Documents to download

On 19 January 2022, the second reading of the Subsidy Control Bill is scheduled to take place in the House of Lords.

The bill would establish a new domestic subsidy control regime following the UK’s departure from the EU. Before giving a subsidy, public authorities would have to be satisfied it was compatible with subsidy control principles defined in the bill. Certain subsidies would be prohibited. Public authorities would have to publish details of subsidies they had given, but some subsidies would be exempt from transparency requirements, including those below £315,000 and subsidies to services of public economic interest below £14.5m. Subsidies of ‘particular interest’ and those called in by the secretary of state would have to be referred to the Competition and Markets Authority (CMA) for a non-binding report on their compliance with the subsidy control requirements. Subsidies of ‘interest’ could be referred to the CMA on a voluntary basis. The Government has not yet defined the terms subsidies of interest or particular interest. The CMA would not have an enforcement role, but the secretary of state and interested parties could apply to the Competition Appeal Tribunal (the CAT) for a review of a decision to give a subsidy. The CAT could consider applications on a judicial review basis only, rather than reviewing the merits of the subsidy.

Under article 10 of the Northern Ireland Protocol, EU state aid rules continue to apply to subsidies related to trade in goods and the single electricity market that affect trade between Northern Ireland and the EU. The bill would not apply to subsidies that are subject to article 10. However, MPs have questioned how public authorities and subsidy recipients would know which regime should apply. The Government is in discussions with the EU over article 10.

A handful of minor government amendments were made at committee stage in the House of Commons. At report stage, the bill was not amended. Three non-government amendments were defeated on division, to do with exempting agricultural subsidies from the bill, seeking devolved consent for defining subsidies of interest/particular interest, and including net-zero commitments in the subsidy control principles. MPs from across the House raised concerns about the transparency requirements for recording subsidies on the database.

Labour supports the need for a post-Brexit subsidy control system. However, it argues the bill is not backed up by a strategy for how to use subsidies to achieve strategic objectives such as net zero or levelling up, and that it does not provide a fair role for the devolved administrations. The Scottish and Welsh Governments have said they are unable to recommend legislative consent for the bill, pointing to a lack of powers for the devolved administrations in comparison to those of the secretary of state. The regulation of harmful or distortive subsidies is a reserved matter, but the Government is seeking legislative consent for parts of the bill that would alter devolved competence.


Documents to download

Related posts

  • Government’s ‘green book’: Review and reforms

    The Government’s ‘green book’ is guidance on how to appraise public sector policies, programmes and projects. In January 2025, the Chancellor of the Exchequer Rachel Reeves announced a review of the green book. The review’s conclusions were published in June 2025 and are designed to improve the effectiveness of public sector appraisal. The Treasury will release an updated green book in early 2026.

    Government’s ‘green book’: Review and reforms
  • UK crafts sector: Economic contribution, financial support and challenges

    The UK crafts sector encompasses a range of artisan activities that depend on expert hand skills. Official statistics show that crafts account for a relatively small share of economic activity and employment, although these estimates may understate the sector’s actual contributions. Crafts are supported by public funding and are being preserved and passed on through a variety of initiatives. However, the sector faces structural, economic and cultural challenges.

    UK crafts sector: Economic contribution, financial support and challenges
  • AI and creative technology scaleups: Communications and Digital Committee report

    In September 2024 the House of Lords Communications and Digital Committee launched an inquiry into the scaleup challenges facing startup enterprises working with artificial intelligence (AI) and creative technology. In a report published in February 2025, the committee warned the UK risked becoming an incubator economy where UK startups developed innovative products and services before selling out or moving abroad. This briefing summarises the report’s recommendations and the government’s response.

    AI and creative technology scaleups: Communications and Digital Committee report