impact of a subsidy on competition or investment within the UK. It is important for the Secretary of State to make it clear to the House why there is such a limited role for the devolved Administrations in the development of this new regime.”
“This affects not only subsidies granted in Northern Ireland but subsidies granted throughout the UK. There is a risk—unless the Secretary of State wants to correct me—that article 10, taken alongside the new subsidy regime, could cause legal or practical difficulties, particularly if the UK and EU disagree on what affects EU-Northern Ireland trade.”
“I have given way to the right hon. Lady already and I hope she will not mind if I continue my remarks. Will the Secretary of State clarify whether it is the Government’s intention that First Ministers, or public interest groups, be considered interested parties for the purposes of being able to bring forward a challenge to a subsidy decision—if so, why will the Government not put that in the Bill?—or will a challenge have to be made via the Secretary of State? This is not where the devolution challenges end. Perhaps the Secretary of State could clarify his remarks on Northern Ireland, because, as I understand it, under article 10 of the Northern Ireland protocol, EU state aid rules must apply to subsidies that affect trade between Northern Ireland and the EU.”
“I thank the Secretary of State. Indeed, I did hear those comments in his opening remarks. I was seeking to clarify the issue because I do not think it is clear across the House, and it is important that it is tested and made clear in the course of the passage of the Bill. Crucially, what is the Government’s intention if the Bill does not receive legislative consent from Scotland, Wales and Northern Ireland, as has been requested?”
“I am not clear why the hon. Lady refers to a veto. I think we are talking about the symmetry of powers in terms of being able to bring forward a challenge. I hope that makes the point clear.”
“There are also concerns about the limited powers of the CMA’s new subsidy advice unit under the Bill. We are pleased that a trusted independent regulator is being given key responsibilities. However, as the Bill stands, the CMA lacks any power to instigate an investigation on its own initiative or to take enforcement action. This requires careful consideration, particularly when transparency issues around the Bill are taken into account.”
“If it is okay, I want to move on because I am conscious of time, but the hon. Lady may want to make her point in her own remarks. Finally, on the issues of oversight and enforcement, while well-designed subsidies can support Government objectives and foster growth and opportunity, there are risks too. Subsidies can distort markets, undermine competition and unfairly discriminate between businesses. Effective oversight and enforcement are critical to the success of our subsidy control regime, yet they are lacking in certain areas of the new regime. The Bill does not provide enough certainty as to the definition of “interested parties” that are able to challenge a subsidy. Does that definition extend to local authorities and devolved Administrations?”
“The Bill gives the Government and other public authorities greater powers to provide subsidies. It is an important Bill, but the gaps in it must be addressed.”
“Does that not expose a significant transparency gap in the Bill? The Government could choose to have further reporting requirements. I urge them to review the CMA’s role alongside the necessary transparency requirements for subsidies. Labour recognises the need to develop a post-Brexit subsidy control regime in line with the UK’s international commitments. There are benefits from a more flexible and speedy subsidy regime, but we have serious concerns about gaps in the Bill that we will look to address during its passage. Those include unanswered questions on the operation of the new regime, its enforcement and oversight, and the role of the devolved Administrations. We want to see legislation that establishes an effective UK-wide subsidy regime that commands confidence across the country.”
“I am sure they will want to ensure transparency in how public money is being spent and to whom it is going. On the decision made for a six-month time limit to upload subsidies to the subsidy database, there was a discussion in the consultation on whether that period should be shorter, or three months. What was the reason for deciding on six months? That seems rather a long time for a decision to be uploaded and therefore in the public domain. If interested parties and the Secretary of State are not made aware of smaller subsidies or those that are uploaded—they have a month to bring a challenge—there will be no opportunity to prevent them going forward, even if they are harmful. The CMA may be able to produce reports on such subsidies, but it will not be able to enforce any of its recommendations.”
“I am sorry but I will move on. I have taken an intervention from the hon. Member, so perhaps he can make his own contribution. The Government have stipulated that subsidies under £315,000 over three years will not have to be reported on the subsidy database. However, there is an issue, also raised by the hon. Member for Thirsk and Malton (Kevin Hollinrake), about the threshold and reporting. In the consultation on the Bill, the Government asked whether there should be a minimum threshold of £50,000 below which no subsidies would need to be reported, and 64% of those who responded agreed on that threshold of £50,000. On that general point, what are the Government’s plans for reporting, oversight and accountability arrangements for subsidies below that threshold?”
“The hon. Lady is absolutely right about the confusion that has been raised. Does she agree that it is important that the Government clarify what they are suggesting has changed in relation to article 10 of the Northern Ireland protocol and whether it has been dropped on the basis of this Bill? Should they not also tell us whether their proposal has been negotiated with the EU, and what the status of those discussions and any agreement might be?”
“For months, the Government have ignored warnings about supply chain issues from the Food and Drink Federation, UKHospitality and other businesses. August saw Nando’s temporarily close 50 stores. McDonald’s ran out of milkshakes and now the HGV shortage has been compounded by a CO 2 crisis that the Government should have foreseen. With Iceland warning of food shortages in days, jobs at risk as businesses deal with this utter chaos, and looming costs for consumers who are now paying the price, will the Minister now tell the Chancellor that universal credit must not be cut? Is Professor Haszeldine not right to say today that, with only two to three days’ of methane stored rather than months’ of supply that other countries have, we should have been far better prepared?”
“Secondly, I want to ask about Afghan nationals who are at risk. A particular example is someone who worked as a BBC journalist who is in hiding at the moment with her children. What advice should I be giving her right now? She is a relative of a constituent and at serious risk at this moment.”
“I thank the Minister for giving way and particularly for his update on his discussions with other countries, including Uzbekistan and Tajikistan, which are a very important part of the puzzle. I want to make two specific points. First, there is a new form on the Foreign Office website for British nationals in Afghanistan to register, but when I asked the Foreign Secretary about whether that form needed to be completed again by British nationals who have already notified the Foreign Office that they are still there, he said he did not know and suggested I ask the Minister. So I would be grateful if the Minister could update the House on whether British nationals still in Afghanistan—this is a very important point—have to fill out another form to be on the Foreign Office’s register.”
“I thank the right hon. Gentleman for his contribution and for the advice he has given me about cases. On intelligence and security, one of my constituent’s relatives is in Afghanistan. He worked for the intelligence services and has information on intelligence and the armed forces here, but he has not been supported to leave Afghanistan and is now being sought by the Taliban because of what and who he knows. What is the right hon. Gentleman’s view on how we should handle that situation from the point of view of our own security?”
“The Night Time Industries Association and others have expressed concerns about the practical implementation of this policy. As the Minister has highlighted, those questions remain and need to be answered quickly. Will the Minister also publish clear guidance on which events and venues will require a covid passport? There will also be increased costs for businesses at a time when they are recovering, so will they also be getting extra funding, and when will that be announced?”
“May I also ask what more the Government are doing, as the Minister alluded to, in terms of advice and support from insolvency professionals? What are the Government doing to ensure that businesses can seek and get good early advice on addressing debt repayment, so that insolvencies that can be avoided in the next year, are avoided? We must not pull that support too early and let viable businesses fall at the last hurdle, with the pathway to recovery still uneven for many different businesses and sectors.”
“It would be very helpful to understand how some of those policies fit together, or indeed whether there is a contradiction. People up and down the country might be enjoying the lifting of restrictions, with the caution that is certainly being encouraged still, but we must not pretend that businesses are no longer struggling or no longer need support. There will be a particularly difficult hit as furlough comes to an end, giving businesses a double whammy of reduced support and protection at the same time. Labour therefore supports the extension of these important provisions, but we seek assurances and detail from the Government on why the extension is to the end of September, and what the Minister assesses the situation for businesses will be from October onwards.”