My Lords, I will also speak to Amendments 167 and 168, which are also in my name. I am grateful to other Members for contributing to this group. The group is about another of the black holes that we are discovering in the Bill. This one is about state aid or, as we must learn to call it, subsidy—or, as the Government would have us call it, “the UK shared prosperity fund”, although details about that are incredibly difficult to find.
State aid matters. It particularly matters if people think money is being stolen from them and used for other purposes. The Government have quite a lot to do to try to explain where they are going with this state aid issue, the timescale and how they intend to make progress in bridging the gap between people’s expectations and where they currently are.
We currently get an awful lot of money through state aid; it is certainly money that would be felt if it were not there. It is hard to get a complete picture of it; the best figures that I have been able to find come from the Institute for Government, which suggests that about £20.7 billion is currently available through state aid in two main forms, the European Regional Development Fund and the European structural funds. The regional development fund focuses on physical development—physical capital, as it were—while the ESF, the structural funds, are about employment and young people and are probably best described as human capital. The combination is a significant quantum of money, held by people who I think regard it as not being money provided directly by the UK Government, although of course money technically circulates around and presumably was originally from taxation in the first place.
Two significant points come from that. First, the headline funding from the EU at the moment is matchable. We currently think that about 40% is added on top of
the just over £10 billion—£10.6 billion, I believe—that is available directly from Europe to the UK agencies that spend it, so that gives us the figure of about £20 billion when it is matched with local authority and central government funding and from the lottery.
An issue that is hidden, or at least more opaque, in terms of how state aid is organised is the way in which it seems to come in response to different requirements. For instance, the long-standing convention is that there is a regional bias based on deprivation, which takes into account the broader picture across the whole of Europe. In the UK, there are only two counties currently in the most deprived areas—or most in-need areas, I think they are described as—which are west Wales and Cornwall and the Scilly Isles. However, there were recently rumours that, had we stayed in the EU, which we are not, four more might have been put into that higher-needs category. That leaves the question: will the Government continue that process? Will they also think in terms of how individual parts of the country are treated in relation to that?
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Secondly, people have recognised that the funding does not use the same indices as for the Barnett formula but with a different set of configurations, not based on population. I think it was also reasonably clear that this was different money. It was much discussed and debated—particularly at the time of the elections to the European Parliament.
We have a new Minister on the Front Bench. I welcome the noble Baroness, Lady Penn. If I do not have this right, I am sure she will be able to give us much more detail. I look forward to her contribution.
This is different, important money. How it will happen does not appear to have been properly thought through yet. The only reference to it that I have been able to find, other than what is in the Bill, was in the Tory manifesto for the last election where it was described as a shared prosperity fund. We all know what happens to manifesto commitments. Nevertheless, it sounded quite good. It aimed to reduce inequality. There was also a figure of £500 million for skills—not for investment in general skills, but to give disadvantaged people the skills they would need in order to make a success of their lives. This is all good. In no sense am I knocking it. There is a bit of a gap between this figure—and the nearly £19 billion we are looking at spending currently. What about the rest? According to the manifesto, there would be consultation, but this has not happened. Announcements were also going to be made in the spending review which was due in the next month or two, though there are good reasons why this has been cancelled. When the noble Baroness comes to respond, it will be interesting to see if she can give us an update about where we are and how it will be handled in future.
We have left the EU. We have to accept that the valuable programmes on which we relied are no longer there. In the Bill, the Government have suggested that there will be a follow up through this shared prosperity fund—or subsidy, depending on how you read it. We accept that this will not happen for some time because there are existing schemes which will run out. It is not
as if the money will stop immediately on 31 December. While these schemes continue through to completion, it is clear that they will be running down. There is some time left for consultation, but not much. It is reasonable to expect the Government to come up with something more than just airy-fairy words for what they might be doing. What is the plan? Perhaps it would have been best to have carried out the consultation and made a statement within the Bill as to the way forward, but we will see what Ministers say when they come to respond.
In order to bridge this gap, I have put down an amendment in my name which suggests a new body—a shared prosperity commission. It is important that it should be seen to be independent. It should have an independent board with representation from the bodies likely to be affected, particularly the devolved Administrations. Parliament should be involved, particularly in the process of appointment but also in receiving reports. There must be an annual statement as to what the fund is worth and how much is available to spend. There must be information about its spending focus. It is fine to accept that it will not be based on Barnett—which is the current way in which day-to-day spending is distributed—but it is important that we have some idea as to what its basis will be.
Luckily, the House of Lords is ahead of the game, as usual. A couple of years ago, a Lords committee recommended a new basis for doing this called “relative need”. In Amendment 167, I have set out some of the ideas that were in that report as potential ways forward. This is, of course, a probing amendment. I am not saying that these are the only options, but if you were to set out to try to replace Barnett and to come forward with a proposal, you could do a lot worse than looking at what the Lords committee recommended. Children living in poverty; those on low incomes; areas of economic weaknesses; the age structure in a particular area; ethnic balance; and the impact of climate change and—especially now—of the pandemic would all be different in relation to current government spending. Local interest groups might well be interested and involved in trying to raise funding that would match money coming from the shared prosperity fund.
In the interests of clarity, the amendment also suggests that the distribution route should be through local authorities, sectoral groups and organisations, educational institutions and other bodies. These are not the usual suspects that receive government funding directly from the departments and spend it on behalf of the people through local authorities and similar bodies. There are different ways of doing that, and I am sure noble Lords will put forward other ideas during this debate.
There is not a lot more that I can say at this stage. This is a probing amendment to try to get the Government to step up to the plate and explain what they are doing. In any final announcement, we need: certainty about the funding level; complete assurances that there will be independent processes to determine the aims and how they should be delivered; transparency; equity and, of course, the involvement of Parliaments, not just here but in the devolved areas as well. I beg to move.