UK government sets out plans for post-Brexit subsidy control system

UK government sets out plans for post-Brexit subsidy control system

The UK government has set out plans for a new post-Brexit subsidy control system that will allow public authorities – including the devolved administrations – to provide direct support to businesses in line with strategic goals.

The Subsidy Control Bill, introduced to Westminster today, has been presented as a departure from the EU’s state aid rules, though ministers say it will not represent a “return to the failed 1970s approach of the government trying to run the economy, picking winners or bailing out unsustainable companies”.

The bill will contain an explicit ban on the award of subsidies that will result in the relocation of jobs and economic activity from one part of the UK to another, which the government says will “help strengthen the Union and help level up the entire country”.

The bill, which the government hopes to implement in 2022, will also ban unlimited government guarantees to businesses as well as subsidies granted to “ailing or insolvent” enterprises where there is no credible restructuring plan.

The Competition Appeal Tribunal (CAT) will be granted jurisdiction to judicially review the award of subsidies.

UK Business Secretary Kwasi Kwarteng said: “Today’s bill marks a clear departure from the EU state aid regime and will ensure our new subsidy system will maintain the UK’s competitive, free market economy that has been central to our economic success and national prosperity for decades.”

UK Business Minister Paul Scully added: “Our modern regime will support the UK government, devolved administrations in Edinburgh, Cardiff and Belfast, and local authorities in swiftly and strategically supporting our economic recovery while ensuring a consistent, level playing field for subsidies across the entire country.”

In order to protect UK competition and investment and to minimise distortions from specific subsidies, the new system will introduce two specific categories of subsidies - Subsidies of Interest and Subsidies of Particular Interest – for which granting authorities may undertake more extensive analysis to assess their compliance with the principles.

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