Subsidy Control

The UK government has recently issued a consultation on adjustments to the UK subsidy control regime (the Subsidy Control Act having come into force in January 2023)(Refining the UK subsidy control regime: consultation document) .

Specifically, the Government is consulting on (a) changing the thresholds for referral of subsidies to the Competition and Markets Authority; and (b) creating new streamlined routes for public authorities to deliver subsidies more quickly and easily in certain scenarios. Interestingly, the consultation specifically asks whether there is support for the creation of a streamlined route focused on arts and culture.

The subsidy control regime includes two specific types of subsidy, or subsidy scheme that have been identified as having greater potential to lead to distortive effects:

• Subsidies or schemes of interest (SSoI)
• Subsidies or schemes of particular interest (SSoPI)

The current thresholds for these are:

• Subsidies over £10 million, or over £1 million but cumulating to over £10 million with other related subsidies over the previous three financial years, are deemed subsidies of particular interest (SSoPI) and must be referred to the CMA.  A subsidy scheme is a scheme of particular interest if it allows for one or more subsidies of particular interest to be given under it. There is a statutory obligation on public authorities to refer these to the Competition and Markets Authority for evaluation (prior to any such subsidy being awarded);
• Subsidies between £5 million and £10 million outside of sensitive sectors are deemed subsidies or schemes of interest (SSoI). Public authorities intending to give or make SSoI may voluntarily refer their assessment of the subsidy or scheme to the CMA for review before awarding the subsidy.

The regulations relating to mandatory referrals detail a list of sensitive sectors, in respect of which the threshold for mandatory referral to the CMA is £5 million rather than £10 million (or £1 million but cumulating to £5 million with other related subsidies within the previous three financial years). The current list is as follows:

• Manufacture of basic iron and steel and of ferro-alloys (SIC code 24.10)
• Aluminium production (SIC code 24.42)
• Copper production (SIC code 24.44)
• Manufacture of motor vehicles (SIC code 29.10)
• Building of ships and floating structures (SIC code 30.11)
• Manufacture of motorcycles (SIC code 30.91)
• Manufacture of air and spacecraft and related machinery (SIC code 30.30)
• Production of electricity (SIC code 35.11)

Consultation is sought based on the levels of the thresholds and the list of sensitive sectors.  Consultation is also sought in respect of “streamlined routes”, which are mechanisms that can be used by public authorities to give subsidies in certain fields. There is no requirement to assess subsidies given under a streamlined route against the subsidy control principles, as long as they are compliant with the conditions set out in the streamlined route. Part of the consultation is seeking views on the development of a new arts and culture streamlined route.

If you have any questions relating to any of the points raised in this article, please don’t hesitate to speak to our Charities team or your usual Anderson Strathern contact.

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