The UK’s New Subsidy Control Bill: Targeting a Faster, More Permissive Regime Than EU State Aid Rules

By: Jonathan Branton & Alexander Rose (Lexxion)

The ability to mastermind the UK’s own State aid regime was presented as one of the best opportunities of Brexit. Well-targeted State subsidies can be used to dramatically improve economies, creating new jobs and nurturing the businesses of tomorrow.  Furthermore, the point of being distinct from the EU regime was that such decisions should be determined by the UK only, and for the benefit of the UK. As a result, there has been considerable hype ahead the Subsidy Control Bill, with political advisers claiming to the BBC that it represents “the most important bit of post-Brexit legislation yet“.

Contrary to reports, the Subsidy Control Bill does not “sweep away EU State aid rules“.  The EU State aid rules were already disapplied at 11pm 31 December 2020 through the State aid (Revocations and Amendments) (EU Exit) Regulations 2020, which implemented directly into UK law the provisions of the  UK-EU Trade and Cooperation Agreement of 24 December 2020 (“the TCA”). The only areas under which EU State aid rules do still apply in the UK (most controversially via the Northern Ireland Protocol) are not repealed by the draft legislation.

Indeed, it should be fundamentally understood that the framework for the UK’s State aid rules (now known as Subsidy Control) is set out within the TCA, which is an international treaty commitment on the part of the UK Government.  What the Subsidy Control Bill does do is present further detail or rather put some “flesh on the bones” for the new regime which has been in place since 11pm 31 December 2020.  The Subsidy Control Bill therefore represents an opportunity to take stock of what has worked well and not so well over the last six months, and improve upon it.  The Subsidy Control Bill also provides an opportunity to specify the identity and powers of the “independent authority” required by the TCA to supervise the UK Subsidy Control Regime, and to specify the Court or Tribunal that shall consider Judicial Reviews brought against subsidies. What the Subsidy Control Bill cannot do, however, is re-write or fundamentally run counter to the TCA…

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