Laws to replace EU subsidies could ‘cut across devolution settlement’

The UK Government’s plans to replace EU state aid rules risks “cutting across the devolution settlement”, a committee of MSPs has said.

Holyrood’s Economy and Fair Work Committee have published a report laying out their concerns with the Subsidy Control Bill.

The Bill sets out how central government, devolved administrations, local authorities, and other public bodies should make decisions to award subsidies.

MSPs on the committee have said the Bill lacks detail and has not been properly scrutinised by Holyrood.

While recognising the need for a subsidy control regime, the committee’s report says the Bill could lead to UK Ministers intervening inappropriately.

However, the two Conservative members of the committee dissented from some of the report’s conclusions.

Convener, Claire Baker, said: “Our committee is deeply concerned by a number of aspects of this Bill and its potential implications.

“The complete absence of detail on how this new subsidy control regime would work is not acceptable.

“In its current form, this new regime could see UK ministers cutting across the devolution settlement and intervening in devolved areas without consultation or knowledge of local circumstances.

“We find it wholly unsatisfactory that this Bill would allow UK Government and UK Ministers to legislate in a way which will have a direct impact on devolved areas of our economy, while bypassing scrutiny of the Scottish Parliament or Scottish ministers.”

She continued: “But our concerns do not end with the impact on devolved matters.

“We have heard evidence that the proposed subsidy scheme could create an imbalance between communities at a local or regional level, who may not have the means or ability to compete for subsidy with larger businesses and orgs, and that will be the case across the UK.

“This may mean it unfairly disadvantages smaller organisations and community groups who previously had access to European support funds.”

In December, UK business secretary, Kwasi Kwarteng, said the Bill will “help unlock potential” across the UK.

Speaking during a third reading before the Bill cleared the Commons, he said: “It demonstrates this Government’s clear commitment to seize the opportunities arising from Brexit.

“For the first time, the decision on whether to grant a subsidy will fall to the granting authority itself.

“At the heart of the regime is a set of clear and proportionate principles which will be underpinned by guidance.

“Local authorities, public bodies and the devolved administrations in Edinburgh, Cardiff and Belfast will be empowered to decide if they can issue taxpayer-funded subsidies by acting consistently with the principles outlined in this legislation.”