New subsidy control system comes into force

The new UK system to regulate the award of subsidies to business has come into force from today (4 January), replacing the EU State Aid regime.

The government said the new system of subsidy oversight and control, established under the Subsidy Control Act 2022, will provide a boost to businesses across the country and empower public authorities to deliver support to businesses in a ‘quicker, fairer, and simpler way’.

“Our new subsidy control regime is another example of us making the most of our opportunities to be free of Europe’s bureaucracy and forge a future tailor-made for the UK,” Business Minister Kevin Hollinrake said.

“New rules mean UK authorities will be free to deliver money to businesses in a quicker, fairer, and simpler way, without longwinded and unnecessary approval processes to bog us down.”

The introduction of the new rules is the most significant changes in subsidy administration in over 40 years, and will allow for subsidies – such as grants, loans or tax credits – that could be tailored to local needs, with public authorities and devolved administrations having added flexibility to ensure they can get support to where it’s most needed as quickly as possible, the government claimed.

Under the previous EU system, all subsidies except for a select few would be required to undergo a time-consuming bureaucratic process, subject to European laws and the European Commission, delaying vital funds reaching businesses in good time.

The government added that the new regime will also give public authorities the ability to award subsidies through streamlined routes, schemes that are pre-assessed by the government, providing them with an even easier and quicker way to award subsidies to businesses.

The government is currently developing three of these schemes, which will cover research, development and innovation, energy usage, and local growth.

Subsidies are administered by all levels of government in the UK, and the definition of public authority is wide and captures any person who exercises functions of a public nature, including public authorities at any level of central, devolved, regional or local government and non-governmental bodies that are performing a public function.