Subsidy Control bill – overview


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The Subsidy Control bill sets out a bespoke UK system for regulating public sector funding/ economic interventions.

Once Parliament enacts the bill public authorities and the recipients of subsidy will need to understand not only the law, but also the framework for approving and objecting to subsidy awards.

The bill represents a significant step change for subsidy control. Public authorities will have a legal obligation to respond quickly to 'pre-action' enquiries about subsidy awards and those challenging decisions will have days, rather than state aid's years, to commence an action. 

The bill incorporates into UK law elements of the UK/EU Trade and Cooperation Agreement (TCA), including refining the definition of 'Subsidy'. It also designates the Competitions and Markets Authority (CMA) as the independent body (subsidy advice unit) which will be empowered, in some instances, to pre-clear or review subsidy decisions. 

The bill however goes beyond the TCA, with a distinct UK flavour. An example is the adoption of extra subsidy principles which seek to support healthy competition within the UK and to protect the 'internal UK market'. Public bodies will have a duty to consider all of the subsidy principles when they make subsidy awards. If challenged they will have to evidence their decision making.

The Secretary of State will have the power to issue guidance about how public authorities should evidence compliance with the subsidy principles. Subsidy Schemes can also be adopted for either funding programmes (i.e. the Retail Grant Scheme) or as a type of framework, which the UK and devolved governments may make (with certain other public authorities). These 'framework' schemes will be available for use by the wider public sector to award lawful subsidy. The subsidy control emphasis for schemes will be when the scheme is approved, and providing individual awards comply with scheme conditions these should be lawful. 

This approach is not too dissimilar (in concept) to former UK state aid schemes. Though, the government has in its subsidy consultation response rejected replicating state aid style block exemptions in favour of allowing public authorities 'room to innovate'. Hopefully pragmatic Secretary of State's guidance together with the adoption of Subsidy Schemes will lighten the public sector's administrative subsidy approval burden.

Public authorities will be required to publish their awards on the public subsidy database (with some exceptions). In all cases those authorities will have a duty to respond within 28 days of receiving a pre-action request for information about either the adoption of a scheme or individual subsidy award. Potentially this could be become burdensome, particularly if interested parties choose to adopt this process as a tactic to discourage subsidy awards to their competitors. 

Those judicially challenging subsidy schemes or individual awards will commence an action in the Competitions Appeal Tribunal (CAT). Unlike state aid, such parties will need to act quickly as they will only have 30 days from the relevant date to commence a case in CAT. CAT will apply High Court judicial remedies with a power to make a recovery order (for unlawful subsidy). 

Both public and private sectors should begin preparing for changes as the bill progresses through Parliament. During this time Trowers' Subsidy Control team will support clients prepare for change and reach out to them and others with articles and training material.

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