Competition watchdog criticises approach of combined authority to assessing plans to make £11.6m grant to developer
The South Yorkshire Mayoral Combined Authority's reasoning for awarding an £11.6 million grant to a developer could be "significantly improved and articulated more clearly", the Competition and Markets Authority’s Subsidy Advice Unit (SAU) has said.
In a report on the proposed grant, the SAU suggested the combined authority's written assessment of the grant could have had better supporting evidence.
The combined authority wishes to hand the grant to developer Capital and Centric (505) Limited to assist in completing a 550-home development on brownfield land in Sheffield, known as the Canon Brewery site.
The development is estimated to cost a total of £143m, including the £11.6m subsidy requested by the developer. The grant will contribute towards the acquisition and remediation of the site, demolition costs, pre-construction site investigations, transport and highway works, and professional fees.
Ahead of approving the grant, the combined authority asked the SAU, which is part of the Competition and Markets Authority, to evaluate its assessment of the proposal's compliance with the Subsidy Control Act 2022.
The SAU's report found that: "Overall, the Assessment could be significantly improved and articulated more clearly by better referencing and leveraging the supporting evidence within the Assessment itself, which was very brief."
The report said the assessment could be improved by explaining in more detail, with evidence and analysis, how the size of the subsidy was assessed to be the minimum necessary to achieve the policy objective.
It also said: "Further consideration of what the commercial incentives to develop the site, absent the subsidy, are likely to be and explaining why the identified counterfactual would continue to be the most likely outcome."
Further consideration of the potential for alternatives to subsidy and further assessment of the potential effects of the subsidy on competition and investment would also have improved the assessment, the report added.
The report also said improvements could have been made by "more fully articulating both the benefits of the subsidy and the potential negative effects" before weighing them up and arriving at a conclusion.
The SAU added that the issues could have been addressed if the combined authority had approached the SAU for pre-referral discussions before referring the subsidy, as encouraged in SAU Guidance.
The combined authority referred its proposal to the SAU as the subsidy constitutes a 'Subsidy of Particular Interest' because its value exceeds £10m.
A spokesperson for the South Yorkshire Mayoral Combined Authority said: “We will be considering the Subsidy Advice Unit’s report fully in the new year, and will then determine how to proceed.”
Adam Carey
