 The next item of business is a debate on motion 3647 in the name of Ivan McKee on subsidy control bill UK legislation. I would ask those members who wish to speak in the debate to please press the request to speak buttons and I call on Ivan McKee minister to speak to and to move the motion around seven minutes please minister. I thank you for this opportunity to debate the proposed UK Government legislation and the implications of this on devolved powers and before I forget I'll take this opportunity also to move the motion at this point in time. The UK Government's interim subsidy control regime came into effect on the UK's exit from EU membership. The UK must adhere to international obligations on subsidies agreed under free trade agreements. The EU-UK trade and cooperation agreement, the TCA and of course the Northern Ireland protocol and public sector organisations must ensure that subsidies comply with the relevant rules. Importantly agriculture and fishery sectors are excluded from the TCA and operate under World Trade Organization WTO rules. The UK internal market act was introduced on 17 December 2020. It completely overrides the devolution settlement by reserving subsidy control and giving UK ministers power to spend directly in devolved areas without the oversight and consent of this Scottish Parliament and Scottish ministers. That has already been seen in the case of the professional qualifications bill that was debated in this chamber on 10 February and for which we have also refused legislative consent. The UK Government introduced the subsidy control bill to Parliament on 30 June 2021. Paul Scully, the minister for small business, wrote to me at the end of June asking if Scottish ministers would be content and principle to begin the legislative consent process in the Scottish Parliament. The LCM was introduced on 25 October. We do not propose to give consent and I will outline why. The bill, if adopted, brings further erosion of devolution through the sweeping powers of the Secretary of State, which overrides the devolution settlement and risks UK ministers intervening without proper knowledge or consultation around local circumstances. The subsidy control bill empowers the base Secretary of State to refer subsidies and schemes in policy areas of the evolved competence to the appointed independent body, the competition and markets authority, where the subsidy has not yet been awarded or the scheme has not yet been made, a cooler-off period will kick in. The Secretary of State has the power to extend this period without consulting devolved administrations. If an act of this would undermine the long-established powers of the Scottish Parliament and Scottish ministers to act in relation to matters within devolved competence such as economic development, the environment, agriculture and fisheries. The Scottish Government has argued for devolved administrations to have equivalent powers to refer subsidies made in other parts of the United Kingdom or even by public authorities in their own jurisdictions to the CMA. The UK Government has consistently rejected this proposal. The absence of formal regulatory and enforcement arrangements undermines confidence in the process for grant awarding bodies and recipients. The measures proposed in the bill are weak, particularly given the proposed advisory role of the CMA. We continue to press for prior appraisal of awards within a detailed regulatory framework to provide greater certainty on what support will be compatible with the UK's subsidy control regime. That is essential for both subsidy awarding bodies and businesses investing in Scotland and the UK. We firmly oppose the inclusion of agriculture in the permanent regime. Agriculture is fully devolved. Farmers and crofters in Scotland face challenges that are not found elsewhere in the UK, yet the principle set out and schedule one of the bill risks constraining our ability to develop future policies that are tailored to the needs of Scottish agriculture. For example, income and couple support payments play an essential role in supporting many of the businesses operating in our most remote and constrained areas. However, they appear incompatible with some of the proposed principles, especially principle F, competition and investment within the UK. The UK Government has pressed on, ignoring our concerns. The bill and the internal market principle in particular risk making the common framework process redundant, putting legislative restrictions on policy divergence within the UK rather than managing it through an established mutual co-operation via the framework. Those concerns are supported by the House of Lords common framework scrutiny committee. My colleague, Mary Gougeon, on Cabinet Secretary for Rural Affairs and Islands, wrote to base minister Paul Scully in June 2021 and to DEFRA Secretary of State George Eustace in November, setting out our concerns and proposing the bill be amended to exclude agriculture from its scope. George Eustace replied in January, stating in his view that the new domestic regime will protect competition and investment in all parts of the UK, however he did not address the substantive concerns of incompatibility with the principles or impact on the common framework process. The potential lack of transparency, the bill originally proposed that awarding bodies would have six months to place information on the database and interested parties would have one month to appeal. Every early this week I received a letter from minister Scully informing me that this has been amended and awarding bodies will now be required to place information on the database within three months. A small and welcome concession and other minor technical amendments have been proposed that this goes nowhere near addressing our grave concerns regarding this bill. We still consider that the time limit for challenge should be increased a more realistic period. I have addressed a number of specific concerns, however the overarching theme as it is the bill remains high-level. The crucial detail, including draft subordinate legislation and in-depth guidance, is lacking. Its absence makes it difficult to take a considered view. The subsidy control bill, as it stands, proposes broad powers to the Secretary of State, shaping the future regime with little scrutiny from the UK Parliament and no scrutiny by devolved administrations. I move that this Parliament backs the motion, refuses legislative consent to the bill as it stands and backs our request for appropriate amendments to be made to the bill that respects this Parliament's role in devolved competencies. I am pleased to speak on behalf of the Economy and Fair Work Committee. We considered the LCM on subsidy control bill at two evidence sessions in January, hearing first from academics, legal experts and COSLA on the ramifications of the bill, followed by evidence from the minister. We published our report on 9 February. Our report raises concerns about the Scottish Government's engagement with us. Though the bill was introduced in the House of Commons on 30 June 2021, the Scottish Government did not lodge its LCM until almost four months later. We did not receive a clear explanation for that. This delay curtailed the committee's opportunity for scrutiny. That is unsatisfactory and I have raised it with the convener's group. To turn to the bill, the committee accepts that there must be a subsidy control regime in the UK and we welcome the flexibility provided in the bill's proposals for a baseline legal framework for the award of subsidies. The law society said that the bill creates a welcome opportunity for schemes tailored to Scottish circumstances. However, the report agrees with the Scottish Government on a number of points and we note that the Scottish Government cannot recommend to the Scottish Parliament that it gives consent to the bill. The committee shares the concerns that the bill gives considerable powers to UK ministers, which operate across the devolution settlement, impacting on areas of devolved competence. We share the concerns that this will potentially result in UK ministers having the ability to intervene in devolved areas without proper consultation or knowledge of local circumstances. Our witness panel highlighted the asymmetry of power between the UK and devolved Governments created by the bill, which the majority of the committee agreed was a concern. I would stress that the committee's concerns relate solely to the areas that are devolved. We are concerned that smaller organisations and community groups may find a new regime harder to navigate, being at a disadvantage to those with greater access to administrative and legal resources. There are concerns that changes will lead to excessive caution, which will stop investment. There are promises of streamlined and fast-track subsidy award pathways and the UK Government is now consulting with the Scottish Government on schemes. The majority of the committee agreed that Scottish ministers should have the power to introduce schemes in devolved areas. We also heard that the bill makes changes to the devolution settlement concerning the status of acts of the Scottish Parliament, the susceptibility to judicial review and interpretation. The majority of the committee is concerned by those developments, and we would urge the constitution committee to continue work in that area. The majority of the committee is concerned that much of the detail of how the new subsidy control regime will operate is not on the face of the bill, but rather will be detailed in secondary legislation and guidance, centralising decision making and not supporting scrutiny. It is frustrating that, while legislation resulting from the exit from the EU could be used to recognise and support the devolution settlement, it is instead, I am afraid, reinforcing a blinkered approach. The committee notes that Scottish ministers will not have equivalent power to the Secretary of State in having the ability to reverse certain subsidies or schemes to the competition and markets authority. Those are concerns shared by the Welsh Government that it does not reflect the interests of devolved administrations. The committee supports the Scottish Government's call and the LCM for equivalent powers for devolved administrations to reverse subsidies made in other parts of the UK to the competition and markets authority. Final point. It is evident that, for whatever reason, Scotland spends significantly more on enterprise and economic development in the UK as a whole. This spending is likely to be registered as subsidy under the bill, so the bill is anticipated to have a bigger impact on Scotland. The committee is also concerned that, in the absence of clarity, that will create significant scope for conflict between the Scottish and UK Governments, which, frankly, they can be enough of without manufacturing more. All efforts must be made to minimise those concerns and work in co-operation if any of the proposed opportunities in the bill are to be realised. I now call on Jamie Halcro Johnston on behalf of the Scottish Conservatives. Thank you, Deputy Presiding Officer. Subsidy control is a key part of ensuring an open, competitive and fair market economy. This piece of UK legislation tackles a vital missing part of the legislative framework for the maintenance of a coherent UK market after our departure from the European Union. We were previously governed by the EU state aid requirements, and it has been a lengthy and often complex process so far in bringing such controls into our domestic law. The maintenance of continuing regulation of state aid is a requirement that has been formalised between the UK and the EU as part of the trade and co-operation agreement, underlying the UK's continued links with the EU single market. However, it is also a system that will have a wide-ranging impact on a number of bodies across this country. The Economy and Fair Work Committee has looked at this area in some detail, and our report from February is on the record. Does the member acknowledge that not only does the bill drive a coach and horses through devolution? In fact, the NUF, NFU Scotland's statement was one of the strongest that I have ever seen about saying that it damages devolution. Even on a practical level, we need subsidy control, but the bill is deficient in a number of measures that will make it less favourable to competition. Could it hinder our investment in net zero and cause risk aversion in terms of partnership funding for important local community projects? No, I do not. I hope that the member will make that in a elongated speech later, but I do not agree with that, and I will be covering some of the concerns that I have with the bill a little bit later. However, it is worth noting that the unanimous conclusion of the committee that the Scottish Government's delay in lodging its legislative memorandum can tail this committee's opportunity for scrutiny, as the committee convener highlighted. LCM was lodged in the Welsh Senate in mid-July, allowing time for greater exploration of the bill. Here, we had to wait until late October, and there has not been, as the committee concluded, a satisfactory explanation for that delay yet. This is a significant set of proposals. It is one part of recreating the structures of our internal market, if not quite from scratch, and certainly with a fresh start. It is the case that this bill in many ways sets a framework to be further expanded by means of secondary legislation and guidance. There has been comment from the devolved administrations and parliaments, as well as within the UK Parliament, noting disappointment at the bill before us is lacking in some detail. While acknowledging that the bill will not be the last word on subsidy control, there is a reasonable case that this lack of detail in primary legislation has made scrutiny more difficult, notwithstanding the late stage at which it came to this Parliament. However, I hope that the Chamber recognises a necessary bill, one that ensures the integrity of the UK internal market, as well as meeting our international obligations. We can see the evidence of the tilling effects of uncertainty in subsidy provision, with public bodies airing on the side of caution to avoid legal challenge. That certainty must be returned, but we agree that the bill alone cannot provide this, which gives the associated guidance and secondary legislation a position of considerable importance. What must, however, be satisfied is a degree of certainty for public bodies to operate within. The committee heard a number of examples of the positives of the framework in which the bill sets out, its greater flexibility, greater autonomy in decision making for local bodies, and as a resultant ability to make decisions with greater speed and responsiveness. My own region, the Highlands and Islands is one where population density in particular makes state support a more regular requirement to secure the sort of policy objections this Parliament wishes to see. We know all too well the rigidities of state aid rules and the lengthy processes it has required in notifications to the European Commission. While maintaining a system of fairness and integrity, it is my hope that the new subsidy control regime will go some way towards addressing these issues. To return to the concerns about detail, additional flexibility will of course not answer wider questions of policy. Within the EU state aid regime, there existed many different approaches taken by the Government of the various Member States, and there will remain political questions over where support should go about obtaining real value for taxpayers' money. In the last session of this Parliament, I was involved in the former economy jobs and fair work committee's business support inquiry, which is a good body of work that deals with one small area of subsidy. There will be choices in this Parliament about how to deploy subsidies effectively, and there is a much wider discussion to be had about how we do so. Responding to the consultation on subsidy control last summer, the business secretary cautioned against damaging subsidy, such as unlimited subsidies to shore up failing companies, where there is no plan for their restructure. But, of course, subsidy is largely used in a positive way, and we will, we hope, increasingly be seen in that light, supporting economic recovery, achieving policies like net zero, and the sort of levelling up that needs to happen both across the United Kingdom, as a whole and within Scotland too. The economy and fair work committee has of course recognised some of the shortcomings in this area, and we need more clarity on how existing objectives will align with a new subsidy control scheme. This Parliament is certainly correct in its wish to see further information from the UK Government on these points. We also recognise some of the points made about asymmetry. While it should be emphasised that we are considering an area reserved to the UK Parliament and one in which we should legitimately expect UK Ministers to be able to act for the whole of the United Kingdom, we do recognise that there is a reasonable argument to grant referral powers to the competition and markets authority to have devolved Ministers, as well as the Secretary of State. Presiding Officer, we acknowledge the significance of the change that this bill brings, as well as the number of concerns that have been raised across this chamber, as well as the remaining uncertainty within the number of organisations and bodies across Scotland. However, we did not accept the position of the Scottish Government that any of these points should be fatal to the bill's progress. It has set out a positive direction for subsidy control within the UK, albeit one that requires additional clarity. I welcome the engagement between Governments that have already taken place for the fleshing out of future subsidy controls to take place. This must continue and go wider still. I now call on Daniel Johnson on behalf of Scottish Labour, and Mr Johnson is joining us remotely. Thank you very much, Deputy Presiding Officer. I apologise for joining late. I have been having some network issues at home and hence the cable that you see running over my left shoulder. Indeed, let me give you the short version just in case I get cut off. Where I agree with Jamie Halcro Johnson is that this is a necessary bit of regulation. We need an overarching framework and regulation for subsidy across the United Kingdom since we have withdrawn from the European Union, but I think that his acknowledgement of the need for, as he put it, clarity also points to the deficiencies in the approach that is taken by the UK Government. The approach that is taken lacks transparency and fails to take due consideration for the devolved Government arrangements that we have across the United Kingdom. Therefore, Scottish Labour cannot support it and will be voting for the motion to withhold consent for this decision time this evening. This was an opportunity to rethink subsidies, to rethink the relationship between industry, enterprise and government, but ultimately the UK Government has failed to do that, failed to seize that opportunity. What is more, the plans do not target regions or sectors with subsidies and there are no measures for using subsidies to help to tackle regional inequality. They are levelling up that the UK Government professes to care so much about. The bill lacks transparency and is needed to ensure that taxpayers' money is spent well. The Law Society of Scotland shares the view that a well-functioning subsidy control regime must be based on clear rules that provide legal certainty to businesses and granting authorities and is one that implements a regime that is clear, proportionate and gives businesses and local authorities the tools needed to operate confidently within it. Critically low, it is the lack of respect for devolution that is most troubling. We raise those concerns in Westminster and also note the concerns raised by the economy fair work committee about the lack of devolved engagement and the asymmetry of power between the UK Government and the Scottish Government. That was an opportunity to perhaps enhance devolution and thereby strengthen it. However, yet again, the UK Government has shown that it either does not understand devolution or perhaps it just does not care about it. The House of Commons Labour tabled six amendments to assure that the devolved administrations were given a meaningful role in the design and implementation of a new subsidy regime. Whilst we understand that the power over a UK-wide subsidy should ultimately rest with Westminster, we also recognise that it is a vital role and vital that all nations of the UK are involved in this regime. Currently, the bill fails to respect the role of devolved nations and does not give them a meaningful seat at the table. We put forward an amendment that would require the Secretary of State to seek the consent of the devolved administrations before making regulations that define the terms of subsidies and those subsidies deemed to be of particular interest, because we believe that the devolved administration should be a partner in making those decisions and those definitions. Those were reasonable amendments, but were defeated and we therefore, as a UK Labour Party, abstained at the second reading of the bill. We have to ensure that we get this right. Clearly designed subsidies can give businesses an unfair advantage, trigger subsidy races and create a risk of international trade disputes. Good subsidies, on the other hand, can help to achieve policy objectives, boost regional growth and encourage research and development. Historically, the UK has spent significantly less on subsidies than other EU member states. In 2019, for example, the UK spent 0.5 per cent of GDP on subsidies, while France spent 0.85 per cent and Germany spent over 1.5 per cent of GDP. On average, EU member states spent 63 per cent more of their GDP on state aid than the UK. While a UK-wide system of subsidy control is needed and necessary, we are concerned that the lack of the role given to devolved administrations under this proposed regime fatally undermines it. Labour believes that there is a need for a genuine four nations approach. We are also concerned that, with the unworkable position of complete unilateral control over subsidies in Scotland that flies in the face of the required co-ordination within our UK single market. While it is clear that some form of regulation is needed, the bill cannot be supported because of its lack of transparency and because of its failure to take account and, indeed, enhance the devolved settlement across the islands. Therefore, we will be voting with the Government to withhold consent for this bill at a decision time. This is the third debate in recent weeks that our two Governments have found it incapable of reaching an agreement on something so fundamental to the operation of our country. We had the debate about the internal market, the inability of the two Governments to work together, the shared prosperity fund and the inability of our two Governments to work together. People deserve, I think, better than this constitutional argument, never-ending constitutional argument. They expect more and they expect, I have to say, a bit of maturity from both sides, because both are as bad as each other. As Clare Baker referred in her contribution, there is a symmetry of power and that needs to change. Therefore, I hope that this is the last time that we have these circumstances and that we actually get Governments to try to work together for the benefit of people because people deserve better. I understand that there is an important—yes, certainly. I am quite perplexed by Willie Rennie's approach here. We have just heard the Conservative members explaining the asymmetry in the bill and the deficiencies within the bill. Is he saying that we should just roll over and not protect the devolution settlement and allow the UK Government to do whatever it wants in devolved areas? Or should we stand up for Scotland and make sure that those areas are protected and the interests of Scotland's economy are protected as a consequence? Willie Rennie? Probably wait and be a little less impatient and listen to what the contribution is going to be from myself, because what I am making clear is that there is, of course, a need for a UK subsidy to the bill. We cannot have a race to the bottom in the different nations and regions of the UK, just like we had with the European Union, but there does need to be a process of engagement between the nations and the regions of the UK. That is what I am calling for. I think that there needs to be a federalist arrangement, as I have argued previously, with the share prosperity fund and also with the internal market arrangements, because we need to find ways of agreeing better together across the United Kingdom, rather than the approach that the SNP and the Conservative Government love to take is the never-ending constitutional argument. People deserve better, and I am sure that the minister truly understands that. However, there is some hope that the House of Lords—there are discussions in the House of Lords about perhaps a non-legislative route for agreement of those issues. That gives us something constructive to work around. It has not been agreed yet, so we will be voting with the Government this evening. We will be voting—not just now—we will be voting with the Government this evening because we want to hold legislative consent, because what we have just now in terms of the decision making process is not adequate. However, if we do get an agreement through the good work in the House of Lords, then I would hope that the Government would come back and recognise that things had changed, so we can give legislative consent because we need to try to work together. Of course, that is a very important bill because it will bring into sharp focus the Scottish Government's failure on industrial intervention, which I have rehearsed with the minister previously, on bifab, which collapsed, and on Lochaber, where we were promised 2,000 additional jobs, which have not materialised. That will be the start of a wider debate, which I am sure the minister will engage in. We need to have a proper arrangement across the United Kingdom. We cannot afford to have a race to the bottom. We need to have effective subsidy control and subsidy in a way that Daniel Johnson has talked about to make sure that we get the best out of it for the benefit of our economy and our people. However, the current loggerhead approach of both the Conservative Government and the SNP Government does not serve people well, they deserve better, and I hope that we can come back with better arrangements in future. Preferably, a featherless solution, which we have argued for some time, is the best way forward for the United Kingdom. I would like to thank members for their contributions. I will touch on those contributions very briefly before I move on to concluding at a very limited time. Jamie Halcro Johnston recognises the chilling effect that the lack of certainty within the bill has on the investment scenarios. We have already seen examples of that in Scotland, so I am glad that he recognises that and is critical of the bill in that regard. We have called for a proposal of awards to be part of the process that the UK Government has refused to do. He also recognises the asymmetry inherent in the bill and why we are where we are, with the challenges on devolution and our reasons for withholding consent. The uncertainty is very clear because businesses and award makers do not have prior approval of awards, and that is one of the key elements in the functional aspects of the bill and one of the reasons why we are refusing to give consent to it. Jamie Halcro Johnston said in response to Fiona Hyslop's question that he did not agree with her assertions. However, I have the NFU approach to the subsidy control bill here. Given the differences in approach regarding future funding that is already set out by the UK and Scottish Governments, the bill is a risk to future rural policy development in Scotland. The oversight controls already in place provide protection to the UK internal market act against distortions. The subsidy control bill, together with the UK internal market act, has the potential to seriously undermine Scottish agriculture, which is the turnkey for a thriving rural community. That is the direct quote from the NFU in Scotland. I think that the minister of Scotland is our big friends of ours, but that is what the minister said in the bill. I am fairly very much for that intervention and as always, he is an expert in this subject area. It is great that he is raising very important issues in that perspective from NFU Scotland, which is hugely important. However, as I said, Jamie Halcro Johnston recognises the problems of the bill and recognises the symmetry that is contained within it. As does Daniel Johnson and I welcome his comments on that, he is right that it is a very important matter that needs to be taken forward, but he is also absolutely right that it further demonstrates that the UK Government does not understand nor care about devolution and that, in the end, will be there undoing. I thank Willie Rennie for his comments and I am glad that he is supporting our position on this issue. He continues to try to breathe life into the corpse of federalism. It is entertaining to watch that process, but the reality is that that ship has long sailed. We have the choice between a UK Government that is determined to remove the powers of the Scottish Parliament and reduce devolution, or we have taken forward our agenda to make sure that Scotland is a normal independent country. Muscular unionism has had its day. It has tried to do what it could do and it has not succeeded. The disconnects are within the UK Government. There are UK Government ministers who are very comfortable and completely understand our position on that, but they have been told what to do by others within the UK Government who are determined to continue down that road of creating fights where there need to be none and creating a situation where even the Conservative members here recognise the challenges and the problems with this particular bill. In conclusion, I move that Parliament backs the motion that refuses legislative consent to the bill as it stands and asks Parliament to back our request that the UK Government lodge suitable amendments as the bill progresses so that it provides equivalent powers to the Scottish ministers, removes agriculture from its scope and requires the UK Government to seek the consent of Scottish ministers if the plan legislation which would impinge on devolved areas. I do not think that that is too much to ask. I do not think that Willie Rennie, frankly, would ask for any more where he is standing in my shoes. It is up to the UK Government to take forward those changes and then we can see where we get to in that regard. Thank you very much.