Clause 44 says it unequivocally: the UK Government, also parading as the English Government in this Bill, are specifically removing from the devolved Administrations their power to provide state aid, by inserting it as a specific reservation or excepted matter in each of the devolution Acts. When I said in earlier debates that the Government were using the Bill to roll back devolution, the Minister insisted that devolved Administrations were being given additional powers. We have already seen in these debates that the Government are using the Bill to sideline and undermine the common frameworks, which have been well established as the basic foundation for the future internal market. At the same time, the Bill removes any incentive for devolved Administrations to develop improved standards. Removing from the devolved Administrations the powers over state aid is fully in line with the thrust of the Bill, which is a barely disguised attempt to emasculate devolution.
I want to concentrate on how this Bill affects Wales, and Clause 44 refers to the Government of Wales Act 2006. In relation to this issue, that Act says:
“The First Minister may give financial assistance (whether by way of grant, loan or guarantee) to any person engaged in any activity which the First Minister considers will secure, or help to secure, the attainment of any objective in the Minister’s functions.”
In Field 4 of Schedule 5, it lists economic development as one of those functions.
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It is important to put Welsh devolution in context. It has grown considerably over the years, but at the start, in 1998, the Assembly did not have full legislative powers. It was essentially an executive body to which were transferred the powers previously held by the Secretary of State for Wales. In the original 1998 Act those powers are listed and specifically include the transfer of a number of existing bodies, including the Welsh Development Agency, which was established in the 1975 Act, when the noble and learned Lord, Lord Morris of Aberavon, was Secretary of State. The WDA became hugely important under the Conservative Government, as Welsh industry was hit by the closure of mines and steelworks. The Act lists its powers as including financial assistance for regeneration and development, the provision of sites and premises for industry, and more. That includes, for example, the provision of support in kind, such as land, which is also considered state aid. In due course, in 2006, the Welsh Government decided to take the powers of the WDA into the Welsh Government themselves. Clearly, those powers have been operated within the framework of EU legislation on state aid.
So that is the legal history of the situation. Now I will turn to how it has actually been handled in practice. I know a fair amount about it because I was there —in the Assembly for 12 years and for three years as Welsh Minister, then in the Wales Office for three years, during which I took the Wales Act 2014 through this House. More recently, I have been a member of our own EU Internal Market Sub-Committee and am now a member of the Common Frameworks Committee. Over the years, I have developed a clear picture of where the power currently lies, and I have no doubt that the Welsh Government have the power to grant state aid, as it lay within EU rules. Their economic development powers are, after all, almost meaningless without it.
Anyone in doubt that the Welsh Government, the UK Government and the EU have all considered that the Welsh Government had state aid powers should look at the Welsh Government website, which has a detailed description of what state aid is and the official registration process required by EU law. It lists the schemes that have been accepted and registered according to the general block exemption scheme, for instance. Among listed Welsh schemes are funding to support superfast broadband, SME development, the Wales Screen Fund, the Development Bank of Wales, a maritime and inland ports scheme, and many more, going back over the years.
You might wonder why the Government are so keen on grabbing responsibility for state aid, because over the years the UK Government have been considerably less keen than many other EU countries on using state aid to support industry. Even within the UK, the devolved Administrations have a more generous record than the Government have in relation to England. But think it through and it is obvious: power lies where the money is. Clause 44 is yet another piece of the jig-saw designed to strip devolution of meaningful powers. The UK Government may still retain their aversion to state aid, but by holding that power centrally, it means the devolved Administrations lose their economic levers.
This is a deceitful, centralising Bill—deceitful because, by sleight of hand, under the guise of promoting competition, the Government are unravelling devolution. I think they thought that they would slip it under the radar at a time of major public crisis, caused by Covid and by the failure, even at this late stage, to get a Brexit deal. However, by the size of the votes here today, the Minister can report back that it has not worked and we have noticed.
There is, as noble Lords have explained in some detail, an offer from the devolved Administrations to work positively together to establish a UK-wide structure in which the devolved nations can participate fully. I hope that the Minister will accept this offer with grace because, otherwise, they are on course for a constitutional stand-off.