The House of Lords EU Committee yesterday published BEIS’ response to the Committee’s letter on the Government’s position on level playing field commitments – a key issue in the negotiations between the United Kingdom and the EU on their future relationship. I discussed the Committee’s letter here.
One concern raised by the Committee was the uncertainty about the Government’s plans for a future anti-subsidy regime – plans sketched out, but only very vaguely, during the Conservative election campaign. BEIS refers to there being “several complexities” in devising such a regime: a comment that is certainly accurate but which raises the question of why, given those complexities, the Government is not now consulting widely about its proposals or the various options it is considering. A new regime that seeks to grapple effectively with these complexities is unlikely to work well if produced like a rabbit from a hat weeks before it is due to come into force: and time is now pressing, given that the new regime will need to come into force on 1 January, with authorities and businesses needing to have some idea of the shape of the new regime well before then in order to plan new projects. The letter is also vague not only about whether the CMA will have a role in the new regime but also about whether there will be any authority at all: but setting up new powers and new teams takes time. None of this looks like good government.
One excuse for the delay is, however, interesting: it is that policy is being “developed in tandem” with the EU negotiations. That excuse only makes sense if the policy is likely to be affected by the negotiations – which effectively concedes the obvious though so far vigorously resisted point that the UK subsidy regime has to be on the table in those negotiations: see my analysis of the only likely way through on this issue. The letter, however, studiously avoids answering the Committee’s point that agreement could in principle be reached as to a set of common anti-subsidy rules while not tying the UK to the specifics of the EU regime.
On the Northern Ireland Protocol, the Committee accurately noted that “It is troubling that no one we heard from thought that the UK Government had a clear understanding of what state aid provisions it had signed up to in the Protocol.” There is no sign in the BEIS letter of any clearer understanding (or at least admission) of its substantial effects – discussed in my pieces already referred to. Instead of setting out any analysis, the letter merely confines itself to an anodyne record of meetings of the Joint Committee. That is simply not good enough, and reinforces the widespread belief that the Government did not understand what it was signing up to when it concluded these provisions. Nor does the Government react to the Committee’s view that renegotiating these provisions with the EU needs to be a priority – the suspicion being that its refusal to accept that point is because the United Kingdom could only hope to succeed in persuading the EU to agree if it offered significant concessions on a general UK subsidy regime.
All in all, this is a disappointing response to a serious letter by a cross-party committee that included several passionate supporters of Brexit. It leaves the question of a future anti-subsidy regime up in the air – an uncertainty that will soon start to be seriously disruptive – and gives the impression that the government is both deeply secretive and making up policy on serious and important matters on the hoof.
George Peretz QC