My Lords, I rise to move this amendment to remove Clause 42 of the Bill. This amendment and Amendment 69, to which we shall come later and which stands in my name, deals with two clauses that are in some ways closely related. This clause authorises the UK Government to spend funds on the huge area of government expenditure—indeed, almost any aspect of government expenditure. Clause 44 deals with the quite separate question of state aid, and it is very important to keep them distinct. I make it clear in moving this amendment that I intend to press this to a Division.
First, I shall say a little bit about the clause. What is it for? The Conservative manifesto spoke of a shared prosperity fund which was intended to be a successor to the European Union regional structural funds. I looked on it as something that would strengthen the union by sharing the prosperity of our four nations. However, because it wore the word “shared”, it carried with it the connotation that the Governments of the four parts of the United Kingdom would share in the way in which it was distributed in accordance with the constitutional arrangements in place.
That such a fund would be greatly welcomed does not need to be stated. There are parts of the UK—and being here in Wales it is evident—that are far poorer than other parts of the United Kingdom, and investment is needed. Of course, we need to look carefully and in a structured way at how they are to be dealt with. I think we have—and I shall come to this later—some guidance published this afternoon in the Red Book, at box 3.1 on page 37. It is convenient for me to deal with that when I come to deal with the role of the devolved Governments.
There is one thing I ought to say—and I hate that this is something that will not come to pass. In Committee, the noble Baroness, Lady Bennett of Manor Castle, drew our attention to another term. She pointed out that in the European Union there were rules about funds allocated for the remediation of poverty and for equalling people up which had been made available to parts of the United Kingdom, including Wales. She pointed out that there would be detailed rules, and that Europe operated detailed rules. However, this shared prosperity fund still has no detailed rules, despite what is said in box 3.1, to which I have referred. She pointed out that the Americans have a term, pork barrelling, for this kind of fund. I would like to
continue to call it a shared prosperity fund, because I believe in the union and in sharing the way our country is governed, and I hope that we will never have this aspect of American politics brought into our way of doing things but, plainly, there are dangers along those lines.
This clause is best analysed by asking eight questions. The first is why it is included in the Bill? As it stands, it is wholly separate from the other provisions we have been debating, which are to do with the internal market. The Bill is not concerned with the allocation of government powers to spend money between the devolved Governments and the Government of the United Kingdom with England. Secondly, what is its aim? I have addressed that: as was stated in the Government’s manifesto and now in box 3.1, it is intended to level up the divisions of society within the union and to help.
One immediately has to ask why this clause is needed. The Government have done city deals and have provided money, perfectly property, under our existing constitutional arrangements. Why do they need this power? If they were to provide the funds through the existing constitutional arrangements, this power would not be needed. The devolved Governments of Scotland, Wales and Northern Ireland would be involved and the spending programmes would go along the way they have always gone along, this fund being an additional fund provided from moneys no longer remitted to the European Union. Indeed, if it were to follow the lines of the city deals or its predecessors in the European Union, the Government would negotiate the other Governments, in the case of the devolved nations, or, in the case of England, the various regions and cities, what they felt the money should be spent on, consider it and make a decision. That is all perfectly feasible. So, yes, it is a very good idea to have a shared prosperity fund, and it needs no legislation.
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The third question that one needs to briefly touch on is: what is the position at the moment? As my noble and learned friend Lord Hope of Craighead pointed out in Committee, paragraph 4(1) of Part III of Schedule 5 to the Scotland Act 1998 made it clear that the powers of
“giving financial assistance to commercial activities for the purpose of promoting or sustaining economic development or employment”
were not reserved but were within the devolved competence. The same is true in Scotland and Northern Ireland. It is therefore plain that the purpose of Clause 42 is to cut across the powers of the devolved Governments to provide financial assistance in areas such as economic development and commercial activities, though there are wider purposes.
Now we come to the critical question four: how does this relate to the devolution schemes? In Committee the Minister sought to reassure the House that the Government had an intention to work with the devolved Administrations. She said:
“This power, in addition to existing powers, will allow the UK Government to complement and strengthen the support given to citizens in Scotland, Northern Ireland and Wales, without taking away devolved Administrations’ responsibilities”.—[Official Report, 2/11/20; col. 596.]
She added, although I do not think that I need quote her at length, that this was all to be done by working with the devolved Governments. It appears from what was said that it was intended that this power would be exercised in co-operation with and dealt with through the devolved Administrations, but of course there is nothing in the clause in the Bill to say so. It is also plain that the power is being taken because the Government want additional powers to cut across the expenditure. So it plainly affects the devolution schemes.
This is now very much clearer from box 3.1. I am sure noble Lords will not mind me referring to a document that has only just been published and which they may not have in front of them. There is not one word in box 3.1, which purports to explain how this works, about the involvement of the devolved Governments. The box says that the fund
“will operate UK-wide, using the new financial assistance powers in the UK Internal Market Bill”.
It has one common theme with the European funding because it says:
“Investments and programmes will display common branding.”
Being in Wales, one is quite used to seeing what was done by the European Union; now, one assumes, that will be substituted by seeing what is being done by the UK Government. From going through what is in box 3.1, it is quite clear that this is to be a UK Government-run scheme dealing directly, with not a word about the devolved Administrations. One can say quite safely, now that box 3.1 has been published, that this cuts right across the current schemes of devolution. The fifth question is: will it do so? The answer to that, again, is plainly yes; as I read it in box 3.1, that is now clear.
Before having the benefit of that, I was able to read what the Prime Minister had said, as reported in the Financial Times, about the intention vis-à-vis Scotland. However, never being entirely comfortable about relying on a report in a newspaper that could be said to have taken remarks out of context, I had a look and found something else. I looked for, and was provided with, an article written by the Secretary of State for Wales last week in the Telegraph. By the Telegraph, I do not mean the Western Telegraph, the long-established and excellent paper that circulates in Pembrokeshire and west Carmarthenshire, but the Daily Telegraph, a paper that is much read here in the valleys of south Wales. In it the Secretary of State said:
“In the past week I’ve been meeting local authorities across Wales. They’re all hungry to play a greater role in smarter investment of this funding—distributing it to those best able to target the money to projects that will benefit their communities most.”
It is clear that this funding is designed to bypass the devolved Governments. The sixth question is: is this a return to “Westminster knows best”? Undoubtedly it is. I had hoped that that thought had died, but it is plainly very much alive.
The seventh question is: is this democratic? As it stands, it plainly is not; it strikes at the very heart of the devolution settlements and the choices that the people in Wales are entitled to make in their coming election. It will therefore enable the UK Government to spend funds in the way that they think best but which the people of Wales may have rejected. That is
not democracy as I have known it. It is, in effect, giving legislative underpinning to the now discredited principle of “Westminster knows best”.
My eighth question is: is it efficient and effective to proceed in this way? The answer must be no. This is where I return to the fear expressed by the noble Baroness, Lady Bennett of Manor Castle. The current position, where the Government of Wales discuss and agree how funds are to be used—either in respect of city deals with the Government in London or, as regards the European funding, with the Commission—is that you have one overall policy, which is then administered and developed as a joint policy. One can see now that this clause is intended to provide divergence, to show that with cash there is a different way of doing things, and maybe to provide that cash, as one sees happening so much in the US, where it is thought to be to the electoral advantage of those providing the money.
It therefore seems to me that this clause, which is now much clearer as a result of box 3.1 in the Red Book, should not be in the Bill. If the clause had provided in terms that all this was to be done in conjunction with the devolved Governments then that would be quite a different matter, but it does not. I will seek to press this amendment to a Division to remove this clause, which is so destructive of our current scheme of devolution and hence to our union. I beg to move.