18:23 Kirsty Blackman (SNP)

New clause 2— Annual report on climate change impacts —

‘(1) The Secretary of State must once every 12 months lay a report before Parliament setting out the impact of subsidies granted in the preceding 12 months on the environment and climate change.

(2) Any report under subsection (1) must include an assessment of the impact of subsidies granted in the preceding 12 months on the UK’s ability to achieve net-zero emissions by 2050.

This new clause would require the Secretary of State to lay an annual report before parliament detailing the climate change impacts of subsidies granted that year.

‘(c) consistency with the United Kingdom achieving its net-zero commitments established under the Climate Change Act 2008.’

This amendment adds consistency with the UK’s net-zero commitments as a particular consideration for public authorities before deciding whether to give a subsidy.

‘Net Zero

H Subsidies should not normally encourage behaviour which will have a negative effect on the achievement of the UK’s net-zero commitments.’

This amendment adds a subsidy control principle relating to the UK’s net zero commitments.

‘(c) delivering the UK’s net-zero commitments established under the Climate Change Act 2008.’

This amendment would ensure that subsidies related to energy and the environment incentivise the beneficiary to help deliver the UK’s net-zero commitments.

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19:15 Jim Shannon (DUP)

In Wales, where more than 80% of land is used for agricultural purposes and farmers are the bedrock of our rural communities, guardians of our natural environment and protectors of our cultural identity, subsidies are vital to protecting that legacy. The latest farm business survey showed that subsidies provide on average 30% of upland cattle and sheep farms’ income. Leaving their fate to a Westminster Government set on securing questionable trade deals that boost UK GDP by 0.01% to 0.03% while at the same time sacrificing our farmers is clearly unacceptable. Equally, without this new clause, the Bill would pre-emptively tie the hands of the Welsh Government as they look to establish a new, post-EU subsidy regime. I therefore urge hon. Members across the House to support the clause to protect our farmers, as well as amendment 11 on net zero commitments.

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19:30 Sarah Olney (Liberal Democrat)

My new clause 2 is about climate change. I welcome the comments made by the hon. Member for Aberdeen North (Kirsty Blackman) about the importance of this matter in her excellent opening speech. There are the seven principles against which the subsidies will be assessed, and also the nine energy and environmental principles. What I am disappointed about is that they do not add up to a broader commitment to using public money to fight climate change. I can only amplify what the hon. Lady said about it being our key public challenge at this time, covid notwithstanding.

The Liberal Democrats would have welcomed the opportunity to put the transition to net zero at the heart of the UK’s subsidy regime, and for the Government to have used every tool at their disposal to make the transition as swiftly and painlessly as possible, and we can see how public subsidies can help to achieve that.

New clause 2 provides for an annual report to Parliament detailing the climate change impacts of subsidies granted that year. This would have been an important mechanism for reviewing the extent to which subsidies are being used to stimulate or to de-risk investment in the green economy. We look to the private sector to drive much of the innovation that we need to see and to create the consumer markets for our net zero future, but the Government must do all they can to encourage the private sector to prioritise reducing emissions alongside creating economic value.

Public subsidies are an important part of the levers available, and taxpayers need to see that they are being used effectively. Let us take, for example, the nine environmental and energy principles. In the past few months, we have seen a tremendous concern about our energy sector, and it is easy to imagine a scenario where subsidies are being granted to improve energy resilience and energy supply. Such goals might make sense in the short term as they are in line with the principles, but when we are making short-term decisions about subsidy use, it is really important that we step back and look at the longer-term impact of some of those decisions. We need to take the opportunity every year to make sure that, regardless of the short-term decisions that sometimes need to be made, we are nevertheless continuing along the path towards net zero—the challenge that the Government have set for themselves. To have that separate net zero/climate change consideration of the total use of all of our subsidies would be an important check for the Government to make sure that they are progressing towards net zero in the way that they should

It is a pleasure to speak to our amendments—new clause 3, on post-award referrals, and amendments 15 to 27. I will also speak in support of similar and, in some cases, identical amendments to those tabled by Labour in Committee, which I was pleased to see have been influential in colleagues’ consideration of the Bill. I refer in particular to amendments 1 to 8, which were tabled by the hon. Members for Weston-super-Mare and for Thirsk and Malton, and amendments 10 and 12, which were tabled by the hon. Member for Aberdeen North. There are only slight differences from our position in Committee, and I am sure that today’s debate will also help consideration of the Bill in the other place. Amendments 13 and 14 are similar to amendments 2 and 7, and are consistent with our significant concerns on transparency and accountability, which we raised in Committee. New clause 2, tabled by the hon. Member for Richmond Park (Sarah Olney), is also consistent with the position on net zero leadership that we set out on Second Reading and in Committee. We are not actively supporting two amendments—we are more neutral on them: amendment 11, which has similar intentions and principles but is slightly weaker than our amendment 16 and which runs the risk of being unclear for local authorities to implement; and amendment 9, where we understand the intention to broaden what the Competition and Markets Authority reports on. However, arguably it would not have the information on all subsidies, as most would not be notified to it, so this provision could be impractical and create a significant burden. However, in Committee we also provided suggestions on how the CMA’s annual report could be strengthened and what areas it could report on. We had a considerable debate on that, including in respect of the CMA reporting on where it had identified non-compliance with the principles and examining the geographical spread of subsidies that had been notified to it.

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19:45 John Penrose

Does the hon. Lady not agree that the problem with amendment 16—the net zero amendment —is judging what is consistent with the net zero commitments? I have a Westminster Hall debate tomorrow —at 4 o’clock if anybody has nothing better to do and wants to tune in. On greenwashing, for example, it is incredibly difficult to ascertain what complies with net zero when there is so much noise around this. We need to improve in that area. Is this not really a charter for lawyers to take these subsidies to court time and again? Is not that the problem with her amendment?

I thank the hon. Member for his intervention. We have agreed with many of his amendments. What he has just said actually lends even greater weight to wanting to make sure that that is a consideration and that we have the resources to support that. Perhaps he will talk to those on his own Treasury Bench about this, because we would have hoped that by now there would be a clearer road map for how the country is supposed to move forward to achieving our net zero commitments. He will know as well as I do that many small businesses have been crying out for a road map to net zero to know what can make the most difference, how to assess it and how to look at whether they have a decarbonisation strategy that is fit for purpose. So I think he is lending weight to our argument that we need something in the legislation to help drive the processes behind that. People want answers and want to know they are doing the right thing and making the right investments on our road map to net zero.

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20:00 The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Paul Scully)

Let me now turn to the amendments dealing with net zero.

New clause 2 would require the Secretary of State to report annually on the impact of all subsidies granted in the previous year on the environment and climate change. This would represent a significant administrative burden, not least on smaller public authorities, and would discourage them from granting subsidies in the first place. There are also long-standing existing obligations on public authorities to collect this information in specific circumstances, and therefore this amendment is unnecessary.

Amendment 11 would add another principle to schedule 1 centred on net zero, but net zero is not inherent to all subsidies. A great number of subsidies will not have a meaningful impact on the UK’s emissions. A requirement for public authorities to assess all subsidies against net zero is therefore disproportionate.

Amendment 16 would add an explicit net zero test to the balancing test principle in schedule 1. The terms of the balancing test are not limited to negative effects on trade or investment within the UK, or to international trade and investment, so this amendment is also unnecessary.

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20:56 Jonathan Reynolds (Labour)

I do not believe in corporate welfare; it is not the Government’s job to bail out firms that are not viable or to distort fair competition in markets. But I do believe that there is a huge role for the Government in partnering with industry to meet our national objectives, particularly on net zero. A good example of where that support is needed is our energy-intensive sector, which has a significant carbon footprint domestically but which compares favourably to the same industries in other countries when international comparisons are made. I want to see from the Government a coherent and effective strategy to use the powers in this Bill to support these industries because, without that, all we will do is offshore our emissions by making these sectors uncompetitive. At present, we have a Government who are willing to intervene, but whose approach is best described as completely scattergun. I know some Conservative Members are converts to economic intervention, but they have skipped the part where that intervention needs to be driven by purpose, rather than short-term political expediency. Michael Heseltine put it best when he said that the Government appear to have “no coherent approach” and the Prime Minister is just

In many ways we will not be able to judge the success or not of this legislation until we have learnt more about how the Government intend to use it. Quite simply, the Government must do better. If they had taken our amendments, and those of other colleagues here today, on board, that would have substantially improved what we are being presented with on Third Reading. It would have given us greater transparency to show where public money is going and a commitment that any subsidies help the UK achieve the net zero targets, and ensured that the nations and regions have the powers they need to make the new regime a success. It is a real regret that those amendments are not part of the Bill, but I hope members in the other place will take these arguments up.

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21:01 Kirsty Blackman (SNP)

The last issue we have is about climate change, which should form part of the key principles. I know that the principles can be updated, including by future Governments, but, for the Bill to stand the test of time, reaching our net zero targets should have been put at its front and centre. I appreciate the Opposition tabling an amendment to that effect. The Liberal Democrats did the same, as did we. This is so important and we feel that the Minister and the Secretary of State are abdicating some responsibility on that.

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