The Subsidy Control Bill

Ryan Copeland and James Hughes analyse the main provisions of the Subsidy Control Bill announced in the recent Queen’s speech.

What is the purpose of the Subsidy Control Bill?

When the Brexit transition period ended at 23:00 on 31 December 2020, the EU-UK Trade and Cooperation Agreement (the “TCA”) came into force. Part Two, Title XI, Chapter 3 of the TCA outlines commitments regarding subsidy regulation between the UK and the EU. The TCA outlines a number of principles and provides that the UK is to have in place and maintain an effective system of subsidy control that ensures the granting of a “subsidy” (as defined in the TCA) respects such principles.

It has been widely expected that the principles and rules outlined in the TCA will be expanded in a forthcoming Subsidy Control Bill and – following the recent “Subsidy control: designing a new approach for the UK” consultation carried out by the Department for Business, Energy & Industrial Strategy (“BEIS”) – it is clear that the UK Government intends to implement a subsidy control regime into domestic legislation in this Parliament.

In the Chamber of the House of Lords, Her Majesty announced “measures will be introduced to ensure that support for businesses reflects the United Kingdom’s strategic interests and drives economic growth [Subsidy Control Bill]”.

According to the Government’s “Master Lobby Pack” (published alongside the Queen’s speech), the purpose of the Subsidy Control Bill is to “implement a domestic UK subsidy control regime that reflects our strategic interests and particular national circumstances, providing a legal framework within which public authorities make subsidy decisions”.

What are the benefits of the Subsidy Control Bill?

The Government has announced that the Subsidy Control Bill will have the following benefits:

• Create a UK specific subsidy control system following the UK’s departure from the EU.
• Enable public authorities to deliver subsidies that are tailored and bespoke for local needs to support the UK’s economic recovery and deliver
• Government priorities, such as increasing UK research and development investment and achieving net zero.
• Empower local authorities, public bodies, and central and devolved governments to design subsidies that deliver strong benefits for the UK taxpayer and local communities.
• Provide certainty and confidence to businesses investing in the UK, by protecting against subsidies that risk causing distortive or harmful economic impacts.
• Enable the UK to meet its international commitments on subsidy control.

What is included in the Subsidy Control Bill?

Details of the specifics of the Subsidy Control Bill are not yet available. Our first insight into any new subsidy control regime is likely to be in the form of BEIS’ published response to its consultation. We eagerly await the outcome of the consultation as this will likely include detail on the forthcoming Subsidy Control Bill.

Nonetheless, for the time being the Master Lobby Pack does provide some initial insight into what we can expect. We expect the Subsidy Control Bill to:

• Establish UK-wide principles for public authorities to follow;
• Delineate exemption categories from subsidies;
• Regulate the markets in which subsidies can be sought and granted;
• Place obligations on public authorities to upload subsidy related information to a centralised database;
• Establish a regulatory subsidy control body to oversee the new regime; and
• Delineate parameters of judicial enforcement and remedies.

Commentary

Although detail at this time is limited, it is reassuring that the Government intends to introduce a Subsidy Control Bill in this Parliament. Currently, the principles contained within the TCA are imprecise and, while we await either domestic legislation or further interpretation to provide more detail, the regime remains uncertain and at times challenging for public authorities to navigate with certainty.

We await the outcome of the BEIS consultation with interest and the eventual presentation of the Subsidy Control Bill in Parliament which will provide much more detail on the eventual regime to be implemented.

Ryan Copeland is an associate and James Hughes is a trainee solicitor at Sharpe Pritchard LLP

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