Draft Subsidy Control (Subsidies and Schemes of Interest or Particular Interest) (Amendment) Regulations 2025

Greg Smith Excerpts

Tuesday 1st July 2025 General Committees

[Greg Smith (Mid Buckinghamshire) (Con)]

It is a pleasure to see you in the Chair and to serve under your chairmanship, Mr Turner, and an enormous pleasure on this hot day to speak on the draft Subsidy Control (Subsidies and Schemes of Interest or Particular Interest) (Amendment) Regulations 2025.

The regulations seek to raise the threshold at which public subsidies must be referred to the Competition and Markets Authority’s subsidy advice unit from £10 million to £25 million. Let me be clear from the outset: the Opposition support a competitive, pro-investment environment in which Government act as careful stewards of taxpayers’ money. The principle of subsidy control is an important one. It ensures fair competition and transparent decision making in line with our international obligations and trade agreements. But this statutory instrument places us in a difficult position.

The Government are asking the Parliament to make a serious judgment on balancing the need to reduce burdens on public authorities and the need to maintain scrutiny of how large sums of taxpayer money are spent, but, remarkably, no impact assessment has been produced. Without one, it is almost impossible to determine the full consequences of this change.

We are told that increasing the threshold to £25 million will reduce the number of referrals by 28%. That might sound attractive on the surface—less red tape, fewer delays—but at what cost? We do not know how many significant subsidies—those with the potential to distort markets or that give rise to genuine competition concerns—will escape scrutiny under the new threshold; nor do we know the value of public funds that could be allocated without independent oversight. That brings me to the central flaw of the Government’s approach. They are asking Parliament to approve a relaxation of oversight mechanisms without providing it with the data to make an informed decision.

The Government’s own consultation received just 45 responses. Of those, a bare majority—23—supported increasing the threshold, and even on that views diverged widely, with some suggesting a threshold of £20 million, others £30 million and some even more than that. Eleven respondents opposed the change entirely, and the rest offered either no view or neutral comments. There is no transparency in the breakdown of those responses—no indication of who responded or the weight that should be given to their views. Why is that, and why has the Minister brought forward this change without providing a proper breakdown of consultation responses? More to the point, why was no impact assessment published? When public authorities and businesses alike are being asked to adjust to a new framework, this lack of rigour is unacceptable.

I have a wider point to make about the process and precedent. The Subsidy Control Act 2022, passed under a Conservative Government, was designed to replace the overly rigid EU state aid regime with a proportionate, sovereign system that protects the taxpayer while empowering public authorities to support investment. However, that system depends on the oversight and credibility of the CMA’s subsidy advice unit. If we start removing that oversight without evidence, we risk undermining the very confidence the system is meant to inspire. The Government argue that this change will allow the CMA to focus on higher-value cases, but without the data we cannot verify whether that trade-off is sound.

This is a serious matter that has real-world implications for competition, taxpayers and the integrity of public spending. The Opposition are not opposed in principle to reforming thresholds, but we do believe that any such reforms must be supported by evidence, transparency and proper parliamentary scrutiny. Until the Government are willing to provide that, we are not in a position to support or oppose these regulations. We will not hinder their passage; we will not vote one way or the other—not out of indecision, but because this Government have failed to provide us with the information needed to make a responsible and informed choice on behalf of our constituents.