Thread by @pmdfoster

It's OUT!! My weekly #Brexit Briefing for @FinancialTimes - first a look at the balance of creativity and certainty needed from UK's new state aid regime, with expert help from @GeorgePeretzQC @AlexanderPHRose @jamesrwebber - thorny but fascinating. /1

ft.com/content/dbed25…

@FinancialTimes @GeorgePeretzQC @AlexanderPHRose @jamesrwebber The exam question is set by @GeorgePeretzQC who sets out the spectrum of choice between EU's slow, formalistic State Aid regime - which requires pre-notification and has long infuriated UK ministers - and the "open sea" approach where only courts act as a check on subsidy /2

@FinancialTimes @GeorgePeretzQC @AlexanderPHRose @jamesrwebber Post #Brexit, as @jamesrwebber points out, we really don't need EU-style regime which was designed to create level playing field among 27 countries all with control over their own tax/economic policies...we can have a nimbler system better suited to the UK. But what system? /3

@FinancialTimes @GeorgePeretzQC @AlexanderPHRose @jamesrwebber Because you do need a system. As @AlexanderPHRose
has observed the current situation where authorities have to assess subsidies based on principles in TCA + NI Protocol is messy and unproven, creates a significant burden on those who don't have bandwidth to make those calls /4

@FinancialTimes @GeorgePeretzQC @AlexanderPHRose @jamesrwebber Which is why the Government has launched a consultation on exactly what the system UK Subsidy Control system should look like, and what powers the Independent Authority should have - its not completely straightforward. /5

assets.publishing.service.gov.uk/government/upl…

@FinancialTimes @GeorgePeretzQC @AlexanderPHRose @jamesrwebber James Webber @jamesrwebber sets out a vision here that warns against the UK sinking too far back towards an EU-style system - we need something that attracts investment; boosts collaboration between government and private sector innovators etc. /6

uksala.org/taking-advanta…

@FinancialTimes @GeorgePeretzQC @AlexanderPHRose @jamesrwebber But as @GeorgePeretzQC says the rub is that too loose a system has the perverse effect of actually inhibiting that process because private investors want certainty - if there's risk that Govt funding gets withdrawn under legal challenge they'll not invest /7

@FinancialTimes @GeorgePeretzQC @AlexanderPHRose @jamesrwebber Or as he puts it: "lenders...might be reluctant to commit money if there is a risk of state funding getting withdrawn — so the risk is that people end up taking very cautious views, ‘sticking close to nurse’ because they are terrified of taking a decision." /8

@FinancialTimes @GeorgePeretzQC @AlexanderPHRose @jamesrwebber This is because while some Subsidy decisions are clear cut, it's the grey areas that cause trouble - the value-judgments on a subsidy that might be distortionary, but yet justified on policy grounds, but arguably could have been done cheaper or in a less distortionary way /9

@FinancialTimes @GeorgePeretzQC @AlexanderPHRose @jamesrwebber Leave aside the separate question of whether a subsidy is distortionary to EU trade and so cuts across the TCA, this is about getting a nimble, working regime for the UK that drives the government's levelling up agenda, that makes Britain work better, for Britain.../10

@FinancialTimes @GeorgePeretzQC @AlexanderPHRose @jamesrwebber To make life easier, as @AlexanderPHRose has advocated, the UK can create Safe Harbours (rough equivalent of EU block exemptions) to clearly rule 'in' types of subsidy, and it could apply these more flexibly. And recall that given pre-notification isn't a feature, more nimbly /11

@FinancialTimes @GeorgePeretzQC @AlexanderPHRose @jamesrwebber It's this balance between having enough clarity to create certainty, while retaining enough flexibility for speed and creativity - and it's fascinating how the legal eagles all subtly disagree on this, which tells you how tricky an area this is /12

@FinancialTimes @GeorgePeretzQC @AlexanderPHRose @jamesrwebber But it will be important to regional development policy and the manner in which this government, having shackled the country to a punishing Canada-style trade deal, does try and reap a #Brexit dividend. Spoiler alert, it'll be more complicated than they'd have you believe. ENDS