We now move to the legislative consent motion on the Subsidy Control Bill, and I call on the Minister for finance to move the motion. Rebecca Evans.

Motion NDM7927 Rebecca Evans

To propose that the Senedd, in accordance with Standing Order 29.6 agrees that provisions in the Subsidy Control Bill in so far as they fall within the legislative competence of the Senedd, should be considered by the UK Parliament.

Motion moved.

Diolch, Llywydd.  I move the motion. I am grateful to the Economy, Trade, and Rural Affairs Committee and the Legislation, Justice and Constitution Committee for their reports on the Subsidy Control Bill, and I thank them for their comments. A supplementary legislative consent motion was laid on 6 January, clarifying our position on the clauses the LJC committee noted and no further actions were raised.

The United Kingdom Internal Market Act 2020 made subsidy control a reserved matter. However, it significantly impacts on non-reserved matters such as economic development, agriculture and fisheries. The impact of this Bill on non-reserved areas raises concerns. We need a detailed regulatory framework that works with, not against devolution.

Businesses are our partners and they rightly call for clarity and certainty on what support is compatible with the UK subsidy control regime. The proposals in the Bill fail this basic test. They effectively give broad powers to the Secretary of State to shape the regime in the future with little scrutiny from the UK Parliament, and none whatsoever from this Senedd.

Once again, the UK Government has demonstrated its indifference to the ramifications for Welsh businesses, jobs and the economy. A rudimentary understanding of the devolution settlement makes it clear that this creates confusion and uncertainty that jeopardise investment in our economy.

This Bill permits the Secretary of State to refer subsidy awards or schemes granted in devolved policy areas to the independent subsidy advice unit in the Competition and Markets Authority, and extends standstill requirements in place upon referred awards or schemes. If enacted, this will undermine Welsh Ministers' power to act in areas within devolved competence.

These powers will not extend to Welsh Ministers where subsidies impact on devolved competence. This could create a conflict of interest for the Secretary of State if Welsh Ministers request a referral of a UK Government award or scheme announced by great fanfare only days previously, for example. This Bill reflects only the narrow political interests of the UK Government rather than the wider needs of the UK.

Despite repeated requests to UK Ministers for changes to be made, nothing substantive has been forthcoming, and I'm extremely concerned that the Bill could have far-reaching practical and constitutional implications for Wales. This Bill undermines the status of devolved primary legislation and it will make it harder to support disadvantaged regions. It makes investment in our most deprived communities less attractive by failing to provide a UK-wide regional aid map. This directly contradicts levelling up by scrapping the mechanism designed to stop Government investing more heavily in Mayfair than Merthyr.

Therefore, I move that the Senedd refuses legislative consent for the Subsidy Control Bill.

I now call on the Chair of the Legislation, Justice and Constitution Committee, Huw Irranca-Davies. 

Thank you, Llywydd. We have published two reports on the memorandum laid by the Welsh Government on the Subsidy Control Bill, the first in December and the second last week.

Our first report expressed our concerns with the Bill. We consider that the subsidy control proposals could have—and we say this in our report—a pernicious impact on devolution and the exercise of devolved functions, particularly in ways that could limit the ability of the Welsh Government and public organisations to fund necessary projects. The potential impact of this Bill is therefore similar to that of the United Kingdom Internal Market Act 2020, which indeed the fifth Senedd did not consent to.

During our scrutiny, it was disappointing to learn from the evidence of the finance Minister to the Economy, Trade, and Rural Affairs Committee that inter-governmental relations, which is, of course, a prime issue of concern for us on our committee, had not been as productive as they should have been during the Bill's development. Our report expressed the hope that this does not represent a trend of the UK Government refusing to co-operate and engage constructively where legislation has the potential to undermine the devolution settlement and the Welsh Government's ability to deliver policy in devolved areas. Such an approach, we say in our report, would risk complicating further the general understanding of devolution, particularly when the existing settlement is already needlessly complex. Furthermore, it could create uncertainty for business, for public sector organisations and for local government, as well as unnecessary bureaucracy by creating bad law that is hard for citizens to understand, and that indeed sows doubt around where the boundaries of devolution lie. We therefore found the UK Government's refusal to co-operate and engage fully with the Welsh Government to be puzzling, because clearly there is much more to be gained by Governments working together constructively and finding an approach that's fair, operable and workable within the existing constitutional framework.

I will turn now to the specific clauses that are subject to the Senedd's consent. In our first report, we noted that we agreed with the Welsh Government that consent was required for clauses 63 to 69, 70 to 75 and 80 to 92 of the Bill. At the time, it was unclear to us whether the Welsh Government believed that clauses 41 and 42 also required the Senedd's consent. We therefore welcome the finance Minister's decision, and that of the economy Minister, to lay a supplementary memorandum that confirmed their belief that these clauses indeed also do require consent, and we agree with that assessment.

Our first report supported the Welsh Government's calls for amendments to be tabled in respect of a number of clauses in the Bill. It goes without saying that the Welsh Government should, for example, be provided with the appropriate powers to make subordinate legislation relevant to the Bill in areas of policy that are already devolved. We also share the Minister's frustration about the lack of detail on the face of the Bill, and we note that the UK Government has indicated that further information will be provided in secondary legislation and in a suite of guidance to follow. To that end, I'd like to highlight a recommendation we made in our first report, that the UK Government should publish draft regulations and guidance for both UK parliamentarians and Members of this Senedd to consider the details of the subsidy control regime and to better understand the potential impacts of this Bill. We therefore wrote to the Secretary of State at the Department for Business, Energy and Industrial Strategy before Christmas seeking his views on this recommendation, but, I regret to say, we have yet to receive a response.

Our second report drew attention to the views of committees in the House of Lords about this Bill. In bringing my remarks to a close, I'd like to highlight in particular comments made by the chair of the House of Lords Common Frameworks Scrutiny Committee, Baroness Kay Andrews. She has said that the Common Frameworks Scrutiny Committee is increasingly concerned about the impact of the Bill and its interaction with common frameworks, for example, though not entirely exclusively, in relation to agricultural support. Consequently, that committee views this as

'an extremely serious matter which bears on the functioning of the Union.'

It will be no surprise that my committee shares those deep concerns regarding the interaction of the Bill with the common frameworks and its implications for devolved policy, and I hope, in putting these remarks on record, it's not only the Senedd that will note these comments, but also the relevant committees in the House of Commons and the House of Lords who take a great interest in this as well. Diolch yn fawr.

I want to speak in support of the LCM before us today. Notwithstanding that support, I do think it's extremely disrespectful for letters to be going from committees of this Senedd and that correspondence not to be receiving a response. That is unacceptable and needs to be dealt with.

I think the reality is here that the Welsh Government, of course, have always been opposed to this Bill because they were opposed to Brexit. That's the reality. You were very happy for the EU to hold subsidy control powers, and I didn't once hear a peep in this Chamber during the time that we were a member of the EU, from any Welsh Government Minister, complaining about the fact that those subsidy control powers were held in Brussels. But now, as a party and a Government, you seem to be taking a very political stance against the UK Government holding those very same powers, which I believe is potentially damaging for Welsh businesses.

The UK Government has gone above and beyond trying to work and engage with the Welsh Government, and indeed the other devolved administrations, to help address some of the concerns that you have outlined today. But, of course, unfortunately, those efforts appear to have been fruitless. Here's the reality: we have left the European Union and we are no longer bound by the bureaucratic and burdensome EU state-aid rules, except in limited circumstances because of article 10 of the Northern Ireland protocol. For the very first time, we here in the UK have the freedom to design a domestic subsidy control regime that reflects our strategic interests and particular circumstances. A UK-wide subsidy control regime is necessary to ensure that subsidies—[Interruption.] I'll happily take an intervention.

I listened to what you said; you say that we've had an opportunity to design a specific UK-wide subsidy control regime in this instance. Do you, therefore, regret that the UK Government has ignored all the representations made by both the Welsh Government and this Senedd?

I don't believe that it has ignored the representations that have been made.

Name one that it has accepted.

I have acknowledged that there has been no response to the committee, which I think is a matter of deep regret, and that is unacceptable. I've already put on record my views about that.

Getting back to what I was saying, a UK-wide subsidy control regime is necessary to ensure that subsidies do not unduly distort competition within the UK internal market. Now more than ever, particularly post the coronavirus pandemic, we need the strength and stability of our economic union as a United Kingdom so that we can build back better. The new approach to subsidy control will provide a single and coherent framework to protect the UK's internal market whilst empowering devolved administrations, empowering the Welsh Government and other public bodies, to design subsidies that are tailored and bespoke to meet local needs, without facing the excessive bureaucracy that we had to encounter with the previous regime when it was run by the European Union.

This Bill will deliver the regime change that we need. It will also support—and I heard the Minister's comments about levelling up—the levelling-up agenda. I know you've had discussions about regional inequalities with the UK Government Ministers when you've been discussing this matter and your officials have been discussing this matter. They have given assurances that this will help to address—[Interruption.] They have given assurances that they will help to deliver the sort of considerations that you have given in respect of the levelling-up agenda, and of course it will help us to achieve the net-zero carbon agenda as well as supporting that economic recovery that I mentioned earlier from COVID-19.

This is going to be a flexible, agile, tailored system that is going to support business growth here in Wales and across the rest of the UK, and of course it will promote competition. We need to make sure that we have a subsidy regime that works for Wales and works for the UK, not one, which was the former, that worked for the EU. 

The Minister for finance to reply—Rebecca Evans. 

Diolch, Llywydd. I would like to begin by thanking the Chair of the Legislation, Justice and Constitution Committee for their work and for their efforts to engage with the UK Government and to get clarity. It is a matter of regret, I think, that a response hasn't been forthcoming. I must say that the Welsh Government has engaged completely in good faith with the UK Government on this matter to seek to get the best outcomes for us here in Wales. Some amendments have been proposed, but they go nowhere near addressing the concerns that we have. We have concerns about the lack of detail on the face of the Bill, about the general imbalance of power within the Bill and the lack of any consenting or consultation, even, with the devolved Governments. We're concerned about the unacceptable impact on constitutional principles, particularly in relation to the judicial review of devolved primary legislation. And, of course, we are concerned that there is an apparent creation of a two-tier system of law whereby primary legislation created by the democratically elected Senedd—[Interruption.] In a moment—in relation to Wales isn't held to the same esteem as legislation created in Westminster in relation to England. And of course, I stress that our concerns aren't about judicial review in general; it's about that lack of equality in the way in which legislation is perceived. 

I'm grateful to you for taking the intervention. You just listed a whole host of concerns—

I haven't finished yet. [Laughter.]

I'm sure you've got a catalogue of more. But can I ask you: all of those concerns could have equally been made of the previous EU subsidy regime; did you ever singly raise one of those concerns with the European Commission in relation to the previous regime, which we had to endure for so many years?

One of the key concerns that I have about the proposals on the part of the UK Government is that there is absolutely no assisted areas map. That was a way in which we could channel and focus spend on the deprived areas of Wales and across the UK under the previous regime, and that is completely gone. There will be no way now in which investment can distinguish between Mayfair and Merthyr, and that has to be absolutely wrong. We've heard what UK Government Ministers have to say in terms of the assurances that they've provided. We had assurances that Wales wouldn't be a penny worse off as a result of Brexit. We had assurances that Wales would not be losing powers as a result of Brexit. Both of those assurances have come to nothing, so I will not take assurances from the UK Government on this point. If they want those assurances, they need to put them on the face of the Bill. 

Overall, Llywydd, the Subsidy Control Bill is yet another example of the UK Government's assault on devolution. The lack of detail, as I say, on the Bill means that the Senedd is being asked to sign another blank cheque, which could bind our hands in developing future laws in devolved areas. And again, the imbalance in the Bill in terms of powers, combined with the lack of consultation and consent powers for devolved Governments in the development and updating of the subsidy regime, does risk the reversal of the devolution process by stealth through the Bill, enabling the Secretary of State to intervene in areas of devolved competence.

To conclude, I will obviously keep colleagues updated on the development of the Bill, but I repeat my request that the Senedd refuses legislative consent. 

The proposal is to agree the motion. Does any Member object? [Objection.] There is an objection, and therefore I will defer voting until voting time.

Voting deferred until voting time.