Subsidy Control Bill and Consultation on Subsidy Control

Wednesday 30th June 2021 Written Statements

[The Secretary of State for Business, Energy and Industrial Strategy (Kwasi Kwarteng)]

Today the Government have introduced the Subsidy Control Bill and published the Government’s response to the consultation “Subsidy control: designing a new approach for the UK”.

The UK Government have seized the opportunity presented by our exit from the European Union to develop a new, bespoke regime for subsidy control within the UK.

This new regime has been designed to reflect our strategic interests, strengthen our Union and help to drive economic growth and prosperity across the whole of the UK.

The new regime will be flexible, agile, and tailored to support business growth and innovation, as well as help to maintain a competitive free market economy and protect competition and investment in the UK.

Between 3 February and 31 March 2021, the Government held a public consultation on the UK’s future subsidy control proposals. The Government have used responses to the consultation to inform the design to provide a bespoke and dynamic framework, which will:

Empower local authorities, public bodies, and central and devolved Governments to design subsidies that deliver strong benefits for the UK taxpayer.

Enable public authorities to deliver subsidies that are tailored and bespoke for local needs to support the UK’s economic recovery and deliver UK Government priorities such as levelling up, achieving net zero and increasing UK R&D investment.

Provide certainty and confidence to businesses investing in the UK, by protecting against subsidies that risk causing distortive or harmful economic impacts, including to the UK domestic market.

Contribute to meeting the UK’s international commitments on subsidy control, including its international commitments at the World Trade Organisation, in free trade agreements and the Northern Ireland protocol.

The foundation of this new domestic subsidy control regime is a clear, proportionate, and transparent set of principles, underpinned by guidance, that will ensure public authorities fully understand their legal obligations and embed strong value for money and competition principles.

The Government will create streamlined routes to demonstrate compliance for categories of subsidies at low risk of causing market distortions, that promote our strategic policy objectives and that the Government judge to be compliant with the principles of the regime. This will ensure that these authorities are able to deliver these subsidies with minimum bureaucracy and maximum certainty.

In order to protect UK competition and investment and demonstrate where it is proportionate for public authorities to give greater scrutiny to their subsidies, we will create two specific categories of small number of subsidies that may undertake more extensive analysis to assess their compliance with the principles: subsidies of interest and subsidies of particular interest. Criteria for these subsidies will be set out in secondary legislation in due course. We anticipate there will be a very small number of subsidies in each of these categories.

The Bill also establishes an independent body which will be a UK subsidy advice unit in the Competition and Markets Authority (CMA). The subsidy advice unit will have a role in monitoring and overseeing how the regime is working as a whole, as well as conducting a mandatory, non-binding review of public authorities’ assessments for subsidies of interest and subsidies of particular interest. Enforcement will be through the Competition Appeal Tribunal who will hear judicial reviews against subsidy decisions.

The Government have designed a subsidy control scheme that promotes a dynamic market economy throughout the UK and that minimises distortions within the UK. To ensure that this system works for all parts of the UK, the Government have worked closely with the devolved Administrations throughout this process, including meeting the statutory duty to share the consultation response document ahead of publication and consider devolved Administrations’ representations.

The measures in the Subsidy Control Bill strike the right balance between maximising our newfound flexibilities, having left the EU, and providing a consistent framework for all UK public authorities. The Bill will ensure that the UK maintains a competitive, free market economy—which is fundamental to our national prosperity—while protecting the interests of the British taxpayer.

I will lay the Government response to subsidy control consultation before Parliament and will place a copy of the impact assessment in the Libraries of both Houses.

[HCWS134]