Our letter to Kwasi Kwarteng about data on subsidies
We’ve today written to Kwasi Kwarteng, the Secretary of State for Business, Energy and Industrial Strategy, laying out our concern about the Government’s proposals not to publish data on government subsidies to business below £175,000 in value.
A copy of the letter is below.
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Dear Mr Kwarteng,
I am writing to you about the proposals in your department’s recent consultation on subsidy control. We believe this consultation misses a significant opportunity for BEIS to gather evidence that would support an effective subsidy control regime.
The Centre for Public Data is a non-partisan organisation with a mission to make the UK’s public data work better. We have responded to your department’s consultation on subsidy control - please find enclosed a copy of our response.
We are concerned that the consultation’s proposals on transparency are based on outdated assumptions. In particular, the proposal that smaller subsidies should not be reported to BEIS’s new transparency database is based on pre-digital assumptions about the cost of collecting data.
Instead, we think public authorities can reasonably be asked to report all their subsidies, not just very large subsidies over £175,000, to BEIS’s database. This would create no extra administrative burden for authorities, but would create significant benefits for Government, businesses and the taxpayer.
We think this is a low-cost and easy-to-implement way to support your goals of maximising the benefits of subsidies and minimising their potential harms, as follows:
It would benefit the Government by providing a clear evidence base for which schemes best deliver on policy priorities such as ‘levelling up’. To evaluate this question, analysts will need comprehensive data on subsidies to join with data on outcomes, which this change would help create. (We note that the consultation’s own analysis has been hampered by a lack of available data on smaller subsidies awarded in the past: under the current proposals this would continue.)
It would benefit public authorities since (as the consultation notes) better public data will help identify potential harms such as rent-seeking before they become significant problems, and it will reduce marketing and fraud recovery costs.
Finally, it would create a level playing field for businesses, correcting information asymmetries to support new investors and entrants to the market, allowing foreign investors to invest with confidence, and helping all businesses learn about appropriate subsidy schemes - such dynamism will support your own ambition to “propel the UK to the forefront of innovation and help create the jobs of the future, while also making the UK the best place to start and grow a business”.
This proposal would reduce rather than increase administrative burdens:
It would not impose new costs on public authorities, since in the digital era, the marginal cost for authorities of reporting data on subsidies is essentially zero. Public authorities will already hold structured data on their subsidies and upload this automatically to BEIS. Uploading more rows creates no new costs.
It would instead reduce their reporting burden, since authorities are likely to have to report all subsidies to any new subsidy regulator, and to the Department for International Trade to meet WTO disclosure requirements. It would be much simpler if authorities could simply report data once to BEIS and other authorities could access this data as needed. In addition, such data will reduce FOI burdens.
There are no privacy implications to publishing subsidy data, as long as subsidy recipients are warned in advance, though we would support anonymisation in the rare cases where subsidies are paid to individuals.
We note that similar reporting thresholds across the public sector, introduced by Conservative governments, are close to zero. For example, local authorities are legally required to publish expenditure over £500. This and similar transparency thresholds have already been carefully evaluated to balance the costs and benefits of data publication.
For these reasons, we urge you to set the reporting threshold at zero, or at a very low number, in order to create a new central, comprehensive dataset of subsidies. We think this is a clear, low-cost win for the Government, businesses and the taxpayer, and will support public confidence in the new regime.