UK Government Raises Threshold for Subsidy Control Scrutiny: A Simplified Overview

In a move designed to streamline the UK's subsidy control regime, the Department for Business and Trade has introduced new regulations that significantly alter how certain subsidies are classified and scrutinized. This change is part of an ongoing effort to refine the UK's approach to subsidy control following its departure from the European Union.

Key Changes:

1. Increased Thresholds: The new regulations amend the existing Subsidy Control framework by raising the monetary threshold for what is considered a "subsidy or scheme of particular interest" from £10 million to £25 million in non-sensitive sectors. This means that fewer subsidies will require mandatory referral to the Subsidy Advice Unit (SAU) for detailed examination.

2. Focus on Significant Subsidies: Subsidies above £25 million in non-sensitive sectors will now be automatically scrutinized by the SAU. In sensitive sectors, the threshold remains lower at £5 million due to the higher likelihood of these subsidies impacting competition and trade.

3. Reduced Administrative Burden: By increasing the threshold, the government aims to reduce unnecessary scrutiny of lower-risk subsidies, such as those for leisure centers, allowing public authorities to focus resources on larger, potentially more impactful subsidies.

4. Consultation and Feedback: This change follows a public consultation which indicated broad support for raising the threshold. Respondents, including public authorities and businesses, highlighted the need for a more efficient system that focuses on the most significant subsidies.

5. Impact on Public Authorities and Businesses: The changes are expected to reduce the regulatory burden on public authorities, save costs, and allow the SAU to concentrate on subsidies that pose the greatest risk to market competition. While there are no significant direct impacts on businesses or charities, there may be secondary effects for those involved in subsidy competitions.

Background:

The Subsidy Control Act 2022 established the framework for the UK's subsidy control regime after Brexit, replacing the EU's State aid rules. This regime is designed to ensure that subsidies do not unduly distort competition and investment within the UK or affect international trade.

Future Monitoring:

The Competition and Markets Authority (CMA) will continue to monitor the subsidy control regime and is expected to report on its functioning by 2026. This ongoing oversight will help ensure that the system remains effective and responsive to changes in the economic landscape.

For more detailed information, the statutory guidance on the Subsidy Control Act 2022 is available on the UK government's website.