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Government launches consultation on “bespoke” approach to subsidy control

The Department for  Business, Energy & Industrial Strategy (BEIS) has launched a consultation on its proposed new approach to subsidy control in the UK.

BEIS said: “Following the end of the transition period on 31 December 2020, the UK has the freedom to design a new domestic subsidy control regime that reflects our strategic interests and particular national circumstances.”

It added that the government aims to deliver a regime that:

  • facilitates strategic interventions to support government priorities, including supporting the economy’s recovery from COVID-19
  • takes account of the economic needs of the UK’s individual nations and strengthens the economic bonds of our Union
  • protects the UK’s competitive and dynamic market economy
  • ensures that subsidies in the UK are given in line with our international commitments including those in the UK-EU Trade and Cooperation Agreement (TCA)

BEIS said: “The government is seeking thoughts on any additions to the principles underpinning the regime, as well as any subsidies which should be excluded from the commitments to these principles.

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“We are also asking for views on how to best manage the most distortive kinds of subsidies, in addition to opinions on the role and powers of the independent body that will oversee the regime.”

Subject to stakeholder views, and any evidence received as part of this consultation, the government will bring forward primary legislation to establish in domestic law its chosen subsidy control system.

The closing date for the consultation, which can be viewed here, is 31 March 2021.

Alex Kynoch, a Senior Associate and expert in state aid at law firm Browne Jacobson, said: “The current subsidy control system in the UK is suboptimal to say the least – it consists of a combination of the old EU state rules incorporated through the Northern Ireland Protocol and new subsidy control rules drawn directly from the UK’s Trade and Cooperation Agreement (TCA) with the EU.

“The new subsidy control rules draw heavily on the old state aid rules so in the absence of a more detailed regime most public authorities are still aligning with the old state aid regime as the only source of authority for how to comply with the principles within the new subsidy control regime.

“Clearly this is not the government’s intention for the future of subsidy control so a new regime is to be welcomed. The consultation is wide ranging and surprisingly seeks opinions on implementing rules that in some cases go beyond what is required by the UK-EU TCA. This suggests the government recognises the advantages of a comprehensive regime even as it endeavours to reduce bureaucracy.”

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