UK Subsidy Control regime: Royal Assent

United Kingdom

On 28 April 2022, the Subsidy Control Bill received Royal Assent, formally making the Bill into an Act of Parliament – the Subsidy Control Act 2022.  However, as highlighted in our horizon scanning article of 11 February 2022, the passing of the Bill is only the first step in establishing the UK’s subsidy control regime. 

A material practical development which occurred during the House of Lords review stage of the Bill (since our last update) is the increased transparency angle. The reporting requirements on the BEIS subsidy database have been lowered to all grants above £100,000 in all cases, and are required to be carried out within in a reduced time period of 3 months. This applies across all of minimal subsidy, schemes and even for services of public economic interest.

The new regime is expected to come into force in Autumn 2022.  In advance of this, the UK Government will publish guidance to support public authorities getting ready for the new rules.  In addition, the Cabinet Office is Department for Business, Energy and Industrial Strategy (BEIS) currently has an open public consultation on the secondary legislation surrounding Subsidies or Schemes of Interest (SSoI) and Subsidies or Schemes of Particular Interest (SSoPI). The consultation closes on 6 May 2022. 

A subsidy or scheme designated as an SSoI may be voluntarily referred to the Subsidy Advice Unit (SAU) within the CMA. In contrast, there will be a mandatory requirement to refer a subsidy or scheme designated as a SSoPI to the SAU.  The CMA has not yet released any information on its internal plans for the SAU, only reference made in its Annual Plan 2022/23 was that, if the Bill is enacted, the Unit will have a role in monitoring and reporting on the overall functioning of the new subsidy control regime, as well as providing non-binding advice to public authorities on a small number of individual subsidies and schemes.

In other subsidy developments, the EU recently raised its first ever World Trade Organisation (WTO) challenge against the UK.  On 28 March 2022, the EU requested consultations with the UK at the WTO in relation to the UK’s alleged “discriminatory practices” when granting subsidies for green energy projects.  The formal consultations mark the first step in WTO dispute settlement proceedings. If the parties do not reach a solution within 60 days, the EU can request the WTO to set up a panel to rule on the matter. If so, it could take around a year for the panel to make a ruling.