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Public Bill Committees

Debated on Tuesday 26 October 2021

Subsidy Control Bill (First sitting)

The Committee consisted of the following Members:

Chairs: Caroline Nokes, † Mr Virendra Sharma

† Baynes, Simon (Clwyd South) (Con)

† Benton, Scott (Blackpool South) (Con)

† Blackman, Kirsty (Aberdeen North) (SNP)

† Bowie, Andrew (West Aberdeenshire and Kincardine) (Con)

† Buchan, Felicity (Kensington) (Con)

† Esterson, Bill (Sefton Central) (Lab)

† Fletcher, Colleen (Coventry North East) (Lab)

† Flynn, Stephen (Aberdeen South) (SNP)

† Hollinrake, Kevin (Thirsk and Malton) (Con)

† Kinnock, Stephen (Aberavon) (Lab)

† Malhotra, Seema (Feltham and Heston) (Lab/Co-op)

† Millar, Robin (Aberconwy) (Con)

† Mortimer, Jill (Hartlepool) (Con)

† Scully, Paul (Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy)

† Stafford, Alexander (Rother Valley) (Con)

† Tomlinson, Michael (Lord Commissioner of Her Majesty's Treasury)

† Whitley, Mick (Birkenhead) (Lab)

Kevin Maddison, Bradley Albrow, Committee Clerks

† attended the Committee

Witnesses

Professor Steve Fothergill, National Director, Industrial Communities Alliance, and Professor in the Centre for Regional Economic and Social Research (CRESR), Sheffield Hallam University

Dr Serafin Pazos-Vidal, Head of Brussels Office, Convention of Scottish Local Authorities

Thomas Pope, Deputy Chief Economist, Institute for Government

Professor Stephanie Rickard, Professor of Political Science, London School of Economics

Public Bill Committee

Tuesday 26 October 2021

(Morning)

[Mr Virendra Sharma in the Chair]

Subsidy Control Bill

Before we go further and begin, I have some preliminary announcements to make. May I encourage Members to wear masks when they are not speaking? That is in line with current Government guidance and that of the House of Commons Commission. Please give each other and members of staff space when seated and when entering or leaving the room. Hansard colleagues will be grateful if Members could email their speaking notes hansardnotes@parliament.uk. Please switch electronic devices to silent. Tea and coffee are not allowed during sittings.

Today, we will first consider the programme motion on the amendment paper. We will then consider a motion to enable the reporting of written evidence for publication and a motion to allow us to deliberate in private about our questions for the oral evidence session. In view of the time available, I hope that we can take those matters formally without debate.

Ordered,

That—

(1) the Committee shall (in addition to its first meeting at 9.25 am on Tuesday 26 October) meet—

(a) at 2.00 pm on Tuesday 26 October;

(b) at 11.30 am and 2.00 pm on Thursday 28 October;

(c) at 9.25 am and 2.00 pm on Tuesday 2 November;

(d) at 11.30 am and 2.00 pm on Thursday 4 November;

(e) at 9.25 am and 2.00 pm on Tuesday 16 November;

(f) at 11.30 am and 2.00 pm on Thursday 18 November;

(2) the Committee shall hear oral evidence in accordance with the following Table:

Date

Time

Witness

Tuesday 26 October

Until no later than 10.30 am

Industrial Communities Alliance; Convention of Scottish Local Authorities

Tuesday 26 October

Until no later than 11.25 am

Institute for Government; Professor Stephanie Rickard, London School of Economics

Tuesday 26 October

Until no later than 2.30 pm

Institute of Directors

Tuesday 26 October

Until no later than 3.00 pm

Monckton Chambers

Tuesday 26 October

Until no later than 3.40 pm

DWF Group; UK Steel

Tuesday 26 October

Until no later than 4.00 pm

Daniel Greenberg, House of Commons Counsel for Domestic Legislation

Tuesday 26 October

Until no later than 4.30 pm

Competition and Markets Authority

Tuesday 26 October

Until no later than 5.00 pm

Ivan McKee, Scottish Government Minister for Business, Trade, Tourism and Enterprise

(3) proceedings on consideration of the Bill in Committee shall be taken in the following order: Clauses 1 to 9; Schedules 1 and 2; Clauses 10 to 78; Schedule 3; Clauses 79 to 92; new Clauses; new Schedules; remaining proceedings on the Bill;

(4) the proceedings shall (so far as not previously concluded) be brought to a conclusion at 5.00 pm on Thursday 18 November. —(Paul Scully.)

Resolved,

That, subject to the discretion of the Chair, any written evidence received by the Committee shall be reported to the House for publication.—(Paul Scully.)

Resolved,

That, at this and any subsequent meeting at which oral evidence is to be heard, the Committee shall sit in private until the witnesses are admitted.—(Paul Scully.)

Copies of the written evidence that the Committee receives will be made available in the Committee Room and circulated to Members by email.

The Committee deliberated in private.

Examination of Witnesses

Professor Steve Fothergill and Dr Serafin Pazos-Vidal gave evidence.

Q Before we start hearing from witnesses, do any Members wish to make a declaration of interest? No.

We will now hear oral evidence from Steve Fothergill, national director of the Industrial Communities Alliance, who is here in person, and Dr Serafin Pazos-Vidal, head of the Brussels office for the Convention of Scottish Local Authorities, who is appearing virtually. Before I call the first Member to ask a question, I remind all Members that questions should be limited to matters within the scope of the Bill and that we must stick to the timings in the programme motion that the Committee has agreed. For this panel, we have until 10.30 am. Will the witnesses please introduce themselves?

Professor Fothergill: Thank you and good morning. In this context, I have two roles. I am Professor Steve Fothergill, a professor of regional and economic development at Sheffield Hallam University. I am an economist by background. I have worked on these issues for many decades. My second role is national director—chief officer, not the political boss—of the Industrial Communities Alliance, which is the all-party association of local authorities in the older industrial areas of England, Scotland and Wales.

Members might be wondering which hat I am wearing. Fortunately, from my point of view, my personal views as a long standing academic coincide with those of the organisation for which I work part time, the Industrial Communities Alliance, so I am wearing both hats simultaneously. If we get on to territory where I am expressing a personal view as an academic, I will try to flag that up.

Would it be helpful if I were to make an opening statement? Perhaps I could do that after the introduction of the other witness.

Dr Pazos-Vidal: I am very grateful to be able to contribute to this hearing. I am responsible for the international policy unit of the Convention of Scottish Local Authorities, which is the local authority association of the 32 Scottish councils—the equivalent to the Local Government Association in England or Wales for instance. A lot of that work these days refers to repatriation of European Union powers. A lot of what we are going to say has been discussed and validated by our political structures and through the councils. I am also an academic researcher on this whole issue of multilevel governance, which is about how levels of government relate to each other—an issue that I believe is particularly true in this Bill. Where it is helpful for the discussion, I will speak from that international academic experience.

Thank you. Professor Fothergill, you have one minute for a brief statement, because time is very limited.

Professor Fothergill: I will do my best. There are two points I want to make by way of introduction. First, we need subsidy control. Subsidies can be expensive and they can be distortive, but they can also deliver valuable objectives—things like regional development, the green agenda and so on—so we do need rules.

The second point I would like to make—this is the big concern I want to air in front of the Committee as we proceed—is about the relationship between the Bill and the levelling-up agenda. The Subsidy Control Bill is potentially a very useful tool in delivering the levelling-up agenda, but at the moment the details are very thin. In particular, there is an absence of an assisted area map, and no commitment to developing one. That would be extremely helpful in promoting growth in the less-prosperous local economies of the United Kingdom.

Q Thank you, Professor Forthergill, for joining us today. I have two brief questions on your comments about the interface between the Bill and the levelling-up agenda. First, what more needs to be done to the Bill to strengthen the involvement and the achievement of the levelling-up agenda in relation to targets and policy? Should there be reporting on that? Should the Competition and Markets Authority’s report consider the geographical distribution of subsidies, for example?

Secondly, do you think that the UK Government and the devolved Administrations will have a common way of delivering policy goals under the subsidy control principle—on market failure and equity rationales, for example? How might that be interpreted by different levels of government? Does more need to be done for a stronger relationship between Westminster and the devolved Administrations and local government on the implementation of the measures?

Professor Fothergill: Okay—there is quite a lot in that. Let me clarify the point I was trying to make about how an assisted area map would strengthen the levelling-up agenda, and how it might be incorporated into the legislation.

An assisted area map would define the areas where you could give additional subsidies to firms to promote investment, to bring in businesses from abroad, and to strengthen existing businesses in the locality, for example. We had an assisted area map under the old EU state aid rules, but let me be quite clear: the whole idea of an assisted area map was not something that was imposed on the UK from Brussels; we had an assisted area map in the UK long before Britain even joined the EU. There were maps back in the ’60s and early ’70s defining the areas where it was legitimate to give additional aid to businesses to promote new jobs or protect existing ones.

I do not think we need some after the event audit of how the geography of subsidies has worked out. What we need, in advance, are some clear criteria defining the places where enhanced subsidies can be given. That sends an important signal to businesses in particular that if they were interested in investing in one of the less-prosperous parts of the UK, they might be able to draw down significant financial assistance. At the moment, the legislation does not rule out an assisted area map, but equally, it does not rule one in. I have to say, with due respect to the Minister, that that leaves a huge amount of discretion in the hands of the ministerial team. In the absence of any commitment in the legislation to defining how an assisted area map should be drawn up, I think it is perhaps taking the whole issue away from the scrutiny of Parliament. That is how the legislation should be strengthened on that point.

On the question of the relationship between the UK Government and the devolved Administrations, it is perhaps fair and reasonable that the whole of the UK operates under broadly the same rules, but there is then a subsidiary issue of whether the different tiers of government in the UK actually take advantage of those rules. That has always been the case. It was the case under the old EU state aid rules; we had rules about what you could and could not do, but the different parts of the United Kingdom put larger or smaller amounts of funding into different schemes to support businesses. As long as that was all within the rules, that was okay. In terms of the detailed implementation of the legislation, and I think a lot of the real operation of this legislation does depend on the details—the devil is in the details—then, clearly, it would be good to have that meaningful dialogue between Westminster and the devolved Administrations, even if we are, at the end of the day, working within a single set of rules for the whole United Kingdom.

Q Thank you. Dr Serafin, would you wish to comment?

Dr Pazos-Vidal: Yes. I could only agree, in general terms, with what has been said already. I will take the questions in order. Quite clearly, there is an expectation from local authorities that there is a specific targeting of given areas, because that will provide legal certainty for public authorities, but also for economic operators, about whether the subsidies can or cannot be applied. That makes sense, and it is clearly a message that comes from many councils across Scotland, particularly from those that have benefited from assisted area status. It is worth recalling, in the case of Scotland for instance, that the regional selective assistance scheme has been running for many years, awarding around £20 million through 60 or so awards a year. That is something that local authorities want to retain, but the same could be applied to colleagues from the rest of the UK.

Quite clearly, as has been mentioned, the Bill does not say one thing or the other. The supporting documents do say, more or less, that there might be some guidelines or guidance on the special targeting of assisted areas, which, as has been mentioned, has been a feature of the UK policy toolbox since the 1930s. The Bill could, for instance, define what an assisted area is. That would be encouraged, and there would be limited discretion on that for whoever the Minister might be in however many years’ time.

That would be helpful, but it is also important to distinguish that having assisted areas does not mean having European-style assisted areas. After all, the geographies that we have seen in the assisted area maps so far have been developed by Eurostat, according to —I would say—very technocratic approaches that did not fit the geographies of the UK. It created a certain degree of lineation by imposing certain geographies that are not recognisable in the UK, so we should not necessarily look at just having the old maps.

The good thing however, is that the UK, and Scotland, and different parts of the UK, are very privileged in the amount of data that is available at a very local level—sub-municipal level, sub-local level, ward and street level—which will allow the granularity that we perhaps did not have under the EU system. Now that we are moving to creating a home-grown system of assisted areas, that could be very much put to use, in a way that has perhaps not been used at the same level during the time of EU membership.

We should not underestimate the importance for this Bill of the participation of the devolved Administrations, and also local government. After all, we are talking about policy choices, not competition policies. It is about policy outcome and political rationale, and we have a very divided system of Governments, which is asymmetric in certain respects. If a decision is just taken by a Minister, or a Minister just issues guidance, as set out in clause 79, that will not work.

We should not underestimate the constitutional impact that the United Kingdom Internal Market Act 2020 had on the territorial constitution and the governmental relations of the UK. That needs to be addressed—one issue with the Act is subsidy control—by taking a more inclusive approach in terms of how rules are made, even if the Minister has to say at the end, “We need to have a system of engagement and consultation.”

In my view, that should also be specifically incentivised, mentioned and encouraged in the Bill itself, so that it is not a question of the Government of the day just deciding to engage or not to engage. This is quite important—it is part of the role of intergovernmental relations. I should also say that, in a statement to this House in March 2018, the UK Government committed to engage with local government when designing the new rules. That is actually one of the ways of honouring the Government commitment.

Q May I follow up on how the guidance should be developed more inclusively? Where in the Bill are there gaps relating to the involvement of the devolved Administrations? Is it in the development of the guidance? Are there powers for the Secretary of State that the devolved Administrations do not have, such as the ability to call in and make challenges? I would be very grateful for your view on that.

Dr Pazos-Vidal: You are absolutely right. Ideally, the Bill should be the framework of how this engagement should be done. Under clause 79, the Secretary of State should consult anybody whom they consider it appropriate to consult before issuing statutory guidance. In our view, that is too general and not reflective of the territorial constitution of the UK as it stands. There should be a provision that the Secretary of State must consult the devolved Administrations in a dedicated system that should also involve local law. There should be a duty to make sure that different parts of the UK have full ownership of the final outcome—it is true that the Secretary of State will issue the guidance—but also the intelligence and the local know-how about these ideas. It is very easy to see things in a certain way in Westminster, but when you are in different parts of the UK, they do not look like that.

On the call-in powers, it is true that UK Ministers have responsibilities only for England on some issues, whereas other Ministers across the UK have responsibilities on the same issue in other parts of the UK. It makes sense that whenever the competent authority is in a devolved part of the UK, the same consultation mechanism should be provided, mutatis mutandis, before the Secretary of State decides to call in a subsidy. That seems to be quite inclusive. I have to say that the intergovernmental review, which was updated in March this year, tends to go in the other direction, but as the supporting document suggests, we cannot wait for the intergovernmental review to happen, because it will take its time.

Subsidy control is potentially a sensitive constitutional and political issue. We are already introducing provisions to make sure that the mechanism of consultation happens. It is quite consistent with the direction of travel in which we should be going. As I say, the intergovernmental review really goes in that direction, but that is a wider piece of work, and I think we should introduce those social provisions in the Bill.

Likewise, because the Government committed to a consultation mechanism with local government a couple of years ago, there should be some provisions for that. That is what we had when the European Commission used to draft the guidelines. The member states had a special legislative committee, and there were specific procedures for local government. There was even a statutory procedure through the European Committee of the Regions. There was a whole infrastructure to help the Commission design the rules. We do not have to replicate exactly the same things, but at the very least we should have the same level of ownership as we had during our EU membership—or more. That is only right and proper if we are to ensure that the system works in the long term.

Equally, the new subsidy control unit in the CMA could benefit from the work of the devolved state aid units, which are not mentioned in the Bill or the supporting documents, but naturally these teams have a lot of experience working with local authorities, sorting out the practicalities of how to assign a subsidy. It would be a shame if all this knowledge was not properly used to design the system and rules that will emerge from the Bill.

Professor Fothergill: May I amplify my remarks on the consultation and the involvement of the devolved Administrations? The crucial thing is to include a commitment to consultation and to their involvement in the drawing up of the detailed guidance, because the guidance really matters. Let me illustrate how this might work in the context of an assisted area map, if we are to have such a map; I know from personal involvement that an assisted area map has been drawn up the last three times round, and a full consultation process has been undertaken. Indeed, there was a two-stage consultation process, in which the principles underlining the map were out for consultation first, because the map was largely drawn here in the UK, though parts of it were set by Europe, and then the draft map went out to consultation.

I am also aware that the devolved Administrations largely drove the detailed drawing of that assisted area map within their own patch. There needs to be a commitment to undertake a similar sort of procedure.

Q Good morning, Dr Pazos-Vidal and Professor Fothergill. You have talked a lot about the assisted area map, Professor, and I certainly take your points about its history and benefits, not least as an MP from Merseyside, which has benefited enormously from state aid over many years. However, there are some criticisms of the way that assisted area maps interact with area boundaries. For example, there are cases where an area that needs investment and support is inside the assisted area, yet the businesses that could deliver that support are outside. Could you say a bit about what the counter-argument is, and what the answer to those sorts of boundary issues might be? I suspect that may be part of our deliberations.

Professor Fothergill: I think that we can draw a map better this time if it is simply drawn here in the UK. Last time, the way that the system worked was that certain areas under EU rules automatically qualified for assistance, such as west Wales and the valleys, the highlands and islands, and Cornwall. There was also a particular deal over Northern Ireland, which meant that the whole of Northern Ireland automatically qualified. The rest of the map beyond those limited areas was drawn within the UK, but it was drawn within an overall population envelope, in terms of population coverage, that was set by Brussels, so it was a question of, “We have so much coverage to allocate. Where do we allocate it?”.

The Government went through a very difficult procedure to try to target the areas that were most in need, as well as places within or close to those areas where there were genuine opportunities to promote jobs and support businesses. In a sense, it is no good putting a line around a residential area and saying, “That is eligible for business support”, because there are not businesses in most residential areas; it is the big areas of trading estates and so on that need to be targeted.

Obviously, within a fixed population envelope, not everywhere that perhaps deserved coverage was able to get coverage. If we are drawing a map here in the United Kingdom under our own rules, we can increase the population coverage of that assisted area map to better reflect the true extent of economic disadvantage in the United Kingdom. Under the old EU rules, only about a quarter of the entire UK population was on the map. That really does not accurately reflect the extent of areas that need levelling up in the United Kingdom.

Q Would you like to add anything, Dr Pazos-Vidal?

Dr Pazos-Vidal: Just briefly, as a complement. My earlier point about consultation at EU level was about all the guidance, not just the regional aid guidance for assisted areas, which is what has been mentioned. Of course we would like to replicate the system and improve on it. On this issue I think—

Dr Pazos-Vidal, could you speak up a little bit?

Dr Pazos-Vidal: Yes, sorry. I withdrew from the mic. The general provisions are more state aid-like than just regional aid guidance received in the assisted areas, as my colleagued referred to previously. On the issue of assisted areas, it is important to highlight that assisted areas of regional aid guidance, as they used to be known, were done in complement to the so-called structural funds. Likewise, it is important that we develop the UK’s shared prosperity fund. It appears there will be an announcement on that in tomorrow’s statement by the Chancellor.

As we have seen so far from the pilots of the shared prosperity fund that are already running—the community renewal fund or the levelling-up fund more generally—they already do some special targeting. It makes sense that the assisted areas map that might be developed should complement the geographical prioritisation that we have seen, and probably want to see now in the shared prosperity fund. Sometimes to reinforce that, and sometimes because these things were not prioritised by the shared prosperity fund subsidies or grants, policy outcomes could be promoted by way of public subsidy. It is important to develop both the shared prosperity fund and the assisted areas map in parallel to make sure they are consistent.

As I said earlier, the UK has incredible advantages in terms of the amount of data that it has. For instance, I know from my experience of international work on EU legislation that it was very common for UK impact assessments of UK input of EU law to be taken as a reference for other countries, because they were very well done. We have a huge degree of knowledge that we can use in the UK to develop maps that deliver, and to learn from possible mistakes, or non-optimal allocation of subsidies in the past in the UK.

Perhaps connected to that is the ongoing work on better regulation by the UK Government, and the need for special and better input of the rules. That is something that the UK will be well equipped to provide, if the Government are allowed to be helped by different parts of the UK and the competent authorities there.

Q Thanks to both our witnesses for their excellent presentations this morning. I want to look at this issue of the maps from the point of view of a north-east Wales MP. That area has really missed out on a great deal of subsidy compared with west Wales and south Wales, as you mentioned, Professor. That is obviously due to the assisted area map. You raised points about perhaps questioning exactly how that is drawn up. As a former county council and town councillor, I feel that it is often at the council level that the areas of deprivation are properly understood, rather than at the devolved Administration level. I feel that the Subsidy Control Bill gives us an opportunity to recast the way in which we provide subsidies, so that we are more flexible and not so obsessed by area maps; you just alluded to their shortcomings. Another Member mentioned the question of how you deal with issues at the boundaries, which is always a major problem. Does the Bill gives us an opportunity to be more flexible and drill down to the local level, which is often where the knowledge lies of what should be done about areas of deprivation?

Professor Fothergill: I would not deny that there are huge amounts of knowledge at local level, but local economies tend to operate beyond the boundaries of individual local authorities. Local economies do not operate at the level of standard statistical regions, but neither do they operate on the small geographical scale of most local authorities; they tend to span several neighbouring areas.

The problem is that if we do not have a map and some sort of discrimination in favour of less prosperous areas, you would be treating potential investment in Guildford, let us say, on the same basis as potential investment in Grimsby. You would not be attempting to incentivise the levelling up of the United Kingdom. In certain places, if we really are serious about levelling up, we have to put more resources into that effort, and we have to use state aid as one of the tools for delivering new jobs.

There is a lot of evidence, accumulated over many years, that state aid subsidies for investment do work and deliver extra jobs in the more disadvantaged areas. It is an effective policy tool, as long as we do it properly and do not squander public money by giving grants automatically; obviously, we would have to scrutinise each case individually, within a set of broad rules. In west Wales and the valleys, for example, it has been possible to give investment projects capital grants of up to 30%, whereas in the more prosperous parts of south-east England, it has not been possible to support investment at all. There has been that positive discrimination in favour of the less prosperous places.

There is a boundary problem; that is inherent in any drawing up of maps. Maps can be drawn sensitively, though, and in a hierarchical way. You do not have to have an area that is entitled to loads of money, and have the rest of the country entitled to no support. You can have a gradation of areas. Indeed, we had a gradation of areas under the old EU system, and under the old UK system before we joined the European Union.

Dr Pazos-Vidal: The Bill is, in a way, is an expression of the legal and cultural difference between continental, EU and UK law. In EU and continental law, everything that is not explicitly mentioned is forbidden, whereas in common law, and certainly in this Bill, it is almost the opposite principle: you can do everything that is not specifically forbidden. That works in theory; in practice, it does not, and that is why we need guidelines, block exemptions, and maps. You need commonly understood criteria across the UK to avoid subsidy rises and the opposite, which is doing less, because the UK public sector is much more risk-averse than the public sector in other European or western countries. We see that at the moment. The old EU rules are de facto being used by managers in local authorities across the UK because they are far more detailed, safe and understood than the provisional framework we have at the moment.

If you do not have a common understanding across the UK about how rules should be applied, what subsidies, even if you leave a lot of local latitude, which we support, of course, we might end up going down the track of, “Are these investments that are actually needed?” and that is why this has to be done. In the same way, there has to be a certain common framework across the UK, because if you leave the onus for doing checks on local authorities, some will not have the capacity or resources, and others would. A common understanding across the UK is helpful for everybody, and that also includes maps.

A lot of Members have indicated that they want to speak now. I have the list and I will call those whose eye I have caught—I will try to call Members whom I have seen first. Seema Malhotra, do you have a question?

Q Thank you, Professor Fothergill and Dr Pazos-Vidal. A lot of what we have heard from you both has been incredibly helpful, but it perhaps shows the limitations of the Bill—we are talking about is what is not in the Bill. Dr Pazos-Vidal, in your last answer you touched on the impact that the lack of detail and certainty could have. I would like to tease that out a little bit more with both of you. What impact do you think the lack of detail and certainty behind the provisions in the Bill will have on the devolved nations in the UK when it comes to making investment decisions? What impact will it have on local government and the decisions that it makes? Finally, Dr Pazos-Vidal, I think you said a wee while ago that the Bill as it stands is not reflective of the territorial constitution of the UK. Could you elaborate on that statement?

Professor Fothergill: Could I emphasise that the Bill settles remarkably little? It deals with the basic principles that will underpin the UK subsidy control regime. Those principles are very sound—they are not out of line with what we previously lived within and they do make sense. It settles the principles and some of the mechanisms legally, but it does not actually tell us what you can or cannot do. That is all going to come forward in the secondary legislation—the statutory instruments, is that the term? Ministers will be able to issue the secondary legislation within the framework of the Bill. From the point of the view of the devolved Administrations, for example, the passage of the Bill will still leave them pretty much in the dark as to what they can and cannot do. The important element in all of this is the guidance that will be issued subsequently. Quite what that guidance will say or is required to say is not specified in detail in the Bill.

Dr Pazos-Vidal: Absolutely, I completely agree. The Bill provides a good skeleton to start working on the guidance. In an ideal world, that would be enough—everybody would have the same understanding and there would be a very cohesive set of ideas on what needs to be done, what the priorities are and so on. Some countries in northern Europe are like that—they are very consensual democracies. I think the UK is a bit more complicated than that and therefore there should be a bit more detail. The UK is complicated and asymmetric, and therefore some of the provisions ideally need to be in the Bill. It is not about being too prescriptive—that is not the UK way —but about marking the direction of how the secondary legislation should be carried out.

In respect of the territorial constitution, it is just an academic expression. Quite clearly, the internal market Act could be considered part of the constitution because of the way it repatriates EU powers and the way it treats common frameworks. Irrespective of that, the Scotland Act always recognised that the UK level—Westminster Ministers—has powers over the internal market. That has always been the case, but in a way the internal market goes a step further. At the same time, public authorities, devolved Administrations and local government have competencies on local economic development, provision of public services and so on. Those powers also need to be recognised. Ideally, and this goes back to the point I made earlier, the Bill needs to be reflective of the powers of the UK Westminster Government and the internal market of the UK, and of the specific powers that local authorities and the devolved Administration Parliaments have in those policy areas. At the moment, the territorial element—the devolved and local element of the Bill—is limited, to put it politely. It would be helpful for the coherence of the system and to avoid problems of political interpretation in the future if some of that is put into the Bill. It does not have to be very detailed, but some improvements to the Bill would be helpful for the scheme in the long term.

I am going to request that Members are brief, because many of you wish to ask questions.

Q May I ask some brief questions, for some brief answers, to get through this? This is a permissive structure rather than asking for explicit permission. When you ask for explicit permission from the state aid regime in the EU, essentially the assisted area maps give an exemption to having to ask for that permission in the first place and wait those months to do it. What is the purpose of the maps that you are talking about, apart from “within guidance” rather than because no exemption is required?

Professor Fothergill: The assisted area maps allow a higher rate of financial support for certain sorts of activities—subsidies, state aid or whatever you wish to call it—than is allowed outside the assisted area maps, so you can provide more intensive support. If you really want to attract inward investors to that locality, you can put more money on the table within an assisted area than you can outside an assisted area. One of the advantages of having a map in advance is that it is a clear signal to everyone concerned. Businesses know that those are areas where financial support can be made available, and local players know that in those areas it is possible to put money on the table if necessary to deliver an investment.

If everywhere is treated the same, everybody will be competing against one another on a level playing field, in terms of powers to give financial support or subsidy. If we are seriously interested in levelling up, we have to back that up with something beyond rhetoric. We have to back it up with some action.

Q Do you agree that the reason we need to level up is that that system has not worked to date?

Professor Fothergill: I disagree that it has not worked. There is plenty of evidence, as I was trying to say earlier, that support for businesses through the various programmes of regional investment aid over the years has delivered substantial numbers of new jobs in the less prosperous areas of the country. Often it has meant that we have been swimming against the tide in many of those places, with old industries disappearing at the same time as we have been doing our best to create new jobs. We have not solved the problem, but plenty of evidence shows that the use of what was state aid—we used to call it regional development grants, or regional selective assistance in England, many years ago—has positive benefits and delivers jobs in the places on the assisted area map.

Q My final question is whether there is any example beyond the EU that we can look to? We are flipping that approach on its head: is there any other trading bloc or country that has a wider regime than the subsidy control regime that we are proposing?

Professor Fothergill: I am not an expert on some of the international systems, I have to say. I would hesitate to look across the Atlantic, from what I understand of the system there, because I do not think they have a simple system—a map—that applies in the United States, and therefore you get the horrible situation developing of a subsidy race between individual states. In many respects, that is what we want to avoid in the United Kingdom. We want a system where Guildford is not bidding against Grimsby. We want a system where places that really need the investment have the powers to deliver the investment. It is not just the places—the local place—of course; it is the Department for Business itself having the powers to mobilise its resources to give financial assistance in the Grimsbys rather than in the Guildfords.

Q Dr Pazos-Vidal, on that last question about international comparisons, do you have any view?

Dr Pazos-Vidal: Yes. I could also say, if I quote some data from pre-pandemic, that in the regional selective assistance scheme in Scotland—I just checked that quickly when you raised that question—there were 69 awards worth in total £24 million, and the jobs created or safeguarded were around 2,500. That is evidence about where these schemes have worked, and we can look at that and evaluate that in terms of the development of the new system.

When it comes to international comparisons, I completely agree with Professor Fothergill. Clearly, the reason why this system exists across the Union—the state aid regime or the procurement framework legislation—is to provide the kind of chaotic system we have in the so-called competitive federalism model, such as in the US. Definitely, the UK would be much smaller and I would say more homogeneous in many ways. We should not actually have a system that is imitating that, because I think even the Americans sometimes would love to have a system that is more consistent than what we had in the EU and probably that we will have in the UK, so definitely no. A system that incentivises subsidy races and competitive federalism such as in the US will not perhaps be helpful.

In any case, it is a matter of choice. On this issue, I have been working with my Finnish and Norwegian colleagues, and one is from part of the EU and the other is not from part of the EU. One—Norway—uses special targeting so that certain remote areas will actually get additional subsidies, whereas Finland does the minimum in what it sets. In that more domestic context—a more European context, I mean, or closer to the UK—there is a variety of models, so it is just a question of finding the model that suits the UK, given the geographies, the mobility and the economy of the UK, specific area diversities that we have in the UK, and also the very specific asymmetric system that we have in the UK.

Thank you. I am going to call Kirsty Blackman first, then Steve Kinnock, Kevin Hollinrake, Alexander Stafford and Mr Millar. As already indicated, and looking at the time, could we stick to brief questions and brief answers to carry on up to the allocated time?

Q I have two questions, but the first one is a yes/no answer. The first is: has COSLA been consulted on what the forthcoming guidance is likely to say? The second question is for both of you. Schedule 1, principle F says:

“Subsidies should be designed to achieve their specific policy objective while minimising any negative effects on competition or investment within the United Kingdom.”

Can I ask you both if that sounds like it is meaningful, and if it is meaningful, what does it mean?

Dr Pazos-Vidal: I assume that the first question was addressed to me. We have had a number of discussions, it is true, in the preparation of the Green Paper and the consultation, and some of this work was facilitated by other organisations, such as ones you are going to speak to later today. I think when we are talking about consultation, we are talking about consultation as something that is structured, something that is predictable, something that has more accountability and something that approaches corporate action to a certain extent. That is something that in the UK is far more touch and go compared with other countries. I think this is an opportunity, on something as potentially economically and politically sensitive as this, to have a much more structured system of consultation, rather than the issue of a local approach. That sometimes works fine—no problem—and I have said to myself that perhaps we could possibly do that many times over the years. Here it is a rather serious matter that is also very political as well, and we should have a very predictable and pre-set system. I should have mentioned that there is a precedent in the UK with the Localism Act 2011. Part 2 deals with subsidies and passing down funds from the EU. At the time, we negotiated a system of proper consultation with local government, in this case from the UK Government, so perhaps that is an issue at present that we can look at in terms of implementing this Bill.

Professor Fothergill: Subsidies are something that you should only use sparingly and where they really deliver something that is beneficial. That is why we need the principles that are set out in the legislation. Indeed, it is hard to see how we can get away from those principles that are set out in the legislation, because all bar one are embodied in the trade and co-operation agreement that was signed with the EU last December. The additional point that the UK Government have added is basically to stop one area entering into a bidding game with another area within the UK, and that, in a sense, is a sensible addition. These are meaningful principles: you use subsidies sparingly, but you use them where they really can deliver something that you think is socially and economically valuable.

Q I have a question for Professor Fothergill about aid intensity. As we know, under the previous state aid regimes, there were upper limits on the percentage of state aid that could be given. There is no guidance on what the aid intensity percentages should be in this legislation. Could you briefly set out what your thoughts on that are —I would certainly assume that aid intensity should be higher than was the case previously—and why that should be?

Professor Fothergill: The detail is not there in the legislation. It is all to be determined; it will follow in the guidance, one presumes. Under the old EU rules, the aid intensity ceiling varies from scheme to scheme and from place to place, but if we were talking about regional investment aid, for example, the maximum aid you could give in the top tier of assisted area was 30% for a larger business. It actually rose to 50% for a very small business, but the problem that we had under the old EU rules was that in the lowest category of assisted area, which covered most of the assisted areas in England, the ceiling for regional investment aid was only 10%. Frankly, at 10%, that is very marginal and very unlikely to make much of a difference to business decisions. If a decision is that marginal, really, come on: is it going to tip the balance? Incidentally, the EU has recently raised that lower threshold to, I think, 15%.

Of turnover?

Professor Fothergill: No, that is 10% of the cost of a capital investment. It has recently been raised to 15%. Certainly, if we are setting aid intensity ceilings in the UK under the detailed guidance, we need to set them at levels that really can make a difference; otherwise, you are probably ending up just giving money to projects that would have gone ahead anyway, which is not the objective and is actually contrary to the principles of the legislation.

Q Subsidies are allowed only for enterprises. Are we missing anything out? Does that mean that social enterprises are excluded? Are the thresholds—£500,000 and £315,000—the right ones? That is pretty much mirrored in what we have already in the EU. Is that the right level? Should it be lower or higher for scrutiny purposes, and should there be a central register of subsidies, rather than those being held at local authority level?

Professor Fothergill: I do not think I have a definitive answer on your first point. I was asked the same question a couple of days ago, and I was not actually sure where charitable and third-sector businesses stood in all this. On your third point, which is about a central register, I think there is a lot of merit and transparency in the whole system.

I hope I have understood your second point correctly. The intention behind the Bill is that there will be what is called, in technical terms, a de minimis threshold, below which you do not have to comply with the rules.

Q You do not have to report it.

Professor Fothergill: Yes, you can just get on and do things. Colleagues with whom I work in local government say that when they are involved in giving small amounts of financial support to businesses, or would like to do so—when we are talking about small amounts, it is unlikely to distort competition within the UK, or indeed international competition—there are too many hurdles if you have to go through lots and lots of paperwork.

Q But £500,000 is not a small amount.

Professor Fothergill: We may be talking about slightly different things. I am talking about the de minimis threshold, which the Bill sets at £315,000 over three years or thereabouts.

Q There are two different levels: £500,000 inside a scheme and £315,000, accumulative, outside a scheme. Do you think those are the right levels?

Professor Fothergill: I do not have a view on the £500,000 issue. Is that about reporting?

Yes.

Professor Fothergill: I see no reason that things should be reported. This is a personal view, not the view of the alliance, but I know that the local authorities that I work with in the Industrial Communities Alliance have welcomed an increase in the de minimis threshold. Operationally, that makes sense and does not lead to big damage to competition across the country, or indeed to damage to international trade.

Q May I ask for some final clarification on that? Part of the question was about the reporting. If all the decisions have been made and the work has been done on a subsidy, reporting—putting an entry on the database—should not be an onerous matter. Are you objecting to that also?

Professor Fothergill: No, I am not objecting to reporting. By the way, when I speak of reporting, I should clarify that the alliance has not taken a particular view on the issue. If I am speaking about reporting, I am expressing a personal opinion that it should not be too onerous. I would have to consult some of my local authority colleagues to clarify their precise views on that, but I know that their precise view on the de minimis threshold is that the increase is a good idea.

Dr Serafin, do you wish to add anything, briefly?

Dr Pazos-Vidal: Some of the EU rules are there because one size fits all. Even the level of the threshold is low because the prices in some countries are much lower than you experience in the UK, so it makes complete sense to raise the threshold, which is welcome.

On the level of reporting, the feedback we got from councils in Scotland, and from colleagues across the UK as well, is that it should not be even more onerous than what we had in the EU. Perhaps the proposed system goes in a direction whereby it is less onerous, and that should definitely be the way forward.

Q On the map situation, it seems to me that you are trying to recreate the previous situation with the EU. If you mention Grimsby, you might as well mention Rother Valley. I can tell you that the previous system does not work. My concern is that if areas get more prosperous, they will be over-subsidised, and if areas get less prosperous over the next five or 10 years, they will miss out on subsidies. To me, there is no flexibility with the map. Could you talk to me briefly about how you will keep it flexible, so that when areas change financially, they can benefit or, equally, come out of the system we have in mind?

Professor Fothergill: First, I would remind you that the map is not simply an EU concept. If anything, an assisted area map was something that the UK sold to the European Union as being a good idea, because we had done it for lots of years. The point is that the map should not be set in stone for all time, of course. Indeed, over the years, the assisted area map in the UK has evolved and changed. Under the EU rules, it used to change on a seven-year cycle. I remember that even before we joined the European Union—I am getting long in the tooth—we changed and revised our assisted area map on several occasions. If an area gets more prosperous, it will come down a tier. If another area is hit by a closure of a major employer, we would have the flexibility to up its status on the map. The map is not for all time; it is a tool, and the details can be adjusted.

I am afraid that brings us to the end of the time allotted for the Committee to ask questions. I thank the witnesses on behalf of the Committee.

Examination of Witnesses

Thomas Pope and Professor Stephanie Rickard gave evidence.

We will now hear oral evidence from Thomas Pope, deputy chief economist at the Institute for Government, who is here in person, and Professor Stephanie Rickard, professor of political science at the London School of Economics, who is appearing virtually. For this session, we have until 11.25 am. Could the witnesses please introduce themselves?

Thomas Pope: I am Thomas Pope, deputy chief economist at the Institute for Government. I have been leading our work on subsidy control for the last couple of years.

Professor Rickard: Good morning. I am Stephanie Rickard, professor at the London School of Economics. I am a political economist, specialising in Government subsidies.

Q Would the witnesses please give a one-minute statement?

Thomas Pope: Great. We have been looking at this area for a couple of years, from back before the trade and co-operation agreement was agreed. The Bill, as a structure, certainly fits with lots of our recommendations and makes sense, taking advantage of the flexibility that the TCA affords. The decision has been made to move away from state aid and this broad structure makes sense—it fits.

A concern would be that, as it stands, the Bill creates a system that is very much a skeleton—there is more to come later. We need to think about the way in which that secondary legislation is going to be made, and how the guidance is going to be made and updated over time. On the enforcement side, one concern would be that there is a risk that damaging subsidies are going to slip through the net. I am sure we can get on to this in more detail later, but particularly on schemes, there is a bit of a risk that damaging schemes might slip through the net.

Professor Rickard: Subsidies can be a very important policy tool for Governments. We see more and more Governments using subsidies more and more often—last year alone, subsidies more than tripled in developed economies—so I really commend the efforts to design a subsidy control regime.

I would like to draw the Committee’s attention to one issue that I think is particularly important, which is transparency. The benefits of transparency, and more of it, outweigh the costs. One of the benefits I would flag is that transparency can potentially ensure that granting authorities comply with the principles that are laid out in the Bill. They are asked to self-certify their compliance with the principles—that is a bit like me asking my students to mark their own exams. They may do so very diligently and very carefully, but there may at times be some incentives to deviate from the principles and to give themselves a higher mark. Having greater transparency and requiring more subsidies to be notified and to be put into the database for public scrutiny will help to ensure that the granting authorities are very careful in complying with the principles. While I applaud the commitment to transparency that is very obvious is chapter 3, I would encourage Members to think carefully about the ways in which we could further increase the transparency to ensure that the UK was a world leader in transparency in subsidies and so as to help to provide consistency and certainty for business and accountability to taxpayers.

Q Thank you, Mr Sharma. I thank Professor Rickard and Thomas Pope for coming in today to give evidence. I will pick up on the issue of transparency first. What specific additions to the Bill might you recommend to increase transparency? I am also interested in your view on whether there should be some form of reporting for all subsidies under the Bill or whether there should be a threshold. Could that be done in a more streamlined way to allow for that transparency?

Could I also ask for your view on whether the six-month reporting deadline is necessary? In your view, could that threshold be reduced if decisions had already been made about the subsidy? Those questions are for both our witnesses. Finally, do you believe that the one-month challenge window is sufficient in the context of how the scheme is being designed and is likely to operate in order to make sure there can be an effective challenge to any subsidies?

Thomas Pope: On transparency, as most of you know, there is the £315,000 de minimis threshold. If the subsidy is below that level, we need not worry whether it is complying with the system. There is then a higher £500,000 threshold. If a subsidy complies with a scheme that has already been approved, it need not be put on the database if it is below £500,000.

Q Can I clarify one thing, because I want it to be clear? Being below £315,000 means that the subsidy does not need to comply with the principles—does not need to be checked against those—and does not need to be reported?

Thomas Pope: Yes, that’s right. The purpose of having a de minimis threshold is that we are worried only about subsidies that are likely to distort competition or investment. The judgment has been made. It is quite hard to know exactly what the right level there is. I think a bit higher than the EU level, which was €200,000, seems about right, so £315,000 certainly seems reasonable.

My view is that there is a benefit to more transparency. Therefore, it is worth having a lower threshold for publishing to the database than for someone having to think about whether they are complying with the regime and all its principles. There are a couple of reasons for that.

First, I think we want to understand how the system is actually working and the impact of different decisions that we are making in the system. One of the big policy levers we are pulling in the system is the £315,000 de minimis threshold, and we want to understand how influential that is. Are lots of subsidies bunching at £300,000 or £310,000 so as not to comply with the system? That is not necessarily a problem, but we want to understand what impact the system is having on how subsidies are offered. If we censor everything so we see only the stuff above £315,000, we have a less good sense of how the system is operating.

Likewise, with the £500,000 threshold for subsidies that are approved under a scheme, we want to understand how often a scheme is being used and how much public authorities are going down that route. Again, we want to know whether a £400,000 subsidy is being approved under a scheme. I do not think that means we should pull the transparency limit down to £500 or £1,000.

Personally, I think a public authority also has to ask the question, “Is this a subsidy?” With quite big amounts of money, such as £100,000 or £200,000, they will be thinking about that. For £1,500 here or there, I imagine that would be quite a big additional burden. Realistically, we are never going to move the de minimis threshold down to £1,500 or £50,000. A level on the transparency database of around the EU level or a bit lower—about £175,000; I know that was in the original consultation as a possibility—would be a reasonable compromise between those two concerns. We could even have fewer things that needed to be put on the database if the subsidy was below £315,000, although we might want it on the database somewhere.

Professor Rickard: I will give a few examples of things that could be changed to help to improve transparency. The first would be to lower that threshold and report subsidies even if they were below £350,000 over three years. Report subsidies that were included in a scheme, even if they were less than £500,000. Report subsidies even if they were subsidies for the public economic interest.

I would shorten that time for reporting; I think six months is too long. If it is a tax break for 12 months, after 12 months a competitor might be out of business, so I certainly think that there would be scope to shorten the time to reporting. I would increase the time to challenge. One month is too short, particularly if someone is learning about a subsidy only through the public reporting and the database. Remember, for subsidies not publicly reported in the database, how will we know about them? Where will we learn information about them? I would increase the time that people had, or people with interest had, to challenge a subsidy.

I would maintain the information on the subsidy for longer than six years. Six years is mentioned in the Bill. I do not see a good justification for deleting information after six years, particularly if we want to analyse how the regime is working. We need this over-time data, this long-time thing, to ask, is the regime working? Are we achieving what we want to achieve with our subsidies? Are we getting good value for money? Are we helping disadvantaged areas? Are we helping to create economic activity? To assess that, we need to have this information and we should not delete it after a certain time.

I would ensure that certain types of information were reported. At the moment, the Secretary of State is given the discretion to ask for certain types of information, but I would want to see as much information as we could possibly get, while protecting commercially sensitive information.

Finally, I would look to make sure that all the information was self-contained in the database, without having links to local councils or other information. As we know, links break and information gets lost. I understand that there is this concern about putting a burden on granting authorities. One possibility may be to ask the recipients themselves to help to provide some of the information, so we could cross-reference and make sure that we had the correct information from the granting authority and the correct information from the recipients.

Those are just some ideas that would help to improve transparency. Through transparency, we can get better compliance and better value for money, and we can help to ensure that the subsidies that are being granted meet the goals that we are setting out to achieve.

Q Thank you both for your contributions so far. Thomas, if I picked you up correctly at the start, you made a reference to damaging schemes. Can you elaborate on that and what you are thinking in that regard?

I also have a question for both of you. Thomas, you touched on this in your remarks in relation to this being a skeleton of a Bill. We heard earlier from Professor Fothergill and Dr Pazos-Vidal about the potential implications of that lack of clarity about what sits behind the Bill and what the Government will be coming forward with: statutory instruments or secondary legislation. Do you see the lack of detail in the Bill having a consequence for the investment decisions of public bodies right across the UK?

Thomas Pope: On schemes, my specific concern—and this links to the one-month challenge window—is that a scheme gets added to the database or is set up. There is then a 28-day window where a potential interested party—someone who might be damaged by a subsidy that could be offered under the scheme—has a chance to appeal and to ask for more information and go through the process as set out in the Bill. Once that challenge window has passed, the scheme is approved and subsidies that fit with that scheme can then be offered with no opportunity to challenge.

The risk is that, if I am a competitor business and a business I am competing against is going to get a subsidy under a scheme, but has not yet got that subsidy at the point when the scheme has been set up, I will probably not know that the scheme is here and the clock is ticking. Here is this subsidy that will come later, and I am an interested party because a subsidy could go to my competitor. It is not even clear that that business would be an interested party, so my concern is that there is a benefit to using schemes in that you do not need to go through a separate process for every subsidy, but there is a corresponding risk that if there is not sufficient scrutiny of the schemes when they are set up, there is almost a sort of free pass if a scheme slips through the net and it allows you to give quite damaging subsidies. Once the time limit has passed, there is nothing you can do about that.

In terms of the Bill being a skeleton, there is a trade-off here. We want to be flexible and we want to be able to update elements of our regime over time. Things that are set in primary legislation are harder to change, but at the same time there are bits of the Bill where there is a lot of power given to the Secretary of State, with very little indication about how he or she might need to, for example, decide what constitutes a subsidy of interest or of particular interest. Those are subsidies that would have to be sent to the Competition and Markets Authority before they could be offered. More detail there would be good.

As to whether it will actually cause uncertainty and affect investment decisions, I do not talk directly to public authorities in the same way that some of your other witnesses will. To the extent that you can write very good guidance and have clear secondary legislation, that need not be a major issue. There are other ways that legal certainty can be provided. There probably is an extent to which this system will take a bit of bedding in. It is not clear how the Competition Appeal Tribunal is going to treat appeals and what the burden of evidence will be, or how easy it will be to challenge a subsidy subject to the principles. Probably that means there will be a bit of caution, at least initially while that beds in, because there will be legal precedent that will build up as well. Again, I do not think that will be a permanent feature necessarily.

Professor Rickard: I will weigh in briefly on the streamlined routes that have been proposed. The Government could propose a streamlined route, and they would bring it to Parliament, so there would be some room for scrutiny, but once that streamlined route or scheme is set up, granting authorities can just designate that subsidy as falling within that scheme, and then it is assumed to comply. That is a potentially interesting situation where you have a scheme and granting authorities say, “Yes, the subsidy is part of the scheme.” If we then assume compliance and do not see these subsidies showing up in the database, that potentially allows some leeway for subsidies that are not fully compliant with all of the principles. That would be one potential way in which the streamlined scheme would lay on top of the individual subsidies.

It is a route, of course, for the Government to set priorities and say, “This is an area in which we would like to see subsidies.” They are signalling a policy direction in which they would like to go. Of course, when you get a new Government, you might get new schemes. That would be right and proper. In a democratic system, you have a new Government with a new platform, and the voters have chosen that platform, but it does set up, potentially, a situation where you would have a streamed route scheme full of subsidies, and when there is a new Government there is a new streamed route scheme for subsidies. I am thinking about how to transition between them and the potential uncertainty generated for both businesses and granting authorities.

I want to pick up on one thing that Mr Pope said about who can challenge a potential subsidy. This is an area that would benefit from additional scrutiny. Thinking about who has a particular interest in challenging those subsidies, there may be good reasons to expand the potential set of challengers to ensure that it includes not just competitors but maybe also employees, trade unions, taxpayers or interest groups. That would give us more eyes on the subsidies to ensure that they are complying with the principles, ensuring value for money and achieving the economic outcomes that they set out to achieve.

Q Can I ask for one quick point of clarification? Would that mean, Professor Rickard, that you would widen the definition of interested parties to include those groups explicitly?

Professor Rickard: Yes. In my opinion, that would be a good strategy. The benefits of ensuring increased scrutiny of how these subsidies are being allocated and how taxpayers’ money is being spent would outweigh any potential costs.

Q Would that include the devolved Administrations?

Professor Rickard: That is a good question. I do not have an opinion on that; I do not think I could say.

Q Thank you, witnesses, for your contributions this morning. Which subsidy system internationally would you consider the best role model for the UK, and why?

Professor Rickard: That is an excellent question. The UK is in a unique position because of the TCA. It is hard to find a perfect analogy internationally because of the TCA, and the structure and the limit of the TCA puts the UK in a unique position.

However, there are world-leading examples in transparency, for example Norway and Germany. They are extremely transparent in their subsidies. States within Germany provide annual subsidy reports that run to 50, 60 or 70 pages. I am not saying that that is necessary, but that is the kind of world-leading transparency that the UK could and should aim for.

What the UK is setting up in the subsidy control regime here is closer to what we see in the World Trade Organisation. The WTO allows subsidies, except for those that are prohibited, a bit like what is suggested here. Granting authorities are allowed to provide subsidies, and they self-certify that their subsidies comply with the rules, as we see in the Bill. Those subsidies then persist until they are challenged. That is the best analogy that we see.

The challenge in the WTO system is that many subsidies that do not comply with the principles, with the agreed upon rules, persist for a long time, and in fact may never be challenged. That is the challenge in the subsidy control regime here: granting the ability to self-assess your own subsidies to ensure that they comply with the principles, but thinking about what happens when a subsidy that does not comply with those principles is enacted. How long does it persist before it is challenged? Certainly in the WTO system they persist for a very long time, because it is difficult to enact that challenge.

Q But is there one country, in the overall scope of what we are talking about—not just transparency but effectiveness—that you think is a role model?

Professor Rickard: I think that Norway is an excellent role model, but again it is in a slightly different situation because it is not bound by the TCA. It has a different system, because it does not have devolved Administrations or devolved authorities. It has Parliament providing budgets to particular subsidy categories, and then an independent body assigning subsidies to groups based purely on economic logic and cost-benefit analysis. So there are politics involved in the budgeting—“We allocate this amount of money for subsidies to research and development”—but then the decision making is granted to an independent body of experts. That works particularly well, because there is still democratic accountability at the budgeting level, but the actual decision-making process is apolitical and led by experts, based on economic logic.

Thank you, Professor. Thomas?

Thomas Pope: As Professor Rickard was alluding to, we are going to be more or less unique in having a domestic subsidy control regime like this. The main examples internationally are the EU state aid system and the WTO system, both of which have that international dimension. We have looked in our research at other systems and what other countries try to do, such as Canada in its inter-provincial free trade agreement. It has more barriers to trade than we do. It has a consulting requirement on subsidies, although it is not a very strong one.

Having looked at other countries, what you see in those countries that do not have a domestic subsidy control regime, which is most of them outside of the EU, are the negative effects of not having one. The US is the obvious example, which other witnesses have alluded to, where you get these quite big subsidy races between cities or states. In Canada, there have also been issues with the risk of subsidy races.

Very centralised countries are in a different situation, because if only one authority can grant subsidies, you are not worried about subsidy races. In a world made up purely of central Governments, I think that it would still be good practice to have a set of rules like this, but you would probably design the rules and the system slightly differently. In the UK, we have the three devolved authorities, which puts us in a different situation and means that, even though we are unique in having a domestic subsidy control regime and even though it is required by our TCA obligations, it is a positive thing and it will be very helpful.

Q Is there one country that you particularly admire, and how do they do it?

Thomas Pope: As I say, I do not think that there is one that has a domestic regime. We are charting our own course here.

Q You have both outlined your concerns about the system in relatively general terms. Do you have specific advice on what you would do differently on some of the challenges? Professor, could you speak about the challenges in self-certification and marking your own exams, which you have referred to? Mr Pope, perhaps you could address some of the timeframe points that you started to touch on?

Professor Rickard: That is an excellent question. Some of the things that could help would be lengthening the time available to challenge—extending it beyond a month would be helpful—and clarifying, and potentially expanding, the definition of interested parties who could potentially challenge a subsidy if they are concerned.

Clause 71(3) has this really interesting phrase. It says that the relevant date you can challenge from is the date on which the subsidy has been published to the database or

“the date on which the interested party first knew or ought to have known”

about the subsidy decision in question. That is difficult. What is the date that a potential challenger ought to have known about the subsidy? That is one particular phrase that jumped out at me, and I am curious to think more about it. We should think about extending the time that you can challenge and defining more clearly and broadly who potential challengers may be, but also about how we will learn about a subsidy if it has not been notified and if we do not have publicly available information about it.

Potential challengers can ask the granting authority for information, and the Bill provides a duty on the granting authorities to provide that information. However, it is difficult to know, particularly within this short timeframe, how I will learn of this subsidy. How will I learn that there is a subsidy that is disadvantaging me and that I think is not complying with the principles? How can I learn that in this very short timeframe? Those are some concrete examples of changes that could be made to increase the ability of interested parties, competitors, businesses and others to scrutinise the subsidies that are being provided.

Q Before I ask Mr Pope to answer the same question, how would you make that information more widely available and easier to find?

Professor Rickard: The database set up by the Department for Business, Energy and Industrial Strategy is excellent, but I would make sure that more subsidies were notified into that database and that it fully encompasses all the information—not linking to other pages, but putting all relevant information into that database. I would also require granting authorities to put that information into the database in a timely fashion—quicker than six months—and make sure that more subsidies have to be notified, not allowing those exemptions for subsidies under £350,000 or £500,000 within a scheme.

Q Thanks very much. I will ask you the follow-up question as well, Mr Pope: if not six months, how quickly should that information be there?

Thomas Pope: I will answer the first question first. I agree with many of the suggestions outlined by Professor Rickard. My real concern is that, as that 28-day period is so short, there is a risk that a subsidy or scheme that is concerning is missed by potential interested parties. The issue could be that they do not qualify as interested parties, so you could expand that, or that the time is too short.

I would propose one solution. At the moment, the CMA has a reactive role in the system—deliberately so. It issues reports on subsidies of interest and particular interest before they have been offered, if those public bodies offer the subsidies to the CMA for review. In special cases, where the Secretary of State is concerned about a subsidy, it can issue a post-award referral, and after a subsidy has been awarded, the CMA can issue a report. I think that the CMA should have the ability to do that investigation off its own bat. That would not mean giving it a standing a court, or anything like that, but that it could keep an eye on potentially problematic subsidies. If the CMA reports on a subsidy and raises a concern—there would not be ratings—it is much more likely that interested parties would be aware of that. I would possibly go even further and allow the CMA to have standing in court, but I understand that that is quite a departure from the system and it probably will not be a goer. However, at the very least, the CMA could have the proactive ability to investigate and issue reports ex-post.

The six-month challenge deadline is clearly something that has been brought in from the TCA, and that is the maximum we are allowed. I am afraid that I do not have a very strong view on the right amount. I have not spent enough time actually writing the reports. The public authorities have to be very strong on that.

Q To clarify, that is the maximum amount.

Thomas Pope: We could make it shorter within our own legislation if we wanted to.

Q My questions focus particularly on chapter 3, which is about the subsidy database and transparency. Do you have any idea what the logic is behind the tax entries in the database? It seems to me that if something relates to a subsidy measure that is taxed, it may not need to be reported for almost two years—or even longer—because it is a year past the first declaration on the tax. Does that make sense, or would it be better to have something different?

I have two more questions. In the event of cumulative subsidies, where an organisation receives various subsidies from various organisations and it takes them over the threshold of the three-year period, who is responsible for ensuring that that is put on the subsidy database? I am not clear on that.

Lastly, EU state aid rules have a number of de minimis exemptions for agriculture and various other things. Does the fact that the Bill does not include them cause problems, or is it more of a tidying-up exercise?

Thomas Pope: On tax, again, that is a longer allowance that is in the TCA, and that is why it looks like that in the Bill. Of course, the bigger question is why it was permitted in the TCA in the first place. I think it is because tax measures tend to operate on a slightly different cycle—we have our financial years and budgets—and that is why there is a different time period, but I am not quite sure.

In terms of cumulative subsidies, I am not sure that they would end up on the database—I do not believe that is the case. In terms of monitoring that, and knowing whether subsidies have exceeded a de minimis limit, I think that is the responsibility of the recipient rather than the public body. However, I am afraid that is one where you would have to ask some lawyers.

Professor Rickard: I do not know the logic behind the 12 months, but as I said in my opening remarks, I think that is quite a long time. If a competitor is benefitting from a discriminatory tax break, then after 12 months I could be out of business. So it does seem like a very long time, and I would think about the potential benefits of shortening it.

The cumulative subsidies question is an excellent point, and it highlights the arbitrariness of having these thresholds. The monetary thresholds are potentially obscuring these cumulative subsidies, exactly as has been suggested. In my own research on procurements, not in the UK but elsewhere, I find that Governments break up their procurement contracts specifically to get them below the threshold so that they do not have to report them and they are not open to scrutiny. I am not suggesting that happens in terms of subsidies, but these cumulative subsidies could potentially take on that kind of logic where you are breaking up a subsidy or collaborating on providing subsidies below that threshold that actually end up going above the threshold.

Finally, in terms of exemptions, there are exemptions included in this Bill. Sometimes they may be legacy exemptions, but I think that the benefits of having this information surely outweigh the costs. If we understand where the subsidies are going and who is getting subsidised, we can have a better understanding of whether these subsidies are working and achieving their goals. If you are weighing up the costs and benefits, I think the benefits of having fewer exemptions would outweigh the costs.

Q To follow that up, probably with Mr Pope, it says specifically that indirect subsidies are to be included. In the event that an indirect subsidy occurs, who is responsible for ensuring that there is transparency and information about that?

Thomas Pope: That is a very good question, and one that I am afraid I do not know the answer to.

Q Thank you very much for your evidence this morning. Coming to Mr Pope first, you spoke about the domestic subsidy control regime being almost unique, and said that we were charting our own course. On balance, do you think having a subsidy control regime is a good thing?

Thomas Pope: Yes.

Q Why do other countries around the world choose not to do it?

Thomas Pope: That is a very good question. I think there are various benefits, and in our research we have outlined them. I think there is a particular case, in a system where competing jurisdictions can offer subsidies, for worrying about subsidy races. Actually, that is effectively a co-ordination problem, and a subsidy control regime is effectively that co-ordination.

I also think that, in general, there are benefits to setting out very clearly what the principles are by which you are going to offer subsidies. An interesting analogy—it is not quite the same—is fiscal rules; they are not legally binding in the same way, but these rules are set out by politicians to indicate what we think is sensible policy. They can sometimes help you to resist, for example, political pressure to save a business that is going under but that has no long-term prospects. Those rules can also be quite helpful.

In general, it is quite hard to hold the line on those things, and that probably explains why there are not domestic subsidy control regimes in general, because this is Governments tying their own hands. In general, it is quite hard to do that. It just so happens that we have an international obligation that requires us to do that, but I think that is actually a benefit rather than a cost. That would be my answer as to why there are not lots of subsidy control regimes elsewhere. Professor Rickard may know better than me on that.

Professor Rickard: No, Mr Pope is absolutely right. You are committing to saying that the regions within the United Kingdom will not compete with each other in trying to win business, jobs and investment by awarding subsidies. It is difficult to give up that ability, and say that we will not engage in that type of subsidy war, but we have seen the damage that competitive subsidy provisions have caused. Estimates suggest that in the United States $80 billion a year is spent by states competing for business with subsidies. If they agreed not to do it, and had their own subsidy control regime, real income in manufacturing alone would increase by 5%, so there are real economic gains to tying your hands and saying, “We’re not going to engage in subsidy races.”

Evidence suggests that subsidy races do not work in the long term. Even providing big subsidies does not necessarily guarantee that you will get businesses where you want them to be. For example, the US biotech industry is concentrated in five cities with world-leading universities and very deep and highly educated labour pools. Businesses locate there despite the fact that 41 out of 50 states have very generous subsidies to try to lure them to their regions, so evidence suggests that spending subsidies to try to attract jobs may not always work, and doing so is really a waste, in terms of spending a lot of money in a way that potentially hurts productivity and real income.

Q Professor Rickard, Mr Pope said that he felt that the level for reporting should be lower than £500,000; it should be £175,000. You agreed, but you did not specify a level. What level do you think it should be?

Professor Rickard: I don’t have a strong feeling on the level. I am not sure where the £175,000 number came from. I heard Mr Pope mention it. I do not know the logic behind it.

I think it’s the EU level.

Professor Rickard: Okay, thank you. I do not see why it could not be lower. I recognise that there is a concern that we are putting a burden on granting authorities, but the granting authorities have this information. They have already collated it and made a decision. Increasingly, with tech, I do not think it is a huge burden to upload that type of information to a database, so I would argue for an even lower threshold than £175,000. If I gave you a number, it would be an arbitrary number—as I suggested, all thresholds are arbitrary numbers—but it could be as low as £100,000. I think that would not unduly burden governing authorities, but would increase transparency to ensure value for money and compliance with the principles.

Thomas Pope: I completely agree that all of these numbers are somewhat arbitrary. The reason I mentioned £175,000 specifically is that it is the EU level, and it is the number that was in the Government’s consultation at the start of the year. That was a question in the consultation, but in the end the level was higher. It is very hard to say whether the right number is £100,000, £80,000, £150,000, £175,000 or £210,000. It should be low enough that we have a good sense of how the system is actually affecting how subsidies are offered.

Q I want to follow up on a couple of points, starting with the duty to provide pre-action information—primarily, clause 76. There are ways in which a public authority may refuse or suggest that it would be difficult to give information based on a number of categories—commercial sensitivity, confidentiality and so on—without it seeming to be clear how that could then be challenged. I wonder whether transparency, and being able to bring a challenge with the information needed, needs to be stronger, or whether the role of the CMA might need to be stronger to support requests for information.

Thomas Pope: I am not an expert on that, and you will probably want to ask other witnesses. I think part of the point here is that a failure to comply with something like this could be challengeable, not directly, under the process set out in this Bill, but that is also a violation of public law. But as I say, it would be better to ask a lawyer than me on that.

Professor Rickard: One possibility, potentially, when you are talking about commercially sensitive information is not to limit the amount of commercially sensitive information that would be in the database but, when you do get a public request, to do something similar to what they do with Nomis and the labour data, which is very disaggregated by firms. You have to sign a declaration saying why you are using this information and that you are not going to use it in a commercial way. That may be a way to provide the necessary information to a potential challenger, but in a way that protects information that is potentially commercially sensitive. So I certainly think there are ways around it, and I think that it would be important to explore some of those mechanisms.

Q May I ask one further follow-up question in relation to this? I am not saying that there would be, but there may be circumstances in which accurate information is not always reported. What mechanisms do you see in the Bill—or does there need to be more on this—in relation to potential audit and checking of the accuracy of the information being submitted, and who should be doing that?

Professor Rickard: I think you are right that we are not only trusting the governing authorities to mark their own exams, but trusting them to provide accurate information about what they have done. So I think there are two possibilities—this is blue-sky thinking. One, as I have suggested before, is to collate information—get the information from the granting authority, but also request information from the body or entity that has received the subsidy. And then you can confirm: do these numbers match? This happens in trade all the time: you say, “What is the export data? What is the import data? Can we match these data?” And if not, what is the problem; why do they not appear to match? One way to have a check and balance on the information that is being provided by the governing authority is to seek this kind of information from the people who received the subsidy. It could even be a condition of receiving the subsidy that you will report this information.

The second suggestion, which is one that Mr Pope offered previously, is giving the CMA a bigger role for audits, and even beyond that. I am glad to see that the CMA has been tasked with doing five-yearly reports, but I really think that there is a lot of additional room for ex post scrutiny, not only of the regime but of individual subsidies, to say, “Did this subsidy achieve this goal? Was the subsidy successful? Did it engender jobs, business and economic opportunities?” I think that is a really important role for the CMA or another entity like that, but in order to be able to do this kind of auditing, this ex post analysis, we need more information, which means we need more transparency.

Thomas Pope: I would agree with all of that. What I would say is that I think there is an incentive to get the information right, in that I think if you are found to have got it wrong, probably your 28-day time limit after you have offered accurate information does not apply. So you do want to make sure that you are providing accurate information here. But I completely agree about some role for the CMA or some other body in getting the information from recipients—it sounds like a very good idea to me—and checking that, subject to how burdensome that would be. Yes, that is a good cross-validation. I suppose the concern here would be that the CMA ends up a sinkhole of time, just looking through every single thing that goes on the database, but if you just have a flag to say, “Hold on, the information doesn’t match here,” and then the CMA looks further, they are two strategies that work together quite well, I think.

Q Professor Rickard, you mentioned the subsidy database that there is already. I have had a bit of a look at that. Do you think that it is a model for how we should take this forward, or do you think that there are significant amounts of information that we need to add to it in order that it will make sense to people? You did touch on this, but could you just expand on it?

Professor Rickard: I think it is a commendable first step. I think it is great that it is publicly available, that it is online, that it is relatively transparent. There would be some more things that I would like to see. For example, there are many cases, as you will know from looking at it, where it just says “other” or “not available”, and there are a lot of cells that have not been filled in or do not look as if they have been filled in correctly. I encourage some mechanism to ensure that you cannot just say “other” or “not available”. Sometimes the amounts are listed as zero; I am not sure I understand why that is the case. I also think best practice could be followed in terms of international comparability. For example, you could put on these codes that we use to identify the sector, like NACE codes—internationally standard codes that would identify the sector to which these subsidies are going.

The Bill is really commendable and is a great initial step, and I am glad to see it up there, but there are ways that it could be improved by providing more information, and more consistent and detailed information, and by using some of these international standard codes that exist in databases that we use—for example, for imports, employment, industries or firms.

Q I am keen to get your views on the subsidy advice unit and its role, responsibilities and powers as defined in the Bill. Do you think that the unit should have some further external voices on it, whether on the board or involved in its work? It seems to have a huge amount of responsibility, but its membership can only be drawn from within the CMA, from which panels might be appointed to undertake reviews. To give confidence, a process of review will need to be robust and have knowledge of devolved competencies, regional issues and so on. Do you think the unit will be strong enough, or do you think it needs some adaptation in order to make it the most effective it needs to be?

Thomas Pope: I certainly think that the CMA and/or the subsidy advice unit should have a membership and input reflecting its four-nation role in the UK and the fact that, although subsidy control is a reserved matter, it affects devolved competence and the operation of policy in all four nations of the UK. I therefore think it is appropriate that there be better devolved representation. These statutory responsibilities go to the CMA and are then exercised by the subsidy advice unit and the Office for the Internal Market. I think it is time for a look at the CMA’s governance, although that is obviously slightly beyond the scope of the Bill.

There could certainly be ways that the subsidy advice unit could get input. A particular concern could be that, because the regional economies of the UK can look quite different, you may need a different set of local expertise when the CMA or SAU were looking into a particular subsidy in Scotland from what you would need in the north of England, which has quite a different industrial structure. There are lots of creative ways that the SAU could do that. You could have regional panels that have that expertise. I would go further and have a real look at the governance of the CMA as well, because ultimately, while it is the SAU doing the subsidy control, those are the CMA’s powers.

Professor Rickard: I was surprised to see in legislation that members of the SAU can only be employees of the CMA. There may be very good reasons for that. The key for the SAU is to ensure that it is insulated from politics and that the decisions it makes are really not only economic logic but are consistent with the principles. Of course, there is a role for politics in that—people saying, “We want to achieve these particular outcomes”—but I think you really want the SAU to be a technocratic body staffed by experts who will review a subsidy on balance, in line with the principles. With those goals in mind, there may be scope for expanded membership, or certainly at least for ensuring some sort of feed-in from experts on the particular issues, subsidies or areas that the SAU happens to be investigating.

I am afraid that brings us to the end of the time allotted for the Committee to ask questions and, indeed, for this morning’s sitting. I thank our witnesses, on behalf of the Committee, for their evidence. The Committee will meet again at 2 pm this afternoon here in the Boothroyd Room to continue taking oral evidence.

The Chair adjourned the Committee without Question put (Standing Order No. 88).

Adjourned till this day at Two o’clock.

Elections Bill (Eleventh sitting)

The Committee consisted of the following Members:

Chairs: Rushanara Ali, Sir Edward Leigh, † Mark Pritchard, Christina Rees

† Anderson, Fleur (Putney) (Lab)

† Badenoch, Kemi (Saffron Walden) (Con)

† Bell, Aaron (Newcastle-under-Lyme) (Con)

† Bristow, Paul (Peterborough) (Con)

† Clarkson, Chris (Heywood and Middleton) (Con)

† Furniss, Gill (Sheffield, Brightside and Hillsborough) (Lab)

Gibson, Peter (Darlington) (Con)

† Grady, Patrick (Glasgow North) (SNP)

† Harris, Rebecca (Lord Commissioner of Her Majestys Treasury)

† Hollern, Kate (Blackburn) (Lab)

† Kruger, Danny (Devizes) (Con)

† Mayhew, Jerome (Broadland) (Con)

† O’Hara, Brendan (Argyll and Bute) (SNP)

† Randall, Tom (Gedling) (Con)

Shelbrooke, Alec (Elmet and Rothwell) (Con)

† Smith, Cat (Lancaster and Fleetwood) (Lab)

† Smith, Nick (Blaenau Gwent) (Lab)

Adam Mellows-Facer, Chris Stanton, Committee Clerks

† attended the Committee

Public Bill Committee

Tuesday 26 October 2021

(Morning)

[Mark Pritchard in the Chair]

Elections Bill

Before we begin, I have a few preliminary reminders for the Committee. I know that you have heard them before, but if you could listen, that would be helpful. Could we have social distancing, and could we have masks being worn when not speaking, please? Also, to be helpful to our wonderful Hansard colleagues, could you email any notes to hansardnotes@parliament.uk? [Interruption.] That is a reminder: please could you turn off all electronic devices? Thank you very much indeed.

We now resume line-by-line consideration of the Bill. Members who wish to press a grouped amendment to a Division should indicate that they wish to do so when speaking to it.

Clause 16

Notional expenditure: use of property etc on behalf of candidates and others

Question proposed, That the clause stand part of the Bill.

It is a pleasure to serve under your chairmanship, Mr Pritchard. Clause 16 makes an important clarification to our political finance rules that I hope will be welcomed by all members of this Committee. In 2018, after the Supreme Court determined that the rules on notional expenditure for candidates did not contain a test of authorisation, there were concerns among parties and campaigners that candidates could be liable to report benefits in kind that they did not know about, but could be seen to have benefited from. On Second Reading, we heard about the direct impact that unclear rules about notional expenditure has had on colleagues, and we must prevent the unwelcome consequences that this confusion may have on participation, such as stopping people from volunteering to be agents due to their fear of falling foul of the law through no fault of their own.

That is why we are making it clear that candidates only need to report as notional expenditure benefits in kind—property, goods, services and facilities that are given to the candidate at a discount, or for free—that they have used themselves, or which they or their agent have authorised, directed or encouraged someone else to use on the candidate’s behalf. That is what was already widely understood to be true prior to the court case. We have sought input from the Parliamentary Parties Panel on these measures, and are confident that they will bring important clarity to the rules and support compliance.

In this clause, we are also making an equivalent amendment to the rules for other types of campaigners, such as political parties and third-party campaigners, to ensure consistency. Expenditure that promotes an individual candidature would continue to count towards a candidate’s own spending limit, and expenditure that is joint between a party and a candidate will continue to be apportioned appropriately, a practice which all parties have long engaged in. Together, these changes will bring much-needed reassurances and clarity to candidates and their agents on the rules that apply to notional expenditure. They will support compliance with the rules and ensure that those wishing to participate in public life can feel safe in doing so. I therefore commend the clause to the Committee.

Question put and agreed to.

Clause 16 accordingly ordered to stand part of the Bill.

Clause 17

Codes of practice on expenses

Question proposed, That the clause stand part of the Bill.

This clause amends existing provisions in electoral law in respect of the codes of practice that the Electoral Commission may prepare on election expenses for candidates. The clause also amends the parliamentary procedure to bring into force some of those codes of practice, so that parliamentary procedures are consistent.

Clause 17 ensures that the code of practice on candidate spending that the Electoral Commission may prepare can, and should, cover what constitutes notional expenditure and third-party spending under the Representation of the People Act 1983. We are making that change in order to put the scope of the guidance beyond doubt. It is important that the guidance is comprehensive, so that it can address concerns about notional expenditure that have been raised across the political spectrum. At present, the legislation implementing the various codes of practice on candidate spending is difficult to understand, and different codes are subject to different procedures.

Currently, the codes of practice on spending for both candidates and parties and campaigners are laid before both Houses in draft form, and are subject to parliamentary scrutiny for up to 40 days. It is right that Parliament is able to scrutinise those codes before giving them final approval, so this will not change. We are amending the provisions for the candidate code in the 1983 Act simply to specify that the order that brings this code of practice into force is a statutory instrument. This is a minor amendment to an existing power and simply remedies the fact that the legislation does not specify that at present. Like the other codes, the candidate code will still be subject to parliamentary scrutiny for up to 40 days. We are not changing that.

We are also amending the Political Parties, Elections and Referendums Act 2000 so that the order bringing the code of practice for political parties into force is subject to no parliamentary procedure, rather than being subject to the negative resolution procedure. That is in line with other commencement orders and with the procedure followed for other codes of practice prepared by the Electoral Commission. This follows the initial 40 days of parliamentary scrutiny when the code is laid in draft, and that will not change. As I explained, these changes will ensure that the procedure for all the codes of practice are consistent and clearer, while ensuring that Parliament remains able to duly scrutinise them and give them final approval.

None of the codes has been put forward to Parliament to date and, given that the Elections Bill is changing the law on notional expenditure, the draft codes previously developed by the Electoral Commission will need to be updated to reflect the changes in the law. We would expect the Electoral Commission to consult political parties and others in future on any new codes of practice.

Question put and agreed to.

Clause 17 accordingly ordered to stand part of the Bill.

Clause 18

Authorised persons not required to pay expenses through election agent

Question proposed, That the clause stand part of the Bill.

Section 75 of the Representation of the People Act 1983 prohibits any third party spending above a certain amount on candidates without the written authorisation of the election agent. However, the current rules also provide that any authorised spending incurred by the third party must be paid for by the election agent. That is not logical, which is why we are amending the rules so that any authorised spending under section 75 can be both incurred and paid for by the authorised third party.

The measure does not change the existing rules around submitting spending returns, as any authorised spending should still be reported by both the third party and the candidate. This change will make the process of paying for that authorised spending more straightforward.

Question put and agreed to.

Clause 18 accordingly ordered to stand part of the Bill.

Clause 19

Declaration of assets and liabilities to be provided on application for registration

Question proposed, That the clause stand part of the Bill.

Clause 19 amends section 28 of the Political Parties, Elections and Referendums Act 2000 to bring forward transparency about political parties’ assets and liabilities to an earlier stage. There is already a requirement for political parties to maintain a record of assets and liabilities in their annual accounting records. However, that information may not be available until up to a year after a party registers and can therefore be after an election that the party has contested.

Parties with assets or liabilities that do not exceed the £500 threshold will be required to make a declaration confirming that fact. Parties with assets or liabilities in excess of £500 will be required to produce a record of those assets and liabilities to accompany their declaration. That will be incorporated into the registration process with the commission and into the register maintained and published by the commission. Parties with assets and liabilities of above £500 will be indicated on the register of parties.

This is a good step forward as it will allow earlier public scrutiny of parties’ finances and ensure public confidence in the transparency of all political parties’ financial positions.

Question put and agreed to.

Clause 19 accordingly ordered to stand part of the Bill.

Clause 20

Prohibition on entities being registered political parties and recognised third parties at same time

Question proposed, That the clause stand part of the Bill.

Clause 20 prohibits groups and individuals from having access to multiple spending limits at an election. Spending limits exist to ensure a level playing field, and any opportunities to unfairly expand them should be removed. During the 2019 UK parliamentary general election, one group claimed that it could do exactly that by registering as both a political party and a third party campaigner. That showed the potential for the current rules to be abused and spending limits expanded.

If we do not close down the loophole, it may be exploited further in future. This change will prohibit recognised third party campaigners from registering as political parties and gaining access to a spending limit for each registration. That will serve to protect the integrity of the existing spending limits.

To ensure that there can be no doubt, the list of individuals and entities permitted to be on the third party campaigner register will also be amended to remove political parties. As groups may already appear on both registers when the provision comes into force, clause 21 will ensure that any group that spends in a third party capacity during a regulated period will not be able also to spend as a political party. That means that any group appearing on both registers when these provisions are commenced will have to choose whether it wants to spend as a political party or a third party campaigner during any subsequent regulated period.

Finally, clause 20 also makes consequential amendments to the rules on donations, spending and reporting for recognised third party campaigners, where they currently refer to the specific requirements for political parties, which take into account their existing financial controls as a party. Altogether, these changes will ensure that groups cannot use the rules to their advantage to expand their spending limits unfairly.

Question put and agreed to.

Clause 20 accordingly ordered to stand part of the Bill.

Clause 21 ordered to stand part of the Bill.

Clause 22

Restriction on which third parties may incur controlled expenditure

Question proposed, That the clause stand part of the Bill.

Clause 22 restricts all third party campaigner spending during a regulated period to entities eligible to register with the Electoral Commission, as listed in section 88 of the Political Parties, Elections and Referendums Act 2000, and to overseas unincorporated associations with the requisite UK connection.

Currently, foreign third party campaigners can legitimately spend on UK elections underneath the recognised third party campaigner registration thresholds, which are £20,000 during a regulated period in England, and £10,000 in Scotland, Wales and Northern Ireland. This activity becomes illegal only once the thresholds are passed. It is important that only those with a legitimate and fair interest in UK elections are able to influence the electorate.

Clause 22 will remove the scope for any legal spending by foreign third party campaigners underneath the registration threshold but above a £700 de minimis. The inclusion of such a de minimis provision will balance the desire to prohibit spending by foreign entities without criminalising low level, potentially unintentional breaches below £700, which are unlikely to adversely impact an election.

It is worth noting that only individual overseas electors are permitted to register as third party campaigners with the Electoral Commission. In order to support overseas electors, who are important participants in our democracy, to work together, the clause will permit them to form unincorporated associations to campaign if they spend below the new lower tier registration threshold of £10,000, set out in clause 24. That is in line with the current situation, and it is only right that such electors should be able to spend in UK elections as they can now. Under our proposals, unincorporated associations will meet the “requisite UK connection” requirement to incur spending in UK elections only if they are composed solely of registered overseas electors.

To conclude, these provisions make necessary and proportionate changes to ensure that spending at UK elections is only permitted, above a £700 de minimis, for those with a legitimate interest in UK elections. They help reduce the risk of illegitimate foreign influence in UK elections.

Question put and agreed to.

Clause 22 accordingly ordered to stand part of the Bill.

Clause 23

Third parties capable of giving notification for purposes of Part 6 of PPERA

I beg to move amendment 71, in clause 23, page 33, leave out lines 6 to 10.

This amendment would leave out the powers for ministers to remove categories of permitted campaigner while leaving in place their power to add new categories of campaigner.

With this it will be convenient to discuss amendment 72, in clause 23, page 33, line 10, at end insert—

“(11) The power to make provision by virtue of paragraph (9)(b) or (c) is exercisable only on, and in accordance with, a recommendation of the Electoral Commission.”

This amendment would require the Government to obtain the recommendation of the Electoral Commission before removing or varying categories of permitted campaigner.

It is a pleasure to serve under your chairship, Mr Pritchard.

Part 4 and its provisions are a brazen attack on our democracy. They will undermine the ability of civil society organisations, charities and trade unions to engage and campaign in our democracy—that is why they are so controversial. We need to spend additional time considering them, and I hope that all Committee members will take up our amendments, which are reasonable, represent an improvement and come very much from civil society.

The provisions in question will infringe the rights of working people to organise politically or campaign on pay or rights at work, and they risk silencing the very people who got our country through the pandemic. They are an unnecessary and disproportionate reaction. They will not add to the integrity of our elections, but only have a chilling effect on democracy.

In a free and open society, democratically elected Governments are scrutinised by Opposition parties and civil society, often campaigning on single issues. Part of what makes democracy healthy is the freedom for civil society to challenge those in power, which the Government are seeking to curtail with the clause and which we seek to amend with amendments 71 and 72.

The clause will allow a Cabinet Office Minister to define who may legally campaign at elections, giving them the power to amend or remove the types of organisations that are allowed to spend as little as £700 on election campaigning across the whole UK. It also doubles as the list of organisations that are allowed to register with the Electoral Commission and spend more than £10,000 at elections. The Minister may now be able to ban charities that are critical of Government cuts to foreign aid, ban local community groups protesting against planning reforms, ban unions that might work with a political party for workplace rights, and ban anyone convicted of a public order offence. In conjunction with the Police, Crime, Sentencing and Courts Bill, which makes it much easier to criminalise protesters—even a protest involving one person—this would disproportionately impact on the Government’s most vocal and active opposition, who may have already been criminalised for protesting. That is a terrifying prospect and, as far as I can see, quite unprecedented.

The Bill is not about influence. It is a way for the Government to stifle their critics before elections and cripple them during elections. Giving the Government such power over their opposition during elections is completely at odds with free and fair elections. It is deeply inappropriate and offensive to our democratic tradition. Unions and other campaign organisations have a right to engage in our democracy and already face a highly regulated landscape, which is why the clause is unnecessary.

The hon. Lady says this is the Government stifling their opposition. Actually, civil society, trade unions and charitable organisations are all our opposition, because they put equal pressure on all candidates and parties that stand in an election, as they want to achieve policy change. Obviously, some organisations are more closely affiliated with political parties than others are, but many of them are party-neutral in that sense, because they want to drive a policy change rather than see one party be successful in any given constituency or general election.

I absolutely agree with the hon. Gentleman. It is a range of political opinions and opinions about different issues that are not necessarily the main bread and butter of political parties, but which are so vital, especially in an election time, when we are talking about the future of such a wide range of policy decisions that are about to be made on behalf of the electorate. Unless we accept the amendment, we face the risk of some groups, individuals, community organisations and single-issue campaigns being unnecessarily banned from taking part in the electoral process. There will be scandals ahead unless we accept the amendment.

Labour’s amendments 71 and 72 seek to temper the clause. Amendment 71 will delete the unprecedented and dangerous powers to remove categories of permitted campaigners while respecting the Government’s stated intention to future-proof electoral law by allowing the addition of novel categories of campaigner. It is flexible and can still respond to new issues and campaigns as we go forward, but it does not have the draconian and heavy-handed influence of only the Minister choosing who is on the list. Amendment 72 requires the Government to obtain the recommendation of the Electoral Commission before removing or varying categories of permitted campaigner, and I hope all Members will agree that it is a very reasonable amendment.

Both amendments are necessary to prevent a Minister from having the unprecedented ability to interfere in a free and fair election. They also have significant civil society support, including from Bond—British Overseas NGOs for Development—which represents over 400 organisations, ranging from small specialist charities to large, international non-governmental organisations. It has many supporters in all our constituencies, with a worldwide presence, and believes that:

“This is an extremely broad power which could be open to abuse by future governments.”

I would add that it could be open to abuse by the current Government. Bond has urged that it be amended, and so do I.

Question put, That the amendment be made.

Question proposed, That the clause stand part of the Bill.

Clause 23 builds directly on the requirements put in place by clause 22. As I have mentioned, the aim of clause 22 is to remove the scope for foreign entities to spend above a £700 de minimis amount during the regulated period running up to an election by restricting all third party campaigner spending at that time to spending by entities that are eligible to register with the Electoral Commission, as in section 88 of PPERA.

However, we are conscious that legitimate categories of third party that are not on the list of categories of campaigners may emerge in future, and clause 22 would significantly restrict their ability to campaign if they could not be added to the list quickly. For that reason, clause 23 makes provision for the amendment of the list of eligible categories of third party campaigners in PPERA. It will allow the Government to add to, remove items from, or otherwise amend the list of categories of third party campaigners as necessary. Any such changes will be subject to parliamentary scrutiny via the affirmative procedure. These provisions will ensure that we can be responsive to the emergence of new groups, and that eligible categories of third party are not unduly restricted from campaigning and participating in our democracy in future. I therefore urge the Committee to allow the clause to stand part of the Bill.

Question put and agreed to.

Clause 23 accordingly ordered to stand part of the Bill.

Clause 24

Recognised third parties: changes to existing limits etc

I beg to move amendment 76, in clause 24, page 33, line 23, at end insert—

“(5C) Registered charities and Community Interest Companies may act as a recognised third party subject to the lower-tier expenditure limits without the requirement to give the Electoral Commission notification under section 88 of PPERA.”

This amendment would exempt registered charities and Community Interest Companies from the notification and registration requirements of Clause 24, which introduces a new lower tier registration for third party campaigners who spend more than £10,000 on controlled expenditure anywhere in the UK.

With this it will be convenient to discuss the following:

Amendment 77, in clause 24, page 33, line 23, at end insert—

“(5C) Registered charities and Community Interest Companies (CICs) which intend to incur election expenditure within the lower-tier expenditure limits may provide the Electoral Commission with their charity or CIC registration number, and the Commission—

(a) shall treat that information as sufficient for the charity’s or CIC’s notification and registration for electoral purposes under section 88 of PPERA, and

(b) may collect any information the Commission requires about the charity or CIC from the Charities Commission or Companies House respectively.”

This amendment seeks allow charities or Community Interest Companies who wish to campaign at elections within the lower tier of expenditure and which are already subject to transparency requirements to avoid the additional compliance burden arising from Clause 24.

Amendment 90, in clause 24, page 34, line 22, at end insert—

“except where the third party is a charity which is registered with the Charity Commission of England and Wales under section 30(1) of the Charities Act 2011 or is exempt from registration under section 30(2)(a), (b) or (c) of the Charities Act 2011 or is registered as a community interest company under section 36B of the Companies (Audit, Investigations and Community Enterprise) Act 2004;”.

I am pleased to speak to amendments 76 and 77, which would significantly improve the Bill. Amendment 76 would exempt registered charities and community interest companies, or CICs, from the notification and registration requirements of clause 24, which introduces a new, lower-tier registration for third party campaigners who spend more than £10,000 on controlled expenditure anywhere in the UK. Our amendment 77 seeks to allow charities or CICs that wish to campaign at elections within the lower tier of expenditure, and that are already subject to transparency requirements, to avoid the additional compliance burden arising from clause 24.

The Electoral Commission says on part 4:

“Some of the changes in Part 4 of the Bill would increase transparency for voters about who is spending money campaigning at elections and how they are funded.”

So far, so good. It goes on:

“But they would not increase transparency about how much is being spent and on what. The added complexity of these changes could deter some from campaigning at elections, or restrict the type of campaigning they can spend funds on. Voters could therefore receive less information about candidates and parties, and hear from a narrower range of sources.”

The Electoral Commission continues:

“Third party campaigners are individuals and organisations that campaign in the run-up to elections but do not stand as political parties or candidates. These are a vital part of a healthy democracy and play a significant role in providing voters with information. It is important that a broad range of campaigners can take part in public debate ahead of UK elections and referendums so voters hear a diversity of voices.”

The commission states:

“These changes would add new requirements to laws which many campaigners have said are already complex and hard to understand.”

Again, these changes are unnecessary and will have a chilling effect on democracy, and especially on registered charities and CICs. That is why they are the focus of our amendments. The Bill risks tying organisations up in red tape and stifling democratic engagement by civil society organisations, which are concerned about breaking the rules.

I was working in a charity when the gagging, or lobbying, Act—the Transparency of Lobbying, Non-Party Campaigning and Trade Union Administration Act 2014 —was introduced. I very often found myself sitting around with my colleagues asking, “Can we now do this? Can we now say that? Can we now work with them? What can we do?”. Our charity did not have enough money to seek a large amount of legal advice. The law was also quite unclear, so to avoid falling foul of it, we would step back and not do many things that would have been perfectly within the law, which had been changed, just in case they were not.

The provisions we are discussing extend those powers. Indeed, I see this as a trilogy, comprising the lobbying Act, the Trade Union Act 2016 and this Bill, which altogether stifle democracy and free speech, and stop really valuable campaigners campaigning about issues that we politicians need to hear about.

I spoke to the National Council for Voluntary Organisations, which is concerned about this issue. It said that it was unconvinced by the argument in favour of the lower threshold in general terms. Has the Minister met the NCVO to discuss its concerns? The Government have framed the issue in terms of increased transparency, but it was not clear to the NCVO, which represents charities across the country, that there would have been a significant impact. It cannot see that there will be more transparency.

The NCVO asked the Minister’s predecessor to look at whether charities could be exempted from the lower threshold. Its argument is that when campaigning is done by a registered charity, people can in any case look it up on the register and see who its trustees are, how it is funded and so on. The transparency point therefore does not apply in the same way, because charities are already transparent and highly regulated. This new tier will inevitably result in smaller organisations being unable to engage in democracy. Charities and community groups that might not have the policy and legal expertise of larger organisations and that, as I have said, will fear running afoul of the rules may decide—in fact, will decide—that it is not worth the trouble to spend a relatively small sum, or they might be put off by appearing on a public register.

The hon. Lady is obviously making a powerful speech, but the primary purpose of charities, which we give tax relief to, should surely be supporting good causes, not campaigning in elections.

In many respects, supporting good causes is done by campaigning. For many charities, the causes of the symptoms they are seeking to address will be back in Government policy. The policies that we decide all the time obviously have an immediate impact on people on the ground. Charities work with those people and need to change the policies to change the issue they are addressing.

Does the hon. Lady agree that charities by their nature have expertise and understanding—for example, of homelessness, third-world debt, climate change, or whatever—that we in this House have to learn from? The idea that they should be restricted simply to raising funds to alleviate an issue, rather than trying to engage and inform the debate, is simply preposterous.

I absolutely agree. For example, during this Bill Committee, we have relied on expert advice from the Royal National Institute of Blind People about the impact of these changes on people who are blind or partially sighted across this country. As the representative organisation of those people, who will be affected by the Bill in how they vote, the RNIB should be giving us expert advice. In the future, having to work out how much money it has spent jointly and severally with other organisations, which tier it falls into and whether it will get on to the list will all have an effect on whether or not we receive that expertise, which helps us to be much better decision makers.

When we consider that the Conservative party spent £16 million in the last general election, we see that lowering the spending threshold for groups to register during an election from £20,000 to £10,000 is clearly aimed at deterring smaller organisations, community groups and single-issue groups, which the hon. Member for Argyll and Bute mentioned, such as groups concerned with refugees, disability rights, women’s rights and LGBTQ issues. Community groups campaigning on a single issue in our constituencies may fear running afoul of changing election rules, which will have that chilling effect.

I ask the Minister whether there will be a review of the impact of the lobbying Act as we go forward with the Elections Bill, because I think that they go together. To know what impact the lobbying Act has had on campaigning will be very instructive. Perhaps there has been such a review already, and I did not know about it. If not, will there be a review of the impact of that Act and this legislation on campaigning, particularly single-issue campaigning?

If existing party activity is redefined as joint campaigning, smaller unions that spend only very small amounts on regulated activity and do not come close to meeting the threshold for registering with the Electoral Commission could find themselves having to register and submit a complex and comprehensive return, despite having not spent any of their own funds on a campaign. Should not they be spending their money on frontline service provision and advocacy, rather than filling in complex and comprehensive returns that do not add to transparency but only decrease our democracy? This will be a huge bureaucratic burden on small organisations; it is both completely unnecessary and overly burdensome.

Labour’s amendment 76 seeks to reduce the chilling effect and remove the burdens of additional regulation by exempting registered charities and community interest companies from the notification and registration requirements. In the community organisation that I worked for just before I became an MP, there was a fantastic organisation called SEN Talk—special educational needs talk.

For years, I supported it in becoming a CIC. It is a long process. The organisation had to go through a lot of measures and have a lot of transparency. It was doing a lot of frontline work with parents and children with special educational needs, but also it was advocating to the council for the changes that it needed in order to operate on behalf of parents, and to the Government, and working on Select Committee reports, for example. If that organisation were asked to then submit returns but did not know exactly when the election period was and feared falling afoul of this, it would have to cut down on its frontline services or not take part in the advocacy that really does help it to stand up for children with special educational needs. It would put that organisation in a real bind, and it is just one example.

This proposal has also, as I have mentioned, been called for by Bond—the overseas aid network—and several other third-sector organisations. Setting up a registered charity takes considerable time and effort, and these entities must already, by law, identify their trustees—or, in the case of CICs, their directors—and publish their accounts. There are already robust transparency initiatives regulating charity governance, so it is highly unlikely that those seeking to exert undue influence in elections would pursue this approach as a means of evading regulation. I would like to know how many conversations the Minister has had with CICs, in particular, about the effect of the Bill.

Registered charities cannot exist for solely political purposes, and charities that do engage in political activity in pursuit of their charitable objects are already closely monitored by the Charity Commission. These organisations would still have to register with the Electoral Commission as a non-party campaigner if they met the existing spending thresholds.

Amendment 77 would recognise the need for all campaigners at elections to submit to electoral regulation by the elections regulator, and to be transparent about their purpose if they are seeking to campaign to influence voters at election time—but without duplicating the compliance burden for those organisations that already routinely are required to be transparent.

I urge all hon. Members to support these very reasonable amendments, which would allow small organisations and single-issue campaigns to continue to campaign.

Like the Labour Front-Bench team, SNP Members have warned repeatedly about the chilling effect that the Bill as a whole will have on political participation. We have gone through the clauses that suppress turnout; we have gone through the clauses that weaken oversight of elections; and now we are on to clauses that will deter organisations with legitimate interests from contributing to debate and policy development, though that is what happens during general elections.

The intervention made by the hon. Member for Newcastle-under-Lyme was very telling. His point was that charities should be seen and not heard—the patrician attitude was that charities do beneficent works, helping poor unfortunate souls, maybe contributing to the Government’s levelling-up agenda, or maybe not, and while doing all the hard work must live with the consequences of the policies made by Governments of whatever colour. That includes SNP Governments in Scotland; there will be organisations that are highly critical of some aspects of SNP Government policy—but so they should be, as the point of a vibrant third sector is to contribute to policy debate.

Most charitable organisations that I have come into contact with in my professional career, both in that sector and as a politician, ultimately do not want to exist. They are there to solve problems, and they do so by providing immediate relief and support to people who require it, but they also want to tackle the underlying policies that have caused those problems. The best time to do that is at election time, when decisions are made and when power really is in the hands of the people and the voters. Of course those organisations want to seek pledges from individual politicians. They are not necessarily seeking to influence political parties as a whole. They are certainly not telling their supporters which party to vote for. First, they are not allowed to, but even if they were, they are not going to tell their supporters and donors which party to vote for, because by definition these are cross-party organisations that draw support from a wide range of people across society, and doing so would be counterproductive.

It is crucial for our democracy, however, to allow these organisations to encourage supporters and donors, educate the people who support their cause, and engage with decision makers. If that means extracting pledges from candidates on a constituency-by-constituency basis, then good for them. If that means that candidates from whatever party get elected and are then held to account for signing a pledge or supporting a policy in the election, so much the better. When we have mass lobby days here in Westminster—there are a few lined up this week, now that covid restrictions are easing—Members of Parliament from all the political parties come along to demonstrate their support for a charitable cause. Yes, sometimes there is weight in one direction or the other, but inevitably the best way to drive political change is to achieve cross-party consensus. That is what these organisations are often trying to do, but the clause will have the chilling effect of which the hon. Member for Putney spoke.

When we heard the intervention from the hon. Member for Newcastle-under-Lyme, was the hon. Gentleman reminded, as I was, of Desmond Tutu’s words:

“There comes a point where we need to stop just pulling people out of the river…We need to go upstream and find out why they’re falling in”?

Is that not the philosophy of the charities that the hon. Gentleman has worked with? Certainly the charities that I have worked with in my constituency want to stop people falling into the river upstream, rather than just keep fishing them out at the bottom.

Absolutely. Where are those decisions ultimately made? Here, in rooms like this one. We are engaging with charitable organisations on this Bill. We are being advised and lobbied on matters in the Bill by organisations that are making representations to us, have frontline experience, and are delivering in a whole range of sectors. We have heard from domestic organisations and from Bond, the international development network.

I am sure all Committee members have diligently read the written evidence submitted by Bond, EB14. I strongly encourage them to do so, because it explains the challenges and difficulties faced by these organisations, which are having to comply with election registration regulations and reporting requirements, and finding it incredibly difficult. There is evidence in that document—we heard it from the hon. Member for Putney as well—that many organisations are already choosing simply to step back, so their voices are not being heard. That goes back to the narrative of what exactly the Bill is trying to achieve, in terms of suppressing debate and political participation in this country.

Although clause 24 is not quite as draconian as clause 23, it is still pretty oppressive. Amendment 96, tabled by the SNP, could achieve much the same as the Labour party amendments in exempting registered charities from these incredibly stringent new reporting requirements. The threshold of £10,000 could easily be reached once everything that had to be calculated was taken into account, such as staff time, resources, and collaboration with other organisations.

It would be easy to hit that threshold, potentially unexpectedly. The charity would then face another burden if it was sanctioned. There have been examples, referred to in the written evidence, of charities that inadvertently crossed the threshold and did not report that appropriately, and then faced fines. That is fair enough, if that is the regime, but it is another cost. That is money that people have given to those charities. It might be taxpayers’ money, received through gift aid, that has to be spent on fines, compliance and regulation, deterring the charity from political participation and delivery of frontline services, when it already exists in a rightly strong and tightly regulated environment.

The Government should accept the amendments. If they genuinely believe in levelling up, surely they want to hear from organisations that have frontline experience of the difficulties and challenges being faced by ordinary people day to day, and that are identifying solutions that will help to raise standards in society and level up. In fact, we are seeing a levelling down, suppression of debate, sticking with the status quo, and a message not to challenge anything coming from the Government who happen to be in power now.

We have learned in this Committee and in others that the chances of an amendment succeeding are middling to none. Nevertheless, I look forward to the Minister’s response to my points.

It is a pleasure to follow my hon. Friend, who is absolutely right, though I admire his endless optimism that the chances are middling to none. He is far more optimistic than me that the Government will ever move an inch. That does not mean that the arguments cannot be made. Indeed, there is every reason for the arguments to be made.

At general elections, every single one of us has been made to think, question and commit one way or another to an idea coming from a third party or campaigning organisation. That is exactly how it should be in a democracy. When we put ourselves forward for election, people have a right to know where we stand on the big issues of the day—whether that is homelessness, third-world debt or support for those suffering domestic violence—and where better to do that, for a charity or third party organisation, than a general election? People are not asking us just as individuals; they are asking all those who put themselves forward for election in this country where they stand, because our public have an absolute right to know that.

The real question is about the motivation of the Government in introducing the measure in the first place. Campaigning is a core function of many organisations. It allows them to highlight areas of concern and contribute to the wider public discourse, from a position of authority and experience, from which every one of us benefits. We have all heard from numerous third party organisations of their concerns, but these measures will make an already complicated area even more confusing and burdensome for those issue-based campaigning organisations. They face new rules that may see them inadvertently fall foul of legislation and, as a result, step a long way back from their activity. They will shrink back from that public debate, which can only harm our democracy. That will dampen public debate, and the voice of those marginalised groups they represent will be further diminished.

Organisations will quite rightly engage in campaigning 12 months prior to a general election, but the vast majority of that campaigning will not be focused on that general election. Those organisations campaign every day of the year, every year of a decade. That is what they are there to do; they are there to inform and to advocate.

What is really troubling here is the purpose test and whether it can be passed. It is confusing. The legislation says that the purpose test can be passed if it

“can reasonably be regarded as intended to influence voters to vote for or against political parties or categories of candidates, including political parties or categories of candidates who support or do not support particular policies”.

That is all well and good, but the confusion arises because that is not the intention of the charity of a third sector organisation. The interpretation comes from someone else, and it is their perception of what counts as political campaigning. Even if the charity is clear that that is not its intention, it could be decreed by someone else that it is. The result is that the charities will shrink from those areas of concern—homelessness, domestic abuse—for fear of falling foul of the legislation. Many of us on this side of the Committee think that that was probably the Government’s intention from the start.

Amendments 76 and 90 would exempt from the transparency requirements provided by the lower tier of expenditure registered charities, charities exempt from registering with the Charities Commission, and community interest companies spending more than £10,000 across the UK but less than the existing notification thresholds. Amendment 77 would allow those groups to forgo the usual notification process for the lower tier and instead provide only their charity or company number.

The Government are clear that any group spending significant amounts in UK elections should be subject to scrutiny. That is essential to ensure transparency for voters and to maintain the level playing field for all participants in elections. It is therefore right that all types of third party campaigner should be subject to the same sets of rules where they are trying to influence the electorate. The amendments would undermine those principles, and the Government cannot accept them.

Additionally, third party campaigner regulations do, and should, focus on the purpose of campaigning activities conducted by all organisations, not just specific types of organisation. Charities and CICs can always choose to spend less than £10,000 in the period before an election if they do not want to register with the Electoral Commission.

Given the repeal of the Fixed-term Parliaments Act 2011, how will charities know when it is 12 months before a general election?

I will come to that point in a moment. Charities can choose to spend less than £10,000 in the period before an election. The clause is drafted so as to increase transparency by requiring third party campaigners to register at a lower level of spend than is currently the case, while also ensuring that the regulatory requirements on such third party campaigners is proportionate to their campaign spend.

Digital technology has significantly reduced the cost of campaigning, and it is important that the lower tier of expenditure reflects that reality. Those third parties subject to the lower-tier expenditure limits will be subject only to minimal registration requirements and will not be subject to reporting or donations controls. That increased transparency is intended to reassure the electorate and to continue to uphold transparency as a key principle of UK elections. No group should be exempt from that. In fact, having third party spending limits is essential to prevent the influence of American style “super political action committee” pressure groups in UK elections.

The notification requirement for third party campaigners involves the provision of important information, which the Electoral Commission uses to ensure that campaigners are eligible and to provide information about those campaigners to the public. While amendment 77 would still require third party campaigners to notify the Electoral Commission, it would allow them to provide only their registration numbers with the Charity Commission or Companies House, instead of providing the usual information, which would undermine the intended transparency.

Let me address some of the questions raised by Opposition Members before I continue on clause 24. I am not clear about what the hon. Member for Putney was referring to when she talked about the impact on the lobbying Act; if I am not answering her question here, I am happy to write to her with more information. The report on the 2014 lobbying Act from Lord Hodgson of Astley Abbotts said that as one of the fundamental purposes of electoral law

“is to maintain public trust and confidence in the integrity of the electoral system, it must be right that any regulation should apply to all such participants, regardless of their size or status.”

That shows that, even as the lobbying Act was being created and reported on, those considerations were taken into account.

The hon. Lady also asked about meetings with community interest companies. I believe that my predecessor, my hon. Friend the Member for Norwich North (Chloe Smith), met with the National Council for Voluntary Organisations and other civil society groups.

I simply do not accept the argument made by the hon. Member for Glasgow North. He asked how charities would know when an election was forthcoming, but he also said that charities specifically are doing that around election time. He is making two almost mutually exclusive points. The fundamental point made by SNP Members was about charity participation in elections, rather than political finance transparency, which is what the Bill is about.

Indeed, or a Back-Bench MP—how will they know when they are in that 12-month period before a general election?

The fact is that we all have a fairly good idea of when an election will be. Although snap elections can be called, the fact is that everybody will be in the same situation.

I am not giving way again on that point. Third party campaigning groups will not have any special intelligence. People will need to take that into account when they are campaigning politically. People seeking to influence the electorate should all be subject to the same laws.

The debate is not about whether charities are nice groups or nice individuals, which is 50% of the argument made by SNP Members. To be perfectly honest, it sounds like Opposition Members want charities to make their political arguments for them, because they think they are more acceptable.

I am no longer giving way on that point.

That is not how we want to regulate our politics or our electorate. Charities should make points on their own—not in the way that SNP Members are saying, as if there are other political reasons that would be helpful to them, rather than the Government. They accuse us of playing politics, but it sounds to me as though they are the ones doing that.

In 2017, the Prime Minister called a snap general election. What would the Minister say to charities who find themselves in a similar situation after the Bill is passed?

I would say that all third party campaigning organisations need to be mindful of their spending. I believe that snap elections are a rarity, given what happened in 2017. They do not happen very often.

Yes, but the fact is they are not very common. Every single one of us in this room is in the same situation. I was elected in 2017. I did not know that a snap election was going to be called. I am afraid that what Opposition Members are asking for is the Fixed-term Parliaments Act 2011, which is not within the scope of what we are discussing. Debates on the clause are not the place to discuss certainty around election time, if that is what Opposition Members want. The clause is about regulating political finance transparency.

The fundamental point made by Opposition Members is that clause 24 creates an undue administrative burden for charities and community interest companies, but it does not do that. They can easily supply the relevant information.

Can the Minister answer a very simple question? Will there be a UK general election by 26 October 2022? That is 12 months from today.

The hon. Lady knows that I cannot answer any questions about when elections are forthcoming. That does not change the premise of our argument. I do not know; she does not know; charities do not know; no third party campaigners know. The law is equal for everybody. I am afraid we simply do not accept the argument that there should be special rules and exemptions for particular groups.

Charities can supply the relevant information, and the amendment would increase the administrative burden for the Electoral Commission—a point it has made several times—and not allow it to obtain all the necessary information covered in the notification requirements. Under the amendment, charities and community interest companies would not have to provide the name of a responsible person. That information cannot be obtained through Companies House or the Charity Commission because it is specific to electoral law.

It is important to identify a person who will be responsible for ensuring compliance with electoral law. Naming a responsible person also acts to protect third parties from being liable for expenditure that has not been authorised by that person. Allowing charities and community interest companies to be exempt from that requirement would risk their duty of compliance and protection falling away, which would not be right. In the light of the reasons I have given, and the minimal burden on charities that the measures will generate, we oppose the amendment.

I have a question for the Minister, which I think is a perfectly reasonable and fair question to ask on behalf of charities. How do they know right now that they are not 12 months out from a general election? How do they know where their spending is in relation to the next general election, and that they have not already exceeded the threshold? The question is whether she thinks it is fair for charities inadvertently to fall foul of the legislation, with their having absolutely no way of knowing where they stand because the Government have changed the rules around about them. Will she address the basic issue of fairness to our charities?

Question put, That the amendment be made.

Question proposed, That the clause stand part of the Bill.

Third party campaigners must currently register with the Electoral Commission before they spend £20,000 in England and £10,000 in any of Scotland, Wales or Northern Ireland for controlled spending during a regulated period before an election. Groups that spend below those thresholds could be spending substantial amounts of money on campaigns, but they are not regulated. Clause 24 addresses that issue, and introduces registration for third party campaigners at a lower level of spend than is currently the case.

Third parties spending in excess of £10,000 on controlled expenditure during a regulated period across or in any constituent part of the UK, but below the existing per-country thresholds for registration, will be required to register with the Electoral Commission. That will not replace the existing registration thresholds, which will stay in place. Therefore, if a third party campaigner spends more than £20,000 in England or £10,000 in Scotland, Wales or Northern Ireland, they will still be required to notify the commission as they currently do. That will be for all groups, as we said in the debate on the amendments. No exceptions will be made for any special category of campaigner; they will all be subject to the same rules.

In addition, all the measures apply only to qualifying expenditure that can reasonably be regarded as intended to promote or procure electoral success at any relevant election. I want to be clear that they do not apply to wider non-electoral campaigning that groups may undertake.

As I mentioned, third parties registered in the lower tier will be subject to minimal regulation upon registration—for example, ensuring that they are UK based or otherwise eligible to register with the Electoral Commission. Again, such entities will not be subject to some of the other political finance controls in legislation around reporting on donations and controlled expenditure, nor will they be subject to the internal reporting and recording requirements.

We must recognise that digital campaigning has significantly altered the campaigning landscape by making it easier to spend less on campaigns and to spend more widely across the whole UK. Introducing registration at a lower level of spend reflects that reality and will help to increase transparency for the public with regulation proportional to the level of spend.

The Minister said in her previous speech that the measure was partly intended to avoid a situation arising comparable to the US super-PACs that spend millions of dollars with very little regulation. It is impossible under current UK electoral law for a situation anything like that to arise in this country. The notion that small local charities that want to lobby their local candidates to stop the closure of a swimming pool, a school or a library are somehow comparable to the dark money seen in other parts of the world, which has been reported as potentially having an increasing impact in this part of the world, is completely extreme.

It is not impossible that there will be a general election in February 2022, because as the Minister has admitted, the Prime Minister will have that option when the Fixed-term Parliaments Act 2011 is finally repealed. As soon as that happens, the next election campaign will effectively start, which is delightful for all of us because of the rare snap elections that we have experienced twice in the last three years.

Under the terms of the clause, if an election came that early it might be the case that some organisations would have already reached the threshold without knowing it, not least because they are in the process of holding us to account for pledges that we made in 2019 that they have not had much opportunity to lobby on. Organisations that are organising a big lobby day—there are several coming up—that involve a lot of logistics such as the hire of the hall and the transportation of people, and that are related to pledges that Members may have made at a general election and therefore could reach the threshold, may find that they are already in breach without knowing it.

It is an awkward clause that relates to the overall package of reform that the Government are bringing in through the Bills that we have mentioned throughout the progress of this Bill, including the repeal of the 2011 Act, the Police, Crime, Sentencing and Courts Bill, and the other aspects of electoral and political law that are being amended. The Minister is falling back on the idea that it affects everyone, but that does not really answer that point. In a sense, it does affect all of us and we may already be in the run-up to a general election campaign but we just do not know because of the power grab that is being exercised by the Conservative Government, of which this clause is another example.

Question put and agreed to.

Clause 24 accordingly ordered to stand part of the Bill.

Clause 25

Joint campaigning by registered parties and third parties

I beg to move amendment 74, in clause 25, page 36, line 19, at end insert—

‘(2A) In section 85(2) of PPERA, after “incurred”, insert “(in the case of a parliamentary election only after the date of the election has been set or fixed)”.’

This amendment would limit regulated periods for UK Parliamentary General Elections to the period between the announcement of the election and the close of polls.

Clause 25 is about joint campaigning by registered parties and third parties and sets up the necessary amendment to have joint plans registered by those registered parties and joint parties when they are campaigning together. It clearly focuses mainly on suppressing the unions’ ability to campaign with parties. The Opposition oppose clause 25 in its entirety, as I will come to later.

On amendment 74, we have just been talking about deadlines and dates and how, if there is confusion about who can campaign, there is confusion about what has to be registered financially and who that has to be registered with. Then there is a lot of red tape. On top of that, there is confusion about the dates and the period that we are in: is it an election time or not? That will all, jointly, have a huge suppression effect on campaigning, which is the lifeblood of our elections and our free and democratic society.

I therefore urge hon. Members to vote for amendment 74, which would limit regulated periods for UK parliamentary general elections to the period between the announcement of the election and the close of polls. Those are two clearly defined dates. Otherwise, we are in a hazy period of not knowing when elections are going to be and whether we are in an election time. It could be at any time.

The amendment will deal with the problems caused by both the passage of the Dissolution and Calling of Parliament Bill, meaning that future elections are more likely to be snap elections—unfortunately—and the proposals in this Bill regarding a strategy and policy statement for the Electoral Commission. That creates uncertainty around whether a Minister could direct the commission to interpret the law on regulated periods in such a way that would be punitive to organisations that campaign all year round on issues that may become political, regardless of whether it is known to be an election period or not.

Third party campaigners are subject to limits on their controlled expenditure in the periods leading up to parliamentary elections in the UK, including devolved elections. The time during which those spending limits apply are known as regulated periods and are 12 months long for UK parliamentary elections and four months long for the relevant parliamentary elections in Scotland, Wales and Northern Ireland. Regulated periods can be longer where they overlap. It is right that any campaign that could influence the electorate at an election should be regulated and subject to a spending limit. While significant amounts of spending might take place following the announcement of a poll, elections are often known, rumoured or expected to take place long before the poll date is announced and a Parliament is dissolved, which is the point that we are debating.

Can the Minister explain how the House can legislate on the basis of a rumour of when a general election might be? How is that any way to run a country?

That is not what we are legislating on; that is a statement of fact. Just as with every intervention the hon. Gentleman has made, it is a point we all acknowledge that while elections are at expected times, they can happen at different times: earlier or there may be snap elections, though rare. That does not change the fundamental point under discussion.

Opposition Members seem to be annoyed that there is a regulated spending period at all. I am afraid that that is not going to change. Campaigning and political activity, which can occur up to 12 months or more in advance of an election, may have a significant influence on its outcome. Having a short regulated period, as proposed by the amendment, would mean that spending, which does influence the electorate, is likely to fall away from being regulated and reported. That fatally undermines the principle of transparency and spending limits.

On the point about transparency, does the Minister not recognise that the Government are not being transparent with charities or third party campaigners? How are they ever meant to know when the regulated spend period is kicking in when we do not have scheduled, regular general elections for the UK Parliament because of legislation we already passed a couple of months ago? Does the Minister agree that we are asking charities, which are blindfolded, to make decisions with no idea when an election will take place? The amendment is the only way we can treat all third party campaigners fairly and give them any sense of transparency. Can the Minister see that the Government are a little inconsistent on the point about transparency?

I do not think so at all. In the previous clause, we made the situation equal for everybody. The Opposition are talking as if there is a secret conspiracy where everybody knows, other than them, when an election is going to be called. We are applying the law equally to everybody. That is right and I am happy to continue making the argument.

I have already given way multiple times and we need to proceed. There are other more important reasons why the amendment simply cannot pass.

Under the terms of the amendment, third party campaigners would be able to incur spending beyond their current limit, prior to the poll being officially set, and still be able to influence the electorate. That would give a potential advantage to those with access to greater funds, and thus also undermine the fundamental democratic principle that there should be a level playing field for all those taking part in elections. That would apply to all third party campaigners, whether on the Government’s side or the Opposition’s. That is the fairness about which the hon. Lady is talking. In addition, donations of third party campaigners are regulated only where they are used for controlled expenditure during a regulated period. That ensures that donations that are spent to influence the electorate in the period before an election come from permissible sources and are fully transparent. This is a regulated period amendment and we are not talking about charities.

A shorter regulated period would allow third party campaigners to accept and spend donations from potentially impermissible sources in the run-up to an election, and do so without being subject to transparency controls, as long as those donations were spent before the regulated period began. That risks unchecked money being used to influence the outcome of an election.

Can the Minister confirm for the benefit of the charities that are watching our proceedings that we are not currently in a regulated spend period?

I have answered that question already.

The amendment, as drafted, does not achieve the aims set out in the accompanying explanatory memorandum. Although the memorandum suggests that the amendment would limit

“regulated periods for UK Parliamentary General Elections to the period between the announcement of the election and the close of polls”,

that is not correct. It makes changes to section 85 of the Political Parties, Elections and Referendums Act 2000, which provides a definition for what constitutes controlled expenditure, namely spending incurred by third party campaigners at relevant elections, not just UK parliamentary elections, which can be regulated. The amendment does not amend the length of the regulated period, but rather creates an additional time period over which controlled expenditure is regulated. That would cause confusion to third parties as to which time applies.

The amendment would also create disparity between the rules for third party campaigners and the controls on political parties, which would still have a twelve-month regulated period, known as the relevant period. The proposed change would therefore also have the effect of making regulated periods for UK parliamentary elections significantly shorter than those for the devolved Parliaments, whose regulated periods would remain at four months. The amendment therefore should not stand because it would undermine the principles of controls and transparency that are placed on election funding and spending, and it would create confusion and disparity.

Question put, That the amendment be made.

Question proposed, That the clause stand part of the Bill.

As I have already set out, spending limits are an integral part of the political finance framework. They ensure a level of fairness between parties and campaigners. Controls are already in place on the integrity of spending limits—for example, in the case of targeted spending where a cap is placed on third party spending to promote one political party, and joint campaigning, which applies where third party campaigners work together and must all report costs. It is right that where groups work together on a campaign the spending should be accounted for by anyone involved in it, otherwise groups could unfairly attempt to make use of multiple spending limits. Therefore, we are extending the principle of joint campaigning to cover scenarios where political parties and third party campaigners are actively working together on a campaign. That is very different from targeted spending, where a third party targets a political party with their spending, but they do not actually work together on a campaign. It will simply mean that where a political party and third party campaigner are incurring spending and actively campaigning together, the relevant spending for that joint campaign should be accounted for by all groups involved in the spending. That will help to ensure that campaigners are playing by the rules and make it much easier to know who was involved in such campaigns. Of course, it will not stop groups spending separately outside the joint plan in their capacity as an individually recognised third party or political party. Any regulated spending that is undertaken by an individual group and is not part of a joint campaign will need to be reported only by the group incurring the spend.

Furthermore, to create parity with the current rules on joint campaigning between third party campaigners, the requirement to specifically identify relevant spending and spending returns will also be applied to the existing rules on joint campaigning between more than one third party campaigner. It is absolutely right that the rules on transparency of joint campaigning should be as similar as possible across all types of campaigners, to ensure fairness and support compliance. Therefore, I urge that the clause stand part of the Bill.

We oppose part 4 in its entirety. The Minister makes it sound very easy. Parties campaign together and write a joint plan. If they have been a part of it, they declare all the expenses. In practice, that involves a huge amount of red tape and burden, and it is absolutely disproportionate to the effect that the Government are trying to achieve with the Bill—transparency, integrity and freeing up our elections so that everyone can take part and we all know what is happening. There should absolutely be transparency, but there should not be an overly bureaucratic system that will actually suppress freedom of speech.

The clause is a deliberate attempt to silence the trade unions in particular, which is what I will focus on. It is all about the Conservatives rigging democracy in their favour, because they know full well that the clause will silence Labour-affiliated trade unions. It is totally out of step with what we see globally. Only four of the 57 member states of the Organisation for Security and Co-operation in Europe—the UK, the Czech Republic, Ireland and Slovakia—require third parties to register campaigning activity at election time. Clause 25 would change the joint campaign rules so that organisations campaigning jointly with political parties are collectively liable for the total campaign expenditure of all organisations. No matter what small part or supporting role an organisation might play, it has to declare the full total amount, which will take up all of its campaigning allowance. That will include the political party.

The 2021 report “Regulating Election Finance” by the Committee on Standards in Public Life says:

“When considering calls for greater regulation of non-party campaigning it is important to be mindful of the role of non-party campaigning in the broader ecosystem of democracy and pre-election debate. As the Committee made clear when it first concluded that spending limits for non-party campaigners would be necessary, there is nothing wrong with individuals and organisations sending out explicitly political messages in advance of and during election campaign—‘On the contrary, a free society demands that they should be able to do so, indeed that they should be encouraged to do so.’ The right to campaign is also protected by law through the right to freedom of expression. This should act as a check on ensuring that regulation strikes the right balance.”

We contest that the Bill does not strike the right balance. Who can think of a political party that has strong historical links with external organisations working together—maybe around election time, and maybe for workers’ rights across the whole country—and traditionally campaigning together as a movement for change? That’s right: it is the trade unions. I hope that the Minister has talked to the trade unions about the Bill and understood the impact that it will have on trade union activity in all our constituencies, as well as across the country.

The national Trade Union and Labour Party Liaison Organisation is extremely concerned about the provisions in the clause. It has said that the clause

“brings in new measures on Political Parties campaigning jointly with non-party campaigners that will have a disproportionate impact on trade unions and the Labour Party. Rules already exist that strictly regulate joint campaigning between non-party campaigners. For example, if a group of unions are running a joint campaign that meets the public and purpose tests, then all the unions have to count the total expenditure on the campaign against their own spending limits—so even though the money has only been spent once, it would have to be declared multiple times.”

It goes on:

“The Elections Bill extends this rule to joint campaigning between a Party and non-party campaigners. This would mean that where the Labour Party is campaigning jointly with trade unions, the total cost of the campaign would have to be declared by both the Party and the participating unions, having the effect of reducing (potentially dramatically) the overall campaign…limit of the organisations.”

That means dramatically reducing the amount of campaigning that can happen, which means reducing the voice of workers throughout the country, which means reducing the quality of our electoral campaigning and knowledge of voters before we go to campaign. It is completely unnecessary and does not need to be in the Bill. Trade union political expenditure is already highly regulated and additional regulations are in place for non-party campaigners who publicly advocate voting for a political party.

Let us be clear: this is the third attack on the political voice of trade unions. There is this trilogy of the lobbying Act, the gagging Act and the anti-trade union Act, and now there is this Act. The lobbying Act has already introduced new restrictions on non-party campaigners such as charities and trade unions campaigning together. At the moment, if trade unions run a joint campaign in the run-up to an election, each union must record the total expenditure of the joint campaign. Even though the money has been spent once, it has to be declared multiple times, eating up each organisation’s campaign limits.

I have a principled opposition to that because I believe in free speech. I believe that organisations should be able to band together to campaign with one voice. I believe in movements. That is the strength of political activism. That battle was lost in the Transparency of Lobbying, Non-Party Campaigning and Trade Union Administration Act 2014, and we have seen the effects as organisations across the movement and the third sector have been cautious about campaigning together in solidarity. That chilling effect will definitely be the result of this clause.

Unions campaign widely on political, industrial, social and international issues. They campaign against the far right, too. Affiliated unions represent 3 million working people and their families, and they are entitled to an independent political voice, separate from that of the Labour party. It is a strength. All that independent political campaigning could be at risk if unions find themselves liable for campaign expenditure that has been incurred by the party. That risks curtailing the ability of affiliated trade unions to campaign in their own right on the issues and priorities that matter to their members. That could mean that when the Labour party campaigns with trade unions, the total cost of the campaign would have to be declared by the party, by all the participating unions and by supporting organisations and community groups.

Let us be clear: these rules are unnecessary. Trade union campaigning is the cleanest money in politics. [Laughter.] I fail to see why Government Members laugh about that. Unions are already regulated by the Electoral Commission and their certification officer, not to mention their being very accountable to their own highly democratic structures––it is highly transparent. There are even rules that mean that if a union campaign is overtly pro-Labour, it has to count towards the party’s spending limit anyway. That is already the case.

This is not about fairness but about silencing the Government’s critics and rigging the rules. This clause in particular is an assault on the UK’s democratic tradition and a brazen attack on the ability of trade unions to speak out on behalf of the millions of working people they represent. I urge Government Members to think deeply about what they are doing to our democracy through the clause. If they are democrats, they will vote for our amendments and against this clause.

I want to speak briefly in solidarity with my Labour comrades. I was reminded during the hon. Lady’s speech of the quote, often attributed to Margaret Mead, that is a favourite of many third sector organisations:

“Never doubt that a small group of thoughtful, committed citizens can change the world; indeed, it’s the only thing that ever has.”

Policy change cannot be effected without building a coalition. We cannot change direction and implement new legislation without bringing several diverse and disparate groups together to support that cause. That is why we have left the European Union: that was done reasonably successfully. We can ask about where some of that money came from, because we know where trade union money comes from; it comes from the members, by and large, and if people do not want their trade union membership fee to fund the Labour party—I have first-hand experience of this—they can opt out. Thatcher introduced that quite some time ago.

Historically, the Labour movement has that relationship with the trade unions, but there are unions or branches in Scotland that support either individual SNP candidates—the cause of independence—or at the very least Scotland’s right to choose. Perhaps the Labour party would be in a slightly better position if it aligned itself with those enlightened trade unions.

The point made by the hon. Member for Putney, about the effect that the clause will have in restricting the ability of organisations to unite behind a common cause, is very concerning. How else will change be achieved? As I said earlier, the whole thing seems to be about putting up a block now—“We have reached some sort of status quo, and that should be the end of it.” That is always the Conservative attitude—that Conservative government is, essentially, the end of history, that perfection has been achieved with their election and that nothing should change. It is not so much levelling up as levelling over—just pouring concrete on everything that might have gone before or anything that might pose a challenge to them, to try to stop it there. Labour Committee members are right to highlight the dangers of the clause, and we will be very happy to vote with them should they press the clause to a Division.

Question put, That the clause stand part of the Bill.

Clause 25 ordered to stand part of the Bill.

Clause 26

Disqualification orders

Question proposed, That the clause stand part of the Bill.

With this it will be convenient to consider that schedule 8 be the Eighth schedule to the Bill.

Clause 26 creates a new disqualification order for offenders who intimidate those who contribute to our public life. Political intimidation and abuse have no place in our society; they risk reducing political participation and corroding our democracy. To tackle the problem, the Committee on Standards in Public Life suggested that it would be appropriate to have specific electoral sanctions that reflect the threat posed by the intimidation of candidates and their supporters.

Based on the protecting the debate consultation, the Government committed to applying electoral sanctions to existing offences of intimidatory behaviour. That is precisely what the new disqualification order achieves. It is a five-year ban on standing for, holding, and being elected to public office. It can be imposed on those convicted of intimidating a candidate, elected office holder or campaigner. After all, it is simply not right that those who try to damage political participation through intimidation are allowed to participate in the very same process that they tried to undermine.

The disqualification order can be applied to a wide range of intimidatory criminal offences such as, but not limited to, stalking, harassment, common assault and threats to kill. For the disqualification order to be imposed, the intimidatory offence must be aggravated by hostility related to, for example, a candidate. That ensures that the disqualification is imposed only in instances where political participation is genuinely at risk.

The court that determines conviction for the intimidatory offence will also impose the disqualification order. Where the court is satisfied that the offence is aggravated by hostility, then it must impose the disqualification order, except where the court considers that there are particular circumstances that would make it unjust to do so. This sentencing model strikes the right balance between ensuring a sufficient deterrent against political intimidation, while maintaining the crucial role of the judiciary in determining the most appropriate penalty commensurate with the seriousness of the individual offence and in light of the specific circumstances of the offender.

The clause also gives effect to schedule 8, which lists the offences that, when committed by an offender with the necessary hostility, can trigger the imposition of a five-year disqualification order. There is no single offence of intimidation in criminal law, so the schedule lists a wide range of offences of an intimidatory nature in respect of which the new disqualification order can be imposed.

The list is based on a core list of offences suggested by the Committee on Standards in Public Life, such as common assault, harassment, stalking or sending communications with intent to cause distress and anxiety. Following public consultation, and engagement with key stakeholders such as the Crown Prosecution Service and the Electoral Commission, we have broadened the list to include four intimidatory offences.

It is important to cast our net widely in selecting intimidatory offences for the schedule; that will help to avoid a situation where a person commits an offence against a candidate with the clear intention of intimidating them but, because the offence is not included in the schedule, the new disqualification order cannot apply. That is why the clause should stand part of the Bill.

I have agreed that the hon. Member for Lancaster and Fleetwood can make her remarks while seated.

Thank you, Mr Pritchard. I welcome not just clause 26, but the whole of part 5 of the legislation. As shadow democracy Minister, I have had the unfortunate pleasure of having to take part in many debates about intimidation of candidates; I am sure all Members will be aware of some of the accounts.

We know that many of our colleagues are intimidated, and many candidates of our party have experienced intimidation and threats. It is devastating that we should be debating this clause so soon after the murder of our colleague, Sir David Amess, who was on the Panel of Chairs and chaired many debates on issues like this. I must be honest: I did not expect when I stood for election in 2015 that I would lose two colleagues to murder in such a short space of time. An attack on an MP, and an attack on a candidate, is an attack on democracy. The Opposition therefore welcome part 5 of the Bill.

I am making remarks about clauses 26 to 34 so that I do not have to bother for future clauses. My only concern is that some of the legislation does not go far enough. Many of the people who might go on to intimidate candidates, agents or campaigners might not be put off by the idea of not being able to stand for elected office for five years, because many of the people who commit these crimes are not interested in participating in our democratic processes—they are, in fact, opposed to the democratic process in its entirety.

As the Minister finds her feet in this new role, I would be very happy to open a dialogue with her to explore ways in which there might be a consensus across the House to ensure that our democracy, which we all take part in and support, can be strengthened so that we do not see the acts of violence and intimidation that we have seen in recent years deter good people from entering public life.

Question put and agreed to.

Clause 26 accordingly ordered to stand part of the Bill.

Schedule 8 agreed to.

Clause 27

Vacation of office etc

Question proposed, That the clause stand part of the Bill.

While those in public life are often the targets of intimidation and abuse, I regret to say that they can also be the perpetrators of intimidation and abuse. For example, it is possible that an MP or a local authority mayor or councillor will be sanctioned by the new intimidation disqualification order. They will be treated no differently from anybody else and will be disqualified from holding elected office.

The clause sets out the process by which the office holder’s office is vacated; this is no more than three months after the officeholder receives the intimidation disqualification order. During the period prior to the office being vacated, the officeholder is suspended from performing the functions of their office. However, if the officeholder makes a successful appeal against their conviction or sentence before that three-month period ends, the office is not vacated and consequently they can resume their office.

The process strikes the correct balance between, on the one hand, the right of an offender to appeal and, on the other, the smooth vacation of office and a swift resolution. A swift resolution provides certainty for electors and ensures that there is an office holder in place who can discharge the responsibilities of that office. This is also consistent with the existing process for vacating office outlined in the Representation of the People Act 1983.

Question put and agreed to.

Clause 27 accordingly ordered to stand part of the Bill.

Clause 28

Candidates etc

Question proposed, That the clause stand part of the Bill.

The new disqualification order will be applied only when intimidatory offences are motivated by hostility towards certain groups of people. This clause defines the first group that requires this additional protection from abuse and intimidation. Candidates at any election, including candidates named on lists, will be protected by the new disqualification order. Future candidates—people whose intention to stand as a candidate has been declared, but whose formal candidacy has not yet begun—are also included in this clause. Substitutes and nominees who are expected to fill vacancies in Northern Ireland will also be protected by the new disqualification order. Candidates, future candidates, substitutes and nominees all play a vital role in participating in our democracy and standing for election. That is why they deserve the additional protection from intimidation provided by the new disqualification order, and it is why I commend this clause to the Committee.

Question put and agreed to.

Clause 28 accordingly ordered to stand part of the Bill.

Clause 29

Holders of relevant elective offices

Question proposed, That the clause stand part of the Bill.

Clause 29 builds on the previous clause and sets out another group of people whom the new disqualification order will protect: holders of elected office, such as—but not limited to—MPs, councillors and mayors. Given the high-profile nature of their roles, elected officeholders are sadly all too often the targets of intimidatory, threatening, or abusive words or behaviour. We cannot allow intimidation to force those public servants to stand down from their offices or not stand for re-election. Banning those convicted of an intimidatory offence from standing for election and potentially standing against the very same people they abused is an important step. That is why I commend this clause to the Committee.

Question put and agreed to.

Clause 29 accordingly ordered to stand part of the Bill.

Clause 30

Campaigners

Question proposed, That the clause stand part of the Bill.

The previous two clauses extended the protection of the new disqualification order to, broadly, candidates and elected officeholders. However, we must not stop there. Campaigners, from grassroots volunteers through to party employees, play a vital role in our democratic process, and the intimidation and abuse to which they are subject is abhorrent. Therefore, an intimidatory offence that is motivated by hostility towards campaigners can also trigger the new disqualification order.

Unlike candidates, there is no single definition of a campaigner. For the purpose of this clause, we have used a reasonably broad definition that includes individuals who are a recognised third party campaigner, an accredited campaigner for a recall petition or a permitted participant in a referendum, or who are involved in the management of a local referendum campaign. Individuals who are employed or engaged by the aforementioned people to carry out campaigning activities are also considered campaigners. This definition includes campaigners who undertake relevant campaigning activities at any time of year, not only during a specific election period, to reflect the fact that campaigning—particularly online campaigning—takes place outside of formal election periods. Unfortunately, intimidation and abuse also affects campaigners at any time of year, not only during election periods.

Anybody can potentially be a campaigner, including volunteers, and the disqualification order must protect campaigners from intimidation in the same way as it protects MPs. For that reason, I commend this clause to the Committee.

Question put and agreed to.

Clause 30 accordingly ordered to stand part of the Bill.

Clause 31

Election etc of a person to the House of Commons who is subject to a disqualification order

Question proposed, That the clause stand part of the Bill.

The new disqualification order, which we have already debated, disqualifies offenders from being elected to various offices. This clause ensures that this disqualification applies to the House of Commons. It specifies that if an offender who is subject to an intimidation disqualification order is elected to the House of Commons, their election will be void. Other relevant elected offices already have provisions that state that an election will be void because of disqualification. The House of Commons has no such provision, and we therefore need to provide specifically for that possibility.

This clause is reasonably technical in nature, but it has an important role to play in ensuring that the new intimidation disqualification order works smoothly. I therefore commend it to the Committee.

Question put and agreed to.

Clause 31 accordingly ordered to stand part of the Bill.

Clause 32

Power to amend Schedule 8

I beg to move amendment 92, in clause 32, page 44, line 12, leave out “may by” and insert

“must consult with such persons as the Minster considers appropriate before making”.

This amendment empowers the Secretary of State to consult broadly before making regulations under clause 32 to amend Schedule 8.

This relatively technical amendment is based on the written evidence and suggested amendments submitted by the Law Society of Scotland, which I am sure Committee members are familiar with and have read in detail. Schedule 8 provides the list of offences that disqualify offenders for elected office, including offences under the law in Scotland, which in a lot of these areas is determined by the devolved Scottish Parliament, so we think it is pretty simple and appropriate that the clause places a duty on Ministers to “consult with” relevant persons as appropriate before making statutory instruments.

A lot of themes that have come up in the course of our deliberations are about the need for enhanced scrutiny and consultation. Indeed, the Minister strongly defended the role of consultation—as opposed to seeking consent from the devolved Assemblies, which we are not asking for in this amendment—in a debate on a previous clause. I look forward to her saying that the amendment would be overly bureaucratic and delay the process and therefore is not necessary.

I thank the hon. Gentleman for his comments. If he already knows what I am going to say, and if we have had this debate multiple times, it raises the question of why he chose to table the amendment. Nevertheless, I will speak to the clause and his amendment.

The purpose of clause 32 is to future-proof the new disqualification order so that it remains relevant and can continue to apply to offences of an intimidatory nature. For example, the nature of electoral campaigning is evolving as online campaigning increases in significance, which unfortunately means that the nature of intimidation and abuse is also evolving and shifting online. It is possible that new online intimidatory offences will be created. For example, a Law Commission report in July recommended the creation of a more modern harm-based communications offence. If this proposed offence became law, we might want to make it possible for the intimidation disqualification order to be imposed in relation to that offence where the necessary hostility was established. That is why the clause enables Ministers to add, amend or remove offences from the list of intimidatory offences in schedule 8. Any statutory instrument made using this power would be subject to the affirmative procedure.

Amendment 92 would require the Secretary of State to undertake a consultation with such persons as he considers appropriate before making use of the regulation-making powers to amend the list of intimidatory offences in schedule 8. This is not necessary, as the hon. Gentleman knew I would say. The Secretary of State will be able to seek and consider the views of such persons as he considers appropriate when relevant without the need for a legal requirement to do so—this is the normal business of government. As previously stated, the clause already requires that any statutory instrument laid using these powers will be subject to parliamentary scrutiny under the affirmative resolution procedure. This will ensure that Parliament can scrutinise and decide whether to accept any proposed changes to schedule 8. The Government will therefore not accept the amendment, as we believe that it is unnecessary. To ensure that the new disqualification order evolves in the same way that intimidatory behaviour and criminal offences evolve, the clause should stand part of the Bill.

I do not think that was a massive surprise. The Minister is right to say that it is important that the legislation is future-proofed. The Scottish Parliament has a proud record—as indeed does the Senedd Cymru—of being in advance of this place sometimes in terms of the legislation it has brought forward and the kinds of behaviour it has gone on to deem a criminal offence; in fact, a recent piece of hate crime legislation might well contain examples to add to the disqualifying offences in the Bill.

In an attempt to strike a note of consensus, I will take in good faith the Minister’s commitment to monitor the development of legislation north and south of the border and that the consultations will happen. On that basis, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 32 ordered to stand part of the Bill.

Clause 33

Interpretation of Part

Question proposed, That the clause stand part of the Bill.

The clause helps to interpret and clarify two terms that are used frequently in this part of the Bill. The first is “disqualification order”, which refers to the new five-year intimidation disqualification set out in clause 26. The second is “relevant elective office”. The list of offices determines the offices that an offender subject to the new disqualification order cannot stand for, be elected to or hold. It also determines the elected office holders who are protected by the new disqualification order.

Question put and agreed to.

Clause 33 accordingly ordered to stand part of the Bill.

Clause 34

Minor and consequential amendments

Question proposed, That the clause stand part of the Bill.

With this it will be convenient to discuss that schedule 9 be the Ninth schedule to the Bill.

The clause gives effect to schedule 9, which contains minor and consequential amendments resulting from part 5 of the Bill.

The new intimidation disqualification order must be enforceable. Offenders who are banned from standing for election must be prevented from doing so. It is already a criminal offence, punishable by imprisonment, to provide false information on a candidate nomination form. All candidates must declare that they are not disqualified from being elected. That will be a sufficient deterrent for most offenders banned by the new disqualification order, but it is possible that some will try to stand for election regardless. That is why schedule 9 amends the rules for Northern Ireland, local and UK parliamentary elections. It provides returning officers with the power to hold a nomination paper invalid where a candidate is disqualified by virtue of the new intimidation disqualification order. Returning officers are only expected to hold nomination papers invalid where they are certain, based on information provided or otherwise available to the returning officer, that a candidate is disqualified.

Schedule 9 also makes minor changes to the process for vacating various elected offices and, by amending the Armed Forces Act 2006, allows the new disqualification order to be imposed by military courts on an offender who is subject to service law. Schedule 9 is important for the enforcement of the new disqualification order and for ensuring that the disqualification fits smoothly and consistently with all elected offices.

Question put and agreed to.

Clause 34 accordingly ordered to stand part of the Bill.

Schedule 9 agreed to.

Ordered, That further consideration be now adjourned.—(Rebecca Harris.)

Adjourned till this day at Two o’clock.

Health and Care Bill (Sixteenth sitting)

The Committee consisted of the following Members:

Chairs: Mr Peter Bone, Julie Elliott, Steve McCabe, † Mrs Sheryll Murray

† Argar, Edward (Minister for Health)

† Crosbie, Virginia (Ynys Môn) (Con)

† Davies, Gareth (Grantham and Stamford) (Con)

† Davies, Dr James (Vale of Clwyd) (Con)

† Double, Steve (St Austell and Newquay) (Con)

† Foy, Mary Kelly (City of Durham) (Lab)

† Gideon, Jo (Stoke-on-Trent Central) (Con)

† Higginbotham, Antony (Burnley) (Con)

† Madders, Justin (Ellesmere Port and Neston) (Lab)

† Norris, Alex (Nottingham North) (Lab/Co-op)

† Owen, Sarah (Luton North) (Lab)

† Robinson, Mary (Cheadle) (Con)

† Skidmore, Chris (Kingswood) (Con)

† Smyth, Karin (Bristol South) (Lab)

† Timpson, Edward (Eddisbury) (Con)

† Whitford, Dr Philippa (Central Ayrshire) (SNP)

† Williams, Hywel (Arfon) (PC)

Huw Yardley, Sarah Ioannou, Committee Clerks

† attended the Committee

Public Bill Committee

Tuesday 26 October 2021

(Morning)

[Mrs Sheryll Murray in the Chair]

Health and Care Bill

On a point of order, Mrs Murray. I put on record through you my gratitude to the Committee, and particularly to the usual channels and the shadow Ministers, for facilitating the adjournment of the Committee last Thursday in order to allow me to attend the funeral of my friend James Brokenshire.

Thank you, Minister. I am sure the Committee has taken note of your point of order.

Clause 106

Prohibition on disclosure of HSSIB material

I beg to move amendment 86, in clause 106, page 92, line 26, leave out subsection (2) and insert—

“(2) In this Part ‘protected material’ means—

(a) all statements taken from persons by the HSSIB during a safety investigation or in the course of deciding whether an incident is going to be subject to an HSSIB investigation,

(b) records revealing the identity of persons who have given evidence in the context of the safety investigation,

(c) information that has been collected by the HSSIB which is of a particularly sensitive and personal nature, such as (but not limited to) copies taken by the HSSIB of health records, care records, clinical notes, or personnel records,

(d) material subsequently produced during the course of an HSSIB investigation such as (but not limited to) notes, drafts and opinions written by the investigators, or opinions expressed in the analysis of information obtained through the investigation,

(e) drafts of preliminary or final reports or interim reports, information that would be subject to legally enforceable commercial privileges.”

This amendment would define more closely the materials covered by the “safe space” protection provided for by the Bill.

With this it will be convenient to discuss the following:

Amendment 87, in clause 106, page 93, line 6, leave out

“information, document, equipment or other item held by that individual”

and insert “protected material”.

This amendment is consequential on Amendment 86.

Clause 106 stand part.

Amendment 91, in schedule 14, page 212, line 14, leave out paragraph 6.

This amendment would remove the provision allowing coroners to require the disclosure of protected material.

Amendment 136, in schedule 14,  page 213, line 3, at end insert—

“Disclosure to families

6A The Chief Investigator may disclose findings to any patient involved in any incident which HSSIB is investigating, or the family of any such patient, on the condition of confidentiality and any other condition the Chief Investigator sees fit.”

This amendment would give the Chief Investigator the discretion to disclose information about an investigation to a patient/family involved if they deem this appropriate, on the condition that the information remains confidential.

That Schedule 14 be the Fourteenth schedule to the Bill.

Amendment 88, in clause 107, page 93, line 17, leave out from “Part” to the end of line 41.

This amendment would remove the ability of the Secretary of State to make regulations authorising disclosure of protected material beyond that provided for in the Bill.

Clause 107 stand part.

Amendment 89, in clause 108, page 94, line 15, leave out paragraph (c).

This amendment is consequential on Amendment 88.

Clause 108 stand part.

Amendment 90, in clause 109, page 95, line 6, leave out subsection (7).

This amendment is consequential on Amendment 91.

Clause 109 stand part.

Clause 117 stand part.

We are now discussing the health services safety investigation body, and I rise to speak to amendments 86, 91 and 88, which are the main substantial amendments, with amendments 87, 89 and 90 being consequential on those three. HSSIB will not apply in Scotland, but having been a surgeon for over three decades and having been involved in quality improvement and the Scottish patient safety programme, I will be watching it with interest. We want it to succeed, and I am sure the other nations in the UK will want to learn from it, so it is important that it is not simply drowned at birth and that we get it right at this stage.

HSSIB is based on the principles of the air accidents investigation branch, and we on the prelegislative Committee felt that the most central and important part was the safe space protected materials. The main priority is learning from incidents, mistakes and errors and looking at how to prevent them from happening in future; it is not about blaming individuals. That is because most incidents in the NHS are system-related, rather than individual-related. Errors and mistakes will happen, particularly when NHS staff face workforce shortages and are covering more patients than normal. The pandemic might mean that they are working outside their comfort zone. They also work long hours, and sometimes the system will cause a mistake. We should be designing a system that prevents a simple mistake or error from delivering harm to a patient. That is the critical aim, and that has been the focus of the Scottish patient safety programme, which was introduced in operating theatres in 2007, when I was still working as a surgeon.

That programme made the World Health Organisation checklist compulsory. It involved a discussion at the beginning of operation lists and time out with the whole theatre team before the operation started, so that patient safety and the responsibility to prevent wrong site surgery, which the shadow Minister raised previously, is made everyone’s responsibility. The whole team stops and is quiet, and everyone goes through that final check before the operation starts. A former Health Minister from this place visited Scotland but never made that checklist compulsory in England. I do not understand why not.

This issue is not in need of investigation by HSSIB, but it does demonstrate that it is necessary for someone learning from an incident to recognise and admit candidly that they have made a mistake. Such mistakes could include putting the wrong mark on a patient, putting the wrong side on the consent form, or putting the X-ray up the wrong way around. Whatever led to the error, we need people to be willing to completely admit to their mistakes, and to then create systems to prevent that mistake from resulting in harm to the patient. That is why the safe space is so critical—otherwise NHS staff, clinicians, and anyone else involved will not be candid—and it is why the prelegislative Committee felt it was important to be absolutely focused on protecting it. The aim is to design safety nets to protect the patient.

Amendment 86 seeks to change the orientation of the Bill. The Bill defines protected materials very widely and creates exceptions. It implies that other organisations cannot get on with their investigations because HSSIB is getting in the way. The amendment seeks to define protected safe space materials very narrowly. HSSIB would only hold copies of records. That means that the originals—the safe space testimony of witnesses or others —would still be held by the NHS. Patients and families could still give permission for their testimony to be disclosed, thereby avoiding the need to repeat it to another agency, but evidence could not be forcibly disclosed. Other bodies could not use HSSIB as a substitute and say, “Oh well, if you’ve investigated it, we won’t bother. We’ll simply copy what you’ve found.”

Amendment 88 to clause 107 would remove the potential for the Secretary of State to simply expand the disclosure exceptions later on. There is a big list in clause 107 of what could be changed. Schedule 14 lists the authorised reasons and persons who would access disclosure. Amendment 91 seeks to remove coroners from that list. If coroners are given access to testimony, other people do not understand why they should not be given access, too. We have probably all been lobbied about that by the ombudsman and the freedom of information bodies. If that happens—if more people access the safe space raw testimony—it will no longer be a safe space and the system will simply not match the achievements of the air accident investigation branch in getting such frank and candid evidence. People can be summoned and made to respond to factual questions, but will they discuss poor interpersonal relationships in a team, people not working together and all the things that could contribute to a bad atmosphere or system?

In the prelegislative Committee we felt that there were two key reasons for disclosure to go ahead regardless. The first obvious one is if there is an ongoing significant risk to patient or public safety, and the other is if there is a criminal prosecution because of someone’s actions or because they have breached the disclosure rules. The Bill states that access can be granted to safe space materials via the High Court. That is how it is for air accident investigations. It is felt that the High Court will weigh up the importance of admitting the disclosed materials versus the chilling effect that could have on future investigations and people giving evidence to them. It is important to keep the High Court provision in place and to trust it as the main route for other bodies or individuals seeking access to safe space testimony or records.

It is important to recognise that aviation is among the safest industries because of the safe space provided when investigating air accidents. It is not always a matter of investigating catastrophes; it is also about investigating near misses and working out why an accident did not happen. Was it by the grace of God, or did something kick in, and should processes and procedures be changed?

The amendments would strengthen the safe space, help ensure the willingness of NHS staff to come forward to give honest testimony, and protect that testimony so that it could be used to reduce any future harm to patients.

It is a pleasure to see with you in the Chair, Mrs Murray. I will speak to amendment 136, as well as the other clauses and amendments in the group. I will not repeat the points made by the Scottish National party spokesperson, the hon. Member for Central Ayrshire, in her excellent introduction, but I will draw the Committee’s attention to a few salient points.

First, amendments 86 and 87 seek to create a new definition of protected material. We support the amendments because, as the SNP spokesperson said, it is important to turn this around and try to create as much certainty as possible by defining protected materials as far as possible. I suspect that the Minister will tell us that the amendments are unnecessary, but we certainly feel that it is better to over-prescribe now than to undercook the Bill and find out in two or three years’ time that some loophole ends up having the chilling effect that we have discussed several times.

I am aware of the counter-argument that there should be no restrictions or protected material if an individual is not capable of being identified, but that is a rather risky strategy. It would not remove the risk of people being able to identify someone simply by working out who was doing what at a particular time and what evidence they gave. It also does not help to build the confidence necessary to deliver the safe space that the Bill is trying to achieve. Certainty and clarity are needed wherever possible, and defining materials that are to be considered a safe space and protected will assist in that aim.

Turning to clauses 106 to 108 on disclosure, it is appropriate to make clear in clause 106 that the disclosure of protected material is prohibited, but we think that clear statement is rather undermined by the ability of the Secretary of State in clause 107 to make regulations to change that. As I have said, the parameters of safe space should be clear, consistent and constant. That is why amendment 86 in particular ought to be supported. The Secretary of State is once again giving himself more powers—a theme we have picked up throughout the Bill—and that is of concern.

Let us not forget that this Bill has been floating around in various guises for about five years, so we do not think it is acceptable or, indeed, necessary for the Secretary of State to reserve for himself greater ability to move the goalposts at some later date. If we do not know now what protected material and safe space are, we are never going to know. Amendment 88 commends itself on those grounds alone. Any ability for the Secretary of State to change the boundaries risks undermining trust and confidence. If those taking part in investigations do not have trust in the safe space provided, it is likely that they will not feel confident enough to be as candid as we would like them to be. If the Minister feels that exceptions are needed, they should be on the face of the Bill; they should not be slipped in by regulations at a later date.

The independent advisory panel of the Healthcare Safety Investigation Branch has also offered a view and stated that staff would not speak up if there was a risk of exposure of identity, and any issues regarding the limits of disclosure are best dealt with by the High Court, not by the Secretary of State in further regulatory procedures.

A related concern on disclosure is that an HSSIB employer who reveals information showing that the organisation itself is failing to properly discharge its responsibilities would commit an offence if he or she knew or suspected that what they were disclosing was protected information. Given the work that they are likely to undertake, I think we can all see that that is likely to be the case. It would not be needed to show that the disclosure had caused, or was likely to cause, harm, and there would be no reasonable excuse defence and no protection under whistleblower legislation. Yet under clause 108(4) a reasonable excuse defence is available to third parties that disclose information to them provided by HSSIB. Will the Minister explain that discrepancy and what protections might be available to whistleblowers who work for HSSIB?

Turning to amendment 91, it is right that considerable concern has been raised about the proposal to allow coroners to access protected material, because it could mean individual coroners routinely requesting material from HSSIB investigations. I hope it is clear to members of the Committee the ramifications that could have on healthcare professionals’ willingness to be fully engaged and open with HSSIB investigations.

Another consideration—and another reason why we think this is a bad idea—is that there is variation in coronial practice around the country. There is a risk that one coroner or region could be more proactive than others, and could undermine confidence in the system as a whole. It is right that coroners have their own discretion and powers, but the chilling effect would be obvious should only one coroner make a stand on a particular issue.

There is also the question of cost. If HSSIB needs to challenge these decisions, which I am sure it will want to from time to time, it will have to spend considerable amounts on legal fees to do so. Surely its resources would be better spent on delivering its core objectives, rather than on trotting off to the High Court every five minutes to deal with inquisitive coroners.

The Joint Committee on the Draft Health Service Safety Investigations Bill concluded:

“We recommend that the draft Bill be amended to put beyond any possible doubt that the ‘safe space’ cannot be compromised save in the most exceptional circumstances, and therefore that the prohibition on disclosure applies equally to disclosure to coroners.”

That is why we believe that amendment 91 should be supported.

I also refer to the evidence submitted by the independent advisory panel of the Healthcare Safety Investigation Branch, which said of the proposal that there is in fact no parallel in the transport sector—from which the idea for this body was originally conceived—and nor is there any evidence from its experience of the transport sector that such an approach would be necessary. Obviously, we are dealing with different orders of investigations. Certainly, the number of people who would die in an air accident is very different from an incident in the NHS, and we would also expect there to be a significant number of patient safety issues that do not apply to the air sector. However, HSSIB has been going for a considerable time and it has not had any circumstances or incidents where it thinks this power would have made any difference.

HSSIB’s approach to protective disclosures does not limit the powers of coroners to conduct investigations in their own way—there is nothing in there that takes away from their current situation. The independent advisory panel also said that areas of prohibited disclosure should be highly specific and as limited as possible, and expressed the view that disputes regarding the prohibition of disclosure should be determined through an independent judicial process in the High Court, which is already provided for in the Bill.

Finally, I will say a few words on our amendment 136, which is a probing amendment. We want to raise the concern articulated to us that, although it is important that any evidence gathered by HSSIB remains protected, for the reasons we have been discussing, there may be occasions when it would be appropriate for some information to be shared with a patient, or the family of a patient, who has been involved in any qualifying incident. I certainly would not envisage such a power being used routinely. Indeed, the amendment places the discretion entirely in the hands of the chief investigator, who may decide not to use that power at all. However, there may be occasions when certain information, handled correctly—and at the very least on condition of confidentiality, and quite possibly with the consent of the individual or organisation that has provided the evidence—could be passed on to those with a direct interest in the matter, whose knowledge and understanding of what had gone wrong would be improved by the disclosure of the information.

That would still not be considered to be admissible evidence for any proceedings. Given the chief investigator’s desire to keep the concept of safe spaces as secure as possible—which should always be the primary consideration—we can see why that might be put at risk, but I want to flag up this as an issue. Patient groups have long-running concerns that the defensive culture that so often pervades the NHS when something goes wrong does little to aid the ability of patients and their families to get to the bottom of what went wrong. There are always concerns about medical negligence or professional competence proceedings, but rarely do families go into these situations looking for compensation. They are far more likely to want an explanation and an assurance that measures are being put in place so that nobody else will have to go through what they have. In any event, the proposed powers are not too dissimilar to those set out in paragraph 2 of schedule 14.

I want to echo that. I have been involved as an external for significant adverse event reviews, and it has always been my experience that what the family wants to find is that it will not happen again. I therefore feel that we have to trust HSSIB that the duty of candour will mean that there is discussion with the family as we go. That should be the culture across the NHS. The problem is that the more threatened clinicians feel by litigation, the more defensive they become. If the whole orientation can be changed to be about learning and preventing rather than blaming, we will probably get better relationships with families and better, open duty of candour discussions.

I thank the hon. Lady for that intervention, which articulates well what we are trying to highlight. It is a question of culture, which legislation can go only so far in addressing. As a Parliament, we need to address what more we can do to engender greater openness in the NHS. When things go wrong, there are better ways of handling that than what happens at the moment. When we have an £8 billion a year clinical negligence bill, it is incumbent on us all to look at ways that we can reduce that as well as assisting patients and their families to gain a better understanding of what has gone wrong.

It is, as ever, a pleasure to serve under your chairmanship, Mrs Murray.

I am grateful to the hon. Member for Central Ayrshire not just for her amendments but for the opportunity to debate the issue, which goes to the heart of the challenges we face. I think there is broad consensus on clauses up to clause 119, perhaps with a challenge or a tweak here and there, but the provisions that we are considering are the one bit, as I know from the hon. Lady’s work on pre-legislative scrutiny and when the Bill was previously considered, that remains challenging. It is a matter of striking the appropriate balance to ensure the proper functioning of judicial authorities at the same time as achieving the overall objective of what we are trying to do with HSSIB: foster that learning culture, understand what goes wrong and avoid a repetition of it. It ultimately comes down to a subjective view of where that balance is most appropriately struck.

Clauses 106, 107, 108, 109 and 117, and schedule 14, address how HSSIB will protect the material it holds and outline the concept of safe space. Before getting into the detail of the clauses, I want to acknowledge that there has of course been extremely good and well-informed debate outside the Committee about how broad or narrow safe space should be; whether it should be as defined in the Bill with exceptions, or, to use the suggestion of the hon. Member for Central Ayrshire, flipped around to be the converse of that; and the merits of HSSIB sharing or not sharing information with other organisations. I feel it is important to set out how we came to the balance we propose.

The hon. Lady mentioned a previous Minister who visited Scotland. I am very conscious that I have a kind, outstanding invitation to visit from her and I look forward to taking that up at some point soon, I hope. I also spoke to the Scottish Cabinet Secretary for Health and Social Care, who endorsed that invitation. I therefore look forward to being able to come not only to Edinburgh, but possibly to Ayrshire, and finding a way to shoehorn that into the visit.

Key to our vision for a new model for investigations is that they are conducted in a safe space so that patients, families, NHS staff and other participants in an investigation are encouraged to speak freely and candidly and have the confidence that the information they provide will be protected, save in the most exceptional circumstances.

The objective is to encourage that open flow of information and get to the bottom of what may have happened with the best possible information available. Without guarantees that that information will not be shared—again, save in very limited circumstances, which I will come on to—we risk, as the hon. Lady said, eroding the confidence of all those who candidly trust HSSIB with that information.

We propose that information, documents, equipment or other items held by the new body in connection with an investigation will be considered protected material and must not be shared, apart from in certain limited circumstances, such as when necessary to address a serious and continuing risk to the safety of a patient or to the public, and then only to the extent necessary to allow a person to address the risk.

It is also important that people have certainty that the information they provide will not be used for the purposes of blame or liability. The current investigation branch does a good job under the current legislative framework but can only operate a weakened form of safe space. In addition, it has no powers to impose sanctions. We need to address that and put the HSSIB on a par with similar investigation bodies in the transport sector, as colleagues have said. Non-compliance with safe space protections may result in criminal sanctions.

I have listened to the reasoning behind the amendments, and I feel that they are based on an acknowledgement that people in the health service have perhaps so far not found themselves willing to come forward and speak up when they see something wrong. The scope is much wider with this proposed body because evidence can be taken not just from people who work in the health service, but more widely. It is hugely important that we get to that place, because when we look at evidence taken on civil aviation and what happens in the civil aircraft space, we see that people always behave with the best interests of their sector, their workplace and the public at heart. People want to do the same with this Bill, so I am grateful that HSSIB has been set up. Can more consideration be given to how we ensure that people can speak up without feeling that they will blame another person or that they could be singled out for speaking out? That is exactly what we hope to address with the safe space.

My hon. Friend is absolutely right. I should say that, even now, I am sure that many people in the health sector co-operate voluntarily, even when it is potentially challenging for them to do so. They do so because they want to foster that culture. This proposal will take that a step further forward and make it even easier for people to do so with confidence and to overcome any reticence that might exist because of, as she said, the fear of blame, the fear of opening up about something and the need to protect their sector and organisation, as they see it. She is absolutely right, and the key is to try to create a learning, rather than a blaming, culture. That is why the balance we strike in the definition of the safe space and exceptions to it is so important. We may or may not reach a consensus on where the balance should be struck, but this debate goes to the heart of the efficacy of the new body and how it will operate.

The Bill therefore sets out, on a statutory footing, a much stronger and more robust form of safe space. Clause 106 is the cornerstone of that. It is key to ensuring that all participants are completely candid with the information that they share, and it enables more thorough investigations and the development of meaningful recommendations. Investigations where protected material is held in the safe space should improve openness and co-operation between all participants and identify risks to the safety of patients, so that patients, families and the wider public can benefit from the experience of better investigations, and improvements can be made to the systems and practices in the provision of healthcare in England.

We believe that we have reached the right, balanced position after a lot of careful thought. In dealing with this legislation, my predecessors and I, along with my right hon. Friend the Member for Mid Bedfordshire (Ms Dorries), who is now Culture Secretary, wrestled a lot with the question of how to strike the right balance. I therefore turn to amendments 86 and 87. I am pleased that there is, I think, a consensus among all Members across the Committee that we need to protect materials, and about the value attached to protecting materials in the safe space, which is a key part of our approach to improving patient safety by allowing individuals to feel able to speak candidly.

Amendment 86 seeks to list in detail the types of material that will fall under the definition of protected material, while amendment 87, as the hon. Member for Central Ayrshire set out, is consequential on that. The definition given in clause 106(2) is intentionally broad. HSSIB will carry out a range of investigations, and it would be impossible to identify prospectively, in advance, all the material that will need to be gathered and should be protected by the safe space. By having a broad definition, we can give greater confidence to those who speak to HSSIB that all the material that it collects will be appropriately protected. There are very specific exceptions, which I will come on to.

As a future-proofing mechanism, the materials that are protected have not been listen in detail in the Bill. New technologies and ways of recording data are developing at a rapid pace. It is vital that HSSIB is able to adapt as these developments reach the frontline, rather than having to rely on returning to this House for further amendments to primary legislation. Listing the types of material in detail would have a number of practical implications. If we had a specified list, we could inadvertently leave out material that should be protected, when the vast majority of material the HSSIB will gather would be protected under the current definition. The Government endeavour to get everything right, but, as we all know, often do not.

Does the Minister think that there is anything missing from the amendment that ought to be included?

I want to point out that it is irrelevant whether records, statements or information, all of which are listed in amendment 86, are in a digital form or some different form in the future. We use the words “statements”, “information” and “records”, and the importance of having copies is that the originals will still be available to other investigatory bodies. I cannot see what the gap is. Whether we are talking about an audio recording or sheets of paper, the technology is irrelevant.

I am grateful to the shadow Minister and the SNP spokesperson, whose points are not dissimilar. I take the hon. Lady’s point that statements and information are recognised legal terms and would catch different mechanisms by which they are recorded. We still think it is prudent to allow not only for developments that we may not have anticipated, but for clarity. We believe that the blanket provision gives greater clarity and certainty without the assistance of the amendment, so we do not share the hon. Lady’s view. I suspect she may still wish to test the amendment with a Division to make the point, as she is entitled to do.

Moving on from these amendments, to illustrate the variety and breadth of debate on this subject—we have had a small taste of it this morning—I want to address the argument that keeping protected materials in the safe space would potentially undermine the role of other bodies, such as the Parliamentary and Health Service Ombudsman. This illustrates part of the challenge. There are, understandably, calls from colleagues on the Committee to further restrict the exceptions to the safe space. As has been alluded to, others outwith this place argue for an expansion of the list of those exceptions. Some have argued that the PHSO should be on that list. With all due respect to those who advocate that, I do not agree. I do not think it would be appropriate to add the Ombudsman to the list of exceptions. The PHSO will still be able to fulfil its important independent role. It will have direct access to the same sources as it does now when it needs to investigate a complaint. The HSSIB will not in any way limit its ability to conduct an investigation.

I am a member of the Select Committee on Public Administration and Constitutional Affairs, which oversees the ombudsman. The Minister will be aware of correspondence between the Committee and the ombudsman. Could the Minister comment on the report from the Venice Commission about how far the United Kingdom will be outwith international consensus on this subject?

I will do so now for the hon. Lady. I have great respect for the work of the Council of Europe and the Venice Commission around ombudsman services. The Venice Commission has looked at this, understandably, from the perspective of the ombudsman and uniformity of process. We have had to weigh that up—exactly as the Committee is doing in this debate—in balancing the impact of too many exceptions, or exceptions that are too wide, on the candour with which people can contribute their views to further the improvement of patient safety. There is no ideal line on this, hence this morning’s debate.

I respect the views that the Venice Commission has set out. I think it formally set out its conclusions a week or so ago, after a number of informal meetings among its members and with officials to gather evidence; I suspect it also took the views of the Public Administration and Constitutional Affairs Committee. The Venice Commission looked at the matter, quite rightly, from the perspective of the ombudsman and the uniformity of the services it provides. We had to strike a slightly different balance, hence why we reached a different conclusion.

I will turn in a moment to the coroner, because I know that that is a key point. Clause 110 outlines how HSSIB and a number of other organisations, such as the Parliamentary and Health Service Ombudsman, will co-operate on practical arrangements when co-ordinating certain investigations, including arrangements for accessing information from primary sources where cases may overlap. Such arrangements exist already between the current investigation branch and the PHSO, and I expect similar arrangements to be put in place when the new body is set up.

Should HSSIB hold protected material that the PHSO or other bodies wish to access, the other bodies can, as the hon. Members for Central Ayrshire and for Ellesmere Port and Neston said, apply to the High Court for an order allowing its disclosure. The High Court would then apply the legal tests set out in schedule 14 to determine whether an order for disclosure should be made. We heard in evidence that although there was dispute over the extent—particularly around coroners—of exceptions or otherwise, there was a consensus that where there was a dispute, the High Court was the appropriate competent body to resolve such a dispute or determine access. We do not envisage that that will be needed in most situations, but it provides a safeguard to ensure there is always a way to access information should the interests of justice balance test be met.

We anticipate that the new body will carry out about 30 investigations a year, and the focus of the investigations will be to support national learning, rather than looking at individual complaints. Therefore, we believe that there will be very limited times when bodies such as the PHSO would need access to information held by the new body.

Schedule 14 describes some of the exceptions to safe space. It is therefore an important part of how we see safe space working, and it is at the heart of what we are debating today. Clause 106 sets out a general prohibition on the disclosure of protected material held in the safe space. There are occasions, however, when we consider it necessary to allow for disclosure of information relating to an investigation outside HSSIB. Those limited exceptions are clearly set out in schedule 14. For example, it is only right that if HSSIB discovered information that demonstrated that there was a serious and continuing risk to the safety of a patient or the public, as the hon. Member for Central Ayrshire alluded to, it is able to disclose information, to the extent necessary, to a body that can address that clear and present risk. Safe space is not about covering up unsafe practices or putting patients at risk; in fact, it is quite the opposite.

HSSIB can disclose information where needed. First, it can do so to help it carry out an investigation—for example, with a witness in an investigation, so HSSIB can get them to comment on or give their reaction to it. Without the provision, HSSIB might not be able to carry out an investigation properly, because safe space could restrict what it could investigate and how it operated. Secondly, it can disclose information to help it to enable prosecution of offences created under part 4; that is, the very limited offences relating to investigations or offences of unlawful disclosure. In such a prosecution, the disclosure of elements of protected information may be required to demonstrate that the offence was committed in the first place. Thirdly, HSSIB can disclose information to help to address a serious and continuing risk to the safety of a patient or the public, for example where HSSIB has evidence of negligent behaviour by a medical professional that may risk the safety of patients, and it wishes to disclose that information to their employer—essentially, whistleblowers and others. In order to address that risk, HSSIB can only disclose sufficient information to enable the employer to take steps to address the defined risk.

In addition, disclosure of protected information can also occur if the High Court makes an order that such information be disclosed by HSSIB to a person for a specific purpose. The Bill sets out the legal test that the High Court must consider before making such an order. Schedule 14 provides that an order can be made only if the High Court deems that the interests of justice served by the disclosure outweigh any adverse impact on current and future investigations by deterring persons from providing information for the purposes of investigations, and any adverse impact on securing improvement of the safety of healthcare services provided to patients in England. That is, rightly, a high bar, but it is an important safeguard to ensure that the interests of justice can be served where necessary and where that bar is met.

I now turn to the crux of the concerns raised by the hon. Member for Ellesmere Port and Neston and the hon. Member for Central Ayrshire. We have included an exception to allow disclosure if a senior coroner requires the information under certain provisions of the Coroners and Justice Act 2009. I know that some outside this place, and some within it, have concerns about the fact that we have created an exception for senior coroners, and here I turn to amendments 90 and 91 on the matter. Amendment 91 seeks to remove the provision allowing coroners to rely on certain provisions in the 2009 Act to require the disclosure of protected material held by HSSIB in the safe space. That would mean that protected material could not be passed from HSSIB to coroners without the High Court ordering it to be so. Amendment 90 is consequential and linked to amendment 91.

The key point that I would highlight when comparing this situation to that of the PHSO or others is that coroners are members of the judiciary. They are judicial office holders, and they have a very distinct and important legal role in investigating specific deaths. We do not want to hamper that, and throughout various pieces of legislation, including the 2009 Act, we have sought to protect their judicial independence.

The shadow Minister raised a concern about inconsistency in how different coroners in different areas might approach the matter. In a past life at the Ministry of Justice, I had responsibility for the coroners system as a Parliamentary Under-Secretary. Over the past decade, we have seen considerable modernisation of the current coronial system in this country, with the appointment of a Chief Coroner—a role that is assumed by a High Court judge. They have sought to bring much consistency, and there has been training and work with coroners—performance management is the wrong word—from the centre to ensure greater consistency of decision making and approaches. That will reduce the potential for significant inconsistencies or differences of approach—for example, a particular coroner may decide to take a very liberal approach and request all sorts of things, while another may say, “I do not need any of that”—which I think is what the hon. Gentleman is concerned about. A lot of work is being done to secure greater consistency and greater clarity, with guidelines promulgated by the Chief Coroner to deliver that. In this space, I would similarly expect the Chief Coroner to take a very close interest in guiding coroners.

I appreciate the work that has gone into ensuring greater consistency among coroners. The fact remains, however, that, as the Minister said, these are independent judicial positions, and coroners are entitled to make decisions as they see fit. I do not think that that concern has been adequately addressed yet.

I will take an intervention from the hon. Member for Central Ayrshire, because I suspect it is consequential on what the hon. Gentleman has said.

I would like to understand what coroners have now that they would lose by the protection of safe space. The provisions on granting disclosure apply to the High Court, not to all courts and not to all judicial positions. Why is the coroners’ court specifically being given the right to access, as opposed to applying for disclosure through the High Court? It will be the thin end of the wedge, and other groups will feel they ought to have a right to the same safe space. As clause 107 allows regulatory changes to be made later, this could continue to be eroded. I do not understand what part of what coroners do would be undermined by the introduction of HSSIB and the real safe space.

I am grateful to the hon. Lady and the hon. Gentleman, and I think the points they made are linked. The distinction we draw with other organisations and individuals is because of the key point that coroners are members of the judiciary. The hon. Gentleman is right to say that that gives them independence in the exercising of their functions, and I will turn in a minute to what the Chief Coroner is doing specifically with these clauses to seek achieve greater consistency.

Coroners are independent and that goes to the heart of their role, which is to determine the circumstances of a death. That is why we believe it is important that their independence, and their existing right to access papers and documents, is not in any way fettered by the legislation. I will try to make a little progress in explaining what we have done with the Chief Coroner, and that may assuage some of the hon. Lady’s fears. I fear it will not, but I will try.

As we know, coroners would not have wholesale access to the protected material. They would have access only when it was necessary for them to fulfil their judicial functions in a clear way—for example, in particular individual cases. We expect that the memorandum of understanding between HSSIB and the Chief Coroner, which will be in place, will set out how HSSIB and coroners will work together to minimise the occasions and the amount of material on those occasions that would need to be shared to meet the responsibilities of a coroner that are clearly set out in statute when investigating a particular death.

Although I hope I have provided a degree of reassurance, I fear that it may not be sufficient for the hon. Lady, who has studied the issue over many years in her work. Our aim is that, due to its sensitive nature, the information cannot be publicly disclosed or shared further without an order from the High Court, which is an important safeguard and something that we have considered carefully to balance the needs of coroners and HSSIB. We believe that we can trust our coroners as judicial office holders to behave appropriately.

If it is the case that it should be judicial officers, why is it only the High Court, and not other courts in the land that might have an interest in such a case?

The role of the coroner is very specific, which is why we have singled out coroners, because their role is to investigate deaths. Hopefully, a large number of the investigations that HSSIB will be investigating will not be about deaths but, to use the hon. Lady’s analogy with air accident investigations, near misses or incidents that, thankfully, did not result in the death of the patient but may have resulted in injury or other concerns. In the vast majority of cases, therefore, I do not believe that coroners will be involved in HSSIB’s work, but they have a specific role in investigating and determining the circumstances and cause of a death. Therefore, we feel that their ability to access it in extremis is the right approach.

The hon. Lady talked about the High Court. For other circumstances, we think that that is the right bar, whether for the PHSO or others, because it is experienced in considering those very complex cases. I suspect, and I think there have been some cases in a similar vein, that the court will consider and debate them over many days because the balance is so delicate.

Because of coroners’ historical and defined-in-statute role, specifically around the investigation of deaths, we think that they are the single right exception in the judicial space. The hon. Lady may take a different view and I entirely respect that, as I respect pretty much all her views when it comes to health. We do not always agree on everything but, like the hon. Member for Bristol South, she knows of what she speaks even if sometimes we reach a different political conclusion.

As I have said, an order will be made only if the High Court is satisfied that the interests of justice served by allowing disclosure in those other cases outweigh the impact. As I touched on in my reply to the hon. Lady, I remind hon. Members that HSSIB will be looking at systemic learning rather than individual cases. As I said, thankfully, many instances do not involve deaths, and even if they do, they may not be ones that are scrutinised by a coroner save in a formalistic way. Therefore, we would not expect the power to be used frequently by coroners at all.

We have included the last limited exception because, as I say, we want to ensure that coroners have appropriate access to information to carry out their statutorily defined judicial functions while seeking to balance that with protecting the integrity of safe space by preventing onward disclosure, except by court order. As such, I hope that hon. Members, even if they do not necessarily agree, recognise the amount of thought that has gone into seeking to strike the appropriate balance.

I still do not understand from the Minister’s explanation what the coroner loses from where they are now. They can still investigate a death, exactly as now, and that was the argument for narrowing what is kept in safe space so that all the original materials are available to other bodies, including the coroner. The Bill adds something extra at the risk of undermining safe space.

I take the hon. Lady’s point, but I do not believe this very narrow exception does or will undermine safe space. What it does is enable coroners to continue to do their job, and if there is information available out there, it enables them to access it from that source. My personal perspective is that we have struck the right balance: if the information is there, we should make it easier for coroners to do their job and access information that facilitates it. I have sat through coroners’ court hearings, and I have seen how families cope with them—it is not the easiest experience for them. If there is information out there that would make it easier for a coroner to reach a swift conclusion, and would give them the information that they need about circumstances and cause of death and so on—the other key part, which is not necessarily pertinent here, is the identification of the deceased individual—I believe it appropriate that we give them access to that information.

I take the hon. Lady’s point that coroners can do what they do now without hindrance, but if that information were available, I do not believe that giving them limited information, with the protection to prevent onward disclosure, would have the chilling effect that some colleagues are concerned about. It would make it easier for coroners to help with that learning and to give families a clear answer. I suspect that although we may disagree slightly about which side of the balance we fall on, she would acknowledge that it is a delicate balance. We have debated the clauses and amendments for almost an hour, because this is almost the knottiest bit of the Bill, as it was in the prelegislative scrutiny.

Amendment 136 would enable the chief investigator to disclose information to a patient or relevant family member on a condition of confidentiality or another condition. Having mentioned the chief investigator, I will take this opportunity to briefly correct the record for Hansard and for the Committee. Previously, when I talked about the pre-appointment hearings by the Health and Social Care Committee, I referred on occasion to the chief investigator rather than the chair, but it is the chair who will have to go through that process.

I imagine that the intention of the amendment is to ensure that patients and families do not feel excluded from investigations or feel that relevant information is withheld from them. I understand the sentiment and intent behind the amendment, but I do not consider it necessary because the Bill already provides for patients and families to be involved in the investigation process. HSSIB will publish its processes for ensuring that, so far as is reasonable and practical, patients and their families are involved in investigations. Clause 99 outlines that when a draft report is produced, HSSIB may share it with anyone it believes should be sent the draft. That would cover patients or family members, who would then be able to comment on it. While the report is at draft stage, it will be subject to safe space restrictions, so although the patient or family members would be able to receive and comment on the draft, they would not be able to disclose the report to others.

I reassure the Committee that, as much as possible, patient and family engagement is intended to be at the heart of HSSIB’s work, as far as is possible and appropriate, to create a space in which they can get to the truth of what has happened, just as it is for the current investigation branch. The current investigation branch takes patient and family engagement extremely seriously, and it has published a national learning report that discusses the best way forward for involving patients and families as they move through the investigation process. For those reasons, I ask the hon. Member for Ellesmere Port and Neston to consider not pressing the amendment to a Division, although I think he said that it was a probing amendment to explore how the measures will work in practice.

Clause 107, following on from clause 106, sets out that the prohibition on the disclosure of protected materials—the safe space requirement—does not apply for disclosures required or authorised by schedule 14, by any other provision in part 4 or by regulations made by the Secretary of State. The clause includes a regulation-making power allowing the Secretary of State to set out additional circumstances when the prohibition on disclosure—the safe space—does not apply. We understand that safe space is a wide concept, and we want to ensure that it is operationalised effectively. The intention is that the power will allow us to add to the list of exemptions in future, if needed, as more investigations take place and there is more learning. That builds a degree of flexibility into the clauses.

I turn now to amendments 88 and 89. Amendment 88 would remove the ability of the Secretary of State to make such regulations authorising the disclosure of protected material beyond that provided for in the Bill. Amendment 89 is consequential on amendment 88. As I have set out, HSSIB will carry out a range of investigations, and it would be impossible to identify prospectively the material that will be gathered and should be protected by the safe space. The definition of protected material given in clause 106(2) is intentionally broad. As I alluded to when addressing the clause, it is vital that HSSIB is able to adapt as clinical and record-keeping practices change on the front line. The hon. Member for Central Ayrshire and I had an exchange on that. She may not quite be convinced by those arguments or explanations, but I think we have probably aired the key issue underlying the amendment.

I have heard concerns—I think they were behind what the hon. Member for Ellesmere Port and Neston was saying—that the regulation-making power could be used as a way of disclosing information in relation to a particular investigation, or that the Secretary of State could exercise it—arbitrarily is the wrong word—in a way that caused that concern to arise. For the avoidance of any doubt, clause 107(3) provides that the regulation-making power cannot be used in that way. The regulation-making power uses the affirmative procedure, so to would of course be subject to debate by this House and the other place before it was made law, providing a degree of democratic scrutiny.