Subsidy Control: Designing a New Approach for the UK

Wednesday 3rd February 2021 Written Statements

[The Secretary of State for Business, Energy and Industrial Strategy (Kwasi Kwarteng)]

The Government are today publishing a consultation on “Subsidy control—Designing a new approach for the UK”. The consultation period will last for eight weeks.

Now that we have left the EU, the UK has the freedom to design our own subsidy control regime that is tailored to the UK’s national interests. The new system, which will be the long-term replacement for the EU’s prescriptive state aid regime, will be designed to be more flexible, agile and tailored to support business growth and innovation as well as maintain a competitive market economy and protect the UK internal market. It will better enable the Government to deliver on key priorities such as levelling up economic growth in the regions, tackling climate change, as well as supporting our economic recovery as we build back better from the covid-19 pandemic.

Unlike the EU’s state aid rules, which were designed for the particular circumstances of the EU, our own bespoke regime should work for the specific needs of the UK economy whilst also meeting our international commitments. Under the proposed UK system, local authorities, public bodies and the devolved Administrations in Edinburgh, Cardiff and Belfast will be empowered to design taxpayer subsidies by following a set of UK-wide principles. These principles will ensure subsidies are designed to deliver strong benefits and good value for money for the UK taxpayer, while being awarded in a timely and effective way.

This consultation invites views from businesses, civil society, think tanks, academics, public authorities, and the devolved Administrations to ensure our new approach works for the UK economy and supports businesses and jobs in every part of the country. The Government are seeking views on any additions to the subsidy control principles that will underpin the regime, the appropriate role for an independent body within the new system and how best to ensure that subsidies deliver strong benefits, while minimising the risk from potentially harmful and distortive subsidies.

Subject to the outcomes of this consultation, the Government will bring forward primary legislation to establish in domestic law a system of subsidy control that works throughout the UK.

I will place copies of the consultation in the Libraries of both Houses, and it can also be found on gov.uk.

[HCWS754]