19 January 2022

Want stronger government data? Start with subsidies

By Anna Powell-Smith

Ministers love to talk about data these days. The National Data Strategy promises to ‘harness the power of data to boost productivity’ and ‘deliver a radical transformation of how the Government understands and unlocks the value of its own data’.

Promising stuff. But as any data scientist knows, it’s not what you say, it’s what you ship that counts. The pandemic has definitely shown that the Government can collect and share vital information smoothly when it wants to. 

But this week a new law will be voted on in Parliament that suggests some parts of the state are still looking at data through a decidedly last-century lens. Happily, there’s still a simple, low-cost opportunity for the Government to live up to its own stated aspirations, if it moves quickly.

Big changes in the UK’s subsidy regime

The new law is about subsidies – those dollops of cash that governments sometimes give to companies to keep them afloat, or to help them focus on important new areas of science or the environment. The Subsidy Control Bill makes big changes to the way that UK public authorities award grants and loans to businesses. 

The Government hopes this regime will be nimbler than the EU’s, which it calls ‘bureaucratic and burdensome’. It also intends to increase subsidy spending dramatically, to support its levelling up and net zero ambitions.

Why data is at the heart of the regime – and how it’s failing

At the heart of the new UK system is an online database of subsidies. This database is incredibly important for making subsidy spending actually work. It matters first because it’s the only way businesses can find out which subsidies have been awarded to their rivals. And, if they can’t find them, they can’t challenge any cash dished out unlawfully.

And, for the rest of us, it’s the only place that will show where this new subsidy spending has gone. So it’ll be a crucial source of evidence on which schemes actually work, which don’t, and who’s getting the cash. 

Unfortunately, the new database of subsidies looks like it’s not actually going to be usable for these purposes for one very simple reason: masses of subsidies – possibly most of them – are never going to be published at all. 

And why will all this vital information be missing? Because the new Subsidy Control Bill says that the Government won’t have to publish any subsidies under £500,000, if awarded via a ‘scheme’. It’s a loophole you could drive an armoured Bentley through (coincidentally, yours for about half a million quid).

What makes this such an example of last-century thinking is that the Government is justifying not publishing all the information as a money-saving exercise. This isn’t, of course, how databases work – and even the official estimate that it will cost £20,000 to publish all the data would raise the eyebrows of most professional data scientists. It doesn’t cost any more to publish a partial database than a full one – we’re not paying for rooms full of scribes any more. 

Luckily, sharp eyes have spotted the issue, and are moving to act on it before the mistake becomes permanent. As I write in a briefing note published with the Centre for Policy Studies today, with an introduction by John Penrose MP, the Prime Minister’s anti-corruption champion, this misses a major opportunity.

In our report we note that the bill as currently tabled would mean that a business can receive repeated subsidies of hundreds of thousands of pounds, without its rivals ever knowing. It also misses a trick to keep the subsidy regime lightweight since, as Professor Stephanie Rickard told MPs, public authorities are more likely to follow the principles if awards are published – reducing the need for legal challenge. We argue that all subsidies made to companies of greater than £500 should be included in the data. That way we’d have much better evidence on what works, and we’d avoid potential corruption and cronyism under future Governments of all colours. 

How to turn things around

The Subsidy Control Bill will be debated in the Lords over the next few weeks. This means there’s an opportunity to amend it to ensure that all subsidies over £500 are included. Lords and MPs should vote for the future, not the past. 

Improving the bill is a no-brainer. But the fact that the opportunity was missed in the first place is worrying. Ministers should be asking questions about how such old-fashioned thinking could emerge from within their departments, rather than defending policy that’s outdated on the day it’s born.

As CPS director Robert Colvile writes, database management is now ‘the essential task of modern government’. The Government can show it understands this by fixing its subsidy data regime before billions start pouring through it. 

Click here to subscribe to our daily briefing – the best pieces from CapX and across the web.

CapX depends on the generosity of its readers. If you value what we do, please consider making a donation.

Donate

Recurring Payment

Thanks for your support

Something went wrong

An error occured, but no error message was recieved.

Please try again, or if problems persist, contact us with the above error message. We apologise for the inconvenience.

Anna Powell-Smith is Director of the Centre for Public Data.

Columns are the author's own opinion and do not necessarily reflect the views of CapX.