Subsidy Control Bill set to replace “bureaucratic” EU State Aid regime

July 2, 2021

New State Aid rules will eliminate red tape and give British businesses greater access to financial support, the Government has revealed.

The report comes after the Subsidy Control Bill was introduced to Parliament on 30 June 2021.

According to the Department for Business, Energy & Industrial Strategy (BEIS), the new laws will replace the EU’s “bureaucratic” State Aid regime, which has been described by critics, such as the Confederation of British Industry (CBI), as slow, rigid, and prohibitive.

Under the EU initiative, all subsidies – except those under a Block Exemption Regulation – have to undergo a “lengthy bureaucratic process of being notified to and approved by the European Commission in advance” – resulting in lengthy delays and unnecessary compliance costs.

But the Government says Britain’s new independent subsidy control system will swiftly deliver financial support – such as a cash payment, a loan with interest below the market rate, or a guarantee – to businesses “without facing excessive red tape”, while also “delivering good value for the British taxpayer”.

The new regime, however, will not mirror the “1970s” approach of Government “trying to run the economy”, with companies succeeding solely through the support of financial subsidies.

The report also reveals that subsidies will not be awarded where there is a risk that jobs and economic activity could be relocated from one part of the country to another – known as displacement.

Commenting on the new regime, UK Business Secretary Kwasi Kwarteng said Britain is “seizing the opportunities of being an independent trading nation”.

“While the UK’s new system will be more agile and flexible, I have been clear that we will not return to the failed 1970s approach of the Government trying to run the economy, picking winners or bailing out unsustainable companies. Every subsidy must deliver strong benefits for local communities and ensure good value for money for the British taxpayer.”

He added: “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.”For help and advice with related matters, please get in touch with our expert team today.

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