Post-Brexit legislation on public procurement and subsidy control announced in the Queen’s Speech

United Kingdom

Today, the Queen delivered her highly anticipated speech in the House of Lords to officially reopen Parliament and set out the legislative agenda for the coming year. Within the 30 bills mentioned, new legislation is proposed to reform public procurement rules, introduce a national subsidy control regime, and build freeports as part of the UK’s post-Brexit trade strategy.

Public procurement

A Procurement Bill is to be introduced to “simplify procurement in the public sector”. The bill is intended to make procurement procedures faster and easier; to allow more freedom for suppliers; and to allow the public sector to work better with the private sector. 

This is a quick turnaround. The Cabinet Office closed its consultation on its Green Paper to transform public procurement only in March. This set out proposed far-reaching reforms to the current public procurement rules following the UK’s withdrawal from the European Union. 

Although the Cabinet Office has not yet published the outcome or any further proposed action from the consultation responses, inclusion in the speech means that the UK Government has decided to press ahead with legislation to overhaul the procurement rules in England, Wales and Northern Ireland. 

Procurement law is a devolved matter in Scotland and the Scottish Government has not yet signalled any reforms of its rules, which currently are closely aligned to the EU procurement rules.  A draft of the new Procurement Bill is anticipated by September 2021.

Subsidy control

As it has been required to do under the Trade and Cooperation Agreement (“TCA”) which the UK entered into with the EU in December, the Government has announced a Subsidy Control Bill. This will introduce a UK subsidy control regime to “ensure that support for businesses reflects the United Kingdom’s strategic interests and drives economic growth”. 

The Government is setting up an independent UK subsidy system into domestic law to replace EU State aid controls that ceased to apply on 31 December. Here too, in recent months the UK Government has held a public consultation as well as roundtables with industry participants, to take feedback and understand priorities when designing this new approach. 

The UK-wide regime will need to take into account WTO rules and UK commitments under international agreements as well as the TCA, but as yet there is little clarity on exactly what sort of regime will emerge.

Trade

A National Insurance Contributions Bill has been proposed. This will include the establishment of eight new “freeports” to create hubs for trade and with the stated intention of helping to regenerate communities. This follows on from announcement made by the Chancellor in the 2021 Budget on the location of the freeports.  

Freeports are economic zones normally located around shipping ports and airports, with the intention of providing tax breaks, simpler planning restrictions, and cheaper imports.  However, a recent furore has centred around the fact that businesses based in freeports could miss out on favourable exports to key markets. Exemption prohibitions for certain jurisdictions that prevent reduced export tariffs where businesses have not paid import duties is an early indication that there may not be a completely clear path to introducing this concept in the UK.