Have your say on the Subsidy Control Bill

Aims of the Bill

The Subsidy Control Bill has six parts and three schedules:

• Part 1 sets out the definitions
• Part 2 sets out the principles that underpin the subsidy control regime and control requirements
• Part 3 sets out which subsidies are exempt from the subsidy control requirements
• Part 4 provides for functions of the Competition and Markets Authority (CMA) and procedures of referrals
• Part 5 contains provisions relating to the enforcement of the subsidy control requirements
• Part 6 contains miscellaneous and general provisions
• Schedule 1 describes the subsidy control principles
• Schedule 2 sets out the energy and environment principles
• Schedule 3 sets out which provisions of the Bill apply to subsidies provided by primary legislation, including by devolved legislatures.

The Bill implements a subsidy control regime for the UK and sets out how central government, devolved administrations, local authorities, and other types of public authority, should make decisions to award subsidies.

A subsidy refers to public support to business activities and can take the form of “a grant, a tax break, a loan or guarantee on favourable terms, or the use of facilities below market price”.[1]

The Government states that objectives of the subsidy control regime are to:

• 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.[2]

The regime will replace the EU state aid rules which applied in the UK until the end of the transition period on 31 December 2020, and the interim provisions set out in the Government guidance on the UK’s international subsidy control commitments.

The Bill has the following key functions:

• It sets out subsidy control principles which granting authorities must observe
• It exempts certain low risk subsidies from the Bill’s requirements
• It prohibits certain subsidies which are generally not compliant with the UKs international obligations, and places requirements on other subsidies
• It sets out additional administrative requirements, such as a requirement to publish information on a subsidy database
• It introduces a more detailed assessment for high risk subsidies.

The Bill establishes a Subsidy Advice Unit (SAU) in the CMA which will have an advisory role in relation to certain subsidies given by public authorities, including devolved Scottish, Welsh and Northern Ireland administrations and local authorities. Its advice will be non-binding and the ultimate decision to go ahead with a subsidy will rest with a granting authority. The Subsidy Advice Unit will also monitor and oversee the working of the regime.

The enforcement of the UK regime will be through the Competition Appeal Tribunal who will effectively hear judicial reviews against subsidy decisions of a public authority.

The Bill’s provisions are neutral about which sectors of industry or policy priorities would benefit from more subsidies. Decisions about the level of subsidies remain the competence of granting authorities. However, the Bill gives the Government power to publish detailed guidance, where it could address such priorities.

The Bill extends to the whole of the UK, except for clause 48(3), which amends the retained EU law on certain aspects of public passenger transport services by rail and by road for England, Scotland and Wales, but not for Northern Ireland.[5]

Subsidies which are subject to Article 10 [state aid] of the Withdrawal Agreement Ireland and Northern Ireland Protocol are exempt from the requirements of the Bill.

The Bill, with its explanatory notes, impact assessment, and delegated powers memorandum is published on the Bill’s page on Parliament.uk, which also gives details of its parliamentary progress to date.[3] The Bill is accompanied by a Government written statement.[4]

A consultation on the Government’s approach to UK subsidy controls ran between 3 February and 31 March 2021. The Government’s response to the consultation was published on 30 June 2021. The Department for Business, Energy & Industrial Strategy has published policy papers providing information about the proposed subsidy control regime.

Follow the progress of the Subsidy Control Bill

The Subsidy Control Bill 2021–22 was introduced to the House of Commons on 30 June 2021. This Bill was debated at second reading on Wednesday 22 September 2021 and has now been sent to a Public Bill Committee which will scrutinise the Bill line by line and is expected to report to the House by Thursday 18 November 2021.

• Bills before Parliament: Subsidy Control Bill 2021–22
• Read Explanatory Notes: Subsidy Control Bill 2021–22
• House of Commons Library Briefing Paper

Oral evidence sessions are expected to be held on Tuesday 26 October.

Guidance on submitting written evidence

Deadline for written evidence submissions

The first sitting of the Public Bill Committee is expected to be on Tuesday 26 October. Written evidence can now be sent in to the Public Bill Committee. The sooner you send in your submission, the more time the Committee will have to take it into consideration and possibly reflect it in an amendment. The order in which amendments are taken in Committee will be available in due course under Selection of Amendments on the Bill documents pages. Once the Committee has dealt with an amendment it will not revisit it.

The first sitting of the Public Bill Committee is expected to be Tuesday 26 OCtober and the Committee is scheduled to report by Thursday 18 November. However, please note that when the Committee concludes its consideration of the Bill it is no longer able to receive written evidence and it can conclude earlier than the expected deadline of 5.00pm on Thursday 18 November. You are strongly advised to submit your written evidence as soon as possible.

Your submission should be emailed to scrutiny@parliament.uk

Further guidance on submitting written evidence can be found here.

Image: Parliamentary Copyright

[1] Explanatory Notes, paras 1-6

[2] HCWS134, 30 June 2021

[3] Subsidy Control Bill, Explanatory Notes (EN), Bill 135, June 2021; Subsidy Control Bill: impact

assessment, 25 June 2021

[4] HCWS134, 30 June 2021

[5] Regulation (EC) No 1370/2007, Article 9 on Public service compensation for the operation of public passenger transport