Extracts from Lords consideration of Commons reasons to the United Kingdom Internal Market Bill - Dec 9

The noble and learned Lord, Lord Thomas, has put forward Amendments 48B and 48C. Let me be clear that the UK Government intend to work with both the devolved Administrations and local communities to ensure that this power is used to best effect and that the UK shared prosperity fund supports citizens across the UK. Indeed, the devolved Administrations will be represented in UKSPF governance structures. Our intention is to work with the devolved Administrations and respect the devolution settlements, and I hope that noble Lords will take this as a demonstration of that commitment. I can assure the House that officials in the Ministry of Housing, Communities and Local Government will continue their ongoing conversations with their counterparts in the devolved Administrations, and will discuss the detail in due course. This provides one example of what we seek to deliver with this power, but I hope it makes plain our intended approach for working collaboratively, while taking a UK-wide view of investment opportunities, to support all parts of the country. As such, I hope that this will encourage the noble and learned Lord not to test the opinion of the House on his Motion...

Lord Thomas of Cwmgiedd (CB) [V]:...My second reason is that, at present, funds provided by the EU for regional aid for matters within devolved powers are provided to the devolved Governments, who have to agree how the funds are to be spent. The amended clause would continue this architecture for the shared prosperity fund the successor fund to that. Under the amendment, the UK Government would agree with the devolved Governments the way in which the funds would be spent where the funds were for matters within the devolved competences—roads, health, education and the like. This would combine the benefit of an overall strategy for the UK with the benefit of devolved Governments agreeing how funds were to be expended in the areas for which they and they alone were responsible...

Lord Stevenson of Balmacara (Lab) [V]:...The Government clearly assert—and we believe them —that these will be additional to existing powers, and we should not be concerned, as we have been, that the devolved Administrations will have their responsibilities and authority challenged in this way. The Minister said that the driving force behind the shared prosperity fund is to add and complement existing arrangements. If she wishes to repeat it when she winds up, that would be helpful. In that sense, there should be no need for the concern that is currently in the devolved Administrations about that particular aspect of it. We do not have the detail, and I think she said the likely outcome for their consultation would not be before spring 2021, which seems a long way away in terms of what we are doing. We accept that existing programmes are currently running out—but they are running out; they are not being continued at the same level and, therefore, there will be a shortfall unless the Government are prepared to move a bit faster than the current timescale suggests.

The Minister also confirmed—and this is good news —that there will be engagement with the devolved Administrations. When she responds, perhaps she could explain a bit more about what that means. We have already heard from the Government today about programmes of engagement that have involved substantial change in previous views; it would be good to hear that language repeated when she talks about how the devolved Administrations might be engaged with this process.

The Minister has confirmed there will be some form of shared prosperity fund board, which is interesting. She may recall that at the previous stage of this Bill, we proposed a shared prosperity commissioner. I said at the time, and I still think, that that was code for a board, because we were trying not to engage financial privilege. We have clearly failed in that. Can she confirm the board will be independent and say more about the powers that might be invested in that board? Can she also talk a bit more about whether the programme itself, when it is brought forward, will be subject to guidelines? Will those be published and discussed before they are invented? Will there be themes to it, as there have been in previous rounds of the regional structural funds? Will the funds be competitive and open to all countries to bid for? Can she confirm, most importantly, that the plan will be for the funds under the shared prosperity fund to be separate from any Barnett formula calculations? That is not in the sense of making people not eligible for funding—that is not what we are about here—but a needs-based or different set of indicators to set out the ideas under which the shared prosperity fund will operate. I look forward to hearing her response.

Baroness Penn (Con)
My Lords, I thank noble Lords for this short but very useful debate. I think it might be useful to take the points of the noble and learned Lord, Lord Thomas, in turn. On the first point on financial privilege, I think the noble Lord, Lord Fox, was wise to stay out of that one. All I can say to this House is that the decision on financial privilege is made by the Speaker on advice from the clerks. It is the only reason, when invoked, that can be given. Though I have spoken to others, that is the process in the other place.

On the second point on the consultation of, and consent from, the devolved Administrations on spending on these matters, I have said before, and will again, since the noble Lord, Lord Stevenson, asked me to reiterate, that this is about an additional programme of spending to support the work of the devolved Administrations but also about taking a strategic look across the whole of the UK. It is important to remember that the main fund we are talking about, when it comes to the use of this power and the shared prosperity fund replaces EU structural funds that were determined at an EU level for the needs of many different nation states. They were determined at an EU level and, while they may have been managed and delivered at a local level, the structure, framework and principles that people had to deliver were decided at an EU level.

The third point was about a principled basis for the funding. The Government set out, at the spending review, the heads of terms for the shared prosperity fund Those have begun to outline how the shared prosperity fund will work. A portion of the SPF will target the places most in need across the country, such as ex-industrial areas, deprived towns and rural and coastal communities.

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The fund will develop a UK-wide framework for investment in places receiving funding. It will prioritise investment in people and skills tailored to local needs, such as work-based training and supplementing and tailoring national programmes; and investment in communities and place, including cultural and sporting facilities, civic, green and rural infrastructure, community-owned assets, neighbourhood and housing improvements, town centre and transport improvements and digital connectivity. There will also be investment in local business, including support for innovation and green and tech adoption, tailored to local needs once again. In terms of how this will work, places receiving funding will be asked to agree specific outcomes to determine within the UK-wide framework. We have also said that investments should be aligned with the Government’s clean growth and net-zero objectives.

That is the start of the principles on which this funding will be allocated but, as I have said, further details will be set out in an investment framework to be published in the spring. I have also said that we will continue to engage with the devolved Administrations on the development of that framework in advance of its publication. I reassure the noble Lord, Lord Stevenson, who asked about the timings of that framework and the multiyear shared prosperity fund that will come in from 2022 onwards, that the existing EU structural funds are still in place; they begin to tail off, but in 2021-22 at least the same amount of money will remain available to those areas under the existing funds. That gives us time to consult properly all those who may be involved on the framework, and for people to see how it will operate when it comes into place. In addition, next year £220 million will be made available to areas to pilot different approaches and begin to test out how this principle should work.

I hope some of those points also address the noble and learned Lord’s fourth point, on “Westminster knows best”, meaning that we do not trust Governments to spend in this area. I reiterate that this is a different approach to the devolved nations; we are talking about replacing EU funds with a UK-wide strategic fund. It is not about replacing the responsibilities of devolved Administrations but supplementing them with a strategic approach at the UK level. These powers do not amend any of the devolution Acts. On the final point about strengthening the union, that is one of the purposes of putting in this UK-wide power. It is to complement and strengthen it on areas where action may need to be taken across nations and regions.

The noble Lord, Lord Fox, asked about consultation with areas that are not devolved Administrations or mayoral combined authorities. I reassure him that we will do our best to consult local authorities and all parts of England, as well as the devolved nations. I believe the Government are bringing forward further plans on devolution that will give areas those strengthened local voices at some future point.

I have addressed the point of the noble Lord, Lord Stevenson, about the potential shortfall in the funds. I have reassured him on that, and that this power is intended to be additional to those powers of the devolved Administrations. I also reassure him that the powers and the shared prosperity fund will be different from Barnett; they will be based on a different understanding of needs and therefore separate from that formula. I can also reassure him that the fund will be open to the whole country, which was a theme of his. On the governance of the fund, I am not sure whether we have been so specific as to say that there will be a board; as I have said, there will be governance structures and the devolved Administrations will have a place within them. That is part of the further work we need to do, in consultation with the devolved Administrations and others, as we work to set out the framework that we will publish in the spring.

The Deputy Speaker (Lord Russell of Liverpool) (CB)
I have received a request to ask a short question of elucidation from the noble Lord, Lord Fox.

Lord Fox (LD)
The Minister will be aware that the current structural fund does not reach many regions across the United Kingdom, compared, I think, to the planned extent of the new shared prosperity fund Can the Minister confirm whether that is true? If it is, and the money put into the shared prosperity fund is only—I use the word advisedly—as much as that put into the structural fund, it will be spread more widely. There will be losers among those who have been able to take advantage of the structural fund, because the money they would bid for will be spread to other regions and countries. Will the Minister acknowledge that? Is that perhaps one reason that the Government are rather reluctant to allow the devolved authorities any more involvement in this, because they know there will be issues around losing out on money that would have come through the structural fund but is now to be spread more widely across the United Kingdom?

Baroness Penn (Con)
My Lords, the Government made a number of commitments on the shared prosperity fund in the manifesto, both about the overall quantum of the fund and the funding that different parts of the UK can expect to receive. We set out in the spending review that that would ramp up to £1.5 billion per year as the structural funds tail off. Our approach will be guided by that but, as I say, more detail will be set out in advance of the operation of the fund in spring next year, with the multiyear settlement coming in the following year...

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