Subsidy Control Bill – services of public economic interest (SPEI)
The Subsidy Control bill incorporates the concept of services of public economic interest (SPEIs) from the UK/EU Trade and Cooperation Agreement (TCA) enabling public bodies and subsidy recipients who previously relied on the SGEI Decision under State aid law to continue to grant and receive subsidies in relation to public services such as social housing, health and social care.
Section 29 of the Bill sets out the requirements for giving subsidies to "SPEI enterprises" (economic actors assigned with tasks in the public interest (including public service obligations)) for "SPEI services" (the services provided in the carrying out of those tasks).
As with SGEIs any subsidy granted to an SPEI enterprise must be limited to what is necessary to deliver the service, taking into account a reasonable profit.
One element of the new regime to be aware of (which was introduced by the TCA) is that SPEI subsidies must follow the general principles for all subsidies set out in Schedule 1 to the Bill (save to the extent that the principles would obstruct (either in law or in fact) the performance of the assigned public interest task). These principles follow those in the TCA with additional consideration to be given to minimising any negative effects on competition or investment within the United Kingdom. Public bodies granting SPEI subsidies are advised to record the extent to which the principles apply and how they have been satisfied.
Where the Bill goes into more detail then the TCA is to stipulate how the public interest task is to be assigned to an SPEI enterprise. Similarly to the SGEI "entrustment" provisions this must be through a written contract or other written legally enforceable arrangement which sets out the terms of the subsidy along with: a description of the SPEI services; the identity of the SPEI enterprise; the delivery period; the geographic area; the subsidy calculation; and a review and recovery mechanism in respect of any overpayment - specifically under the Bill the public body must check the use of the subsidy every 3 years and at the end of the service delivery period.
Other familiar provisions are an exemption from publication on the subsidy database of all SPEI subsidies of less than £14,500,000 and all subsidies (of any value) for certain SPEI services including social housing, long term care and hospital care.
On the whole the SPEI approach is largely recognisable and public bodies should be able to apply the new rules to enable them to continue granting subsidies for public services as they have done to date.
Further resources on the Subsidy Control bill are available here: