This briefing refers to the Subsidy Control Bill as as amended in the Public Bill Committee, before its adoption as an Act of Parliament (Subsidy Control Act 2022) in April 2022.
On 30 June 2021, the Government presented the Subsidy Control Bill 2021-22 to Parliament. MPs debated the Bill at its second reading in the House of Commons on 22 September. The Bill completed its Commons stages on 13 December 2021. On 20 April 2022, the Commons considered the amendments made in the House of Lords. The Subsidy Control Act 2022 received Royal Assent on 28 April 2022.
This briefing summarises what happened during Commons second reading and committee stage.
What does the Bill do?
The Bill implements a subsidy control regime for the UK and sets out how central government, devolved administrations, local authorities, and other types of public authority, should make decisions to award subsidies. A subsidy refers to a grant, tax break, loan, or other form of financial assistance paid from public funds.
The Government’s aim is for public authorities to make their own assessments of whether a new subsidy meets the requirements of the regime. It would replace EU state aid rules, which applied to the UK until 31 December 2020. Previously, the European Commission signed off specific subsidies.
The Bill gives the Competition and Markets Authority an advisory role for certain subsidies given by public authorities, including devolved administrations. The UK’s regime would be enforced through the Competition Appeals Tribunal when the legal framework isn’t followed.
Second reading
The central themes of the second reading debate where the role of the devolved administrations in the new subsidy control system; ways to direct subsidies to economically disadvantaged areas; transparency of public authority subsidy spending; and the place of Northern Ireland in the new framework. While the Labour Party didn’t oppose the Bill and abstained in the vote, other opposition parties voted against submitting the Bill to committee stage.
Main issues in committee stage
87 amendments to the Bill and three new clauses were proposed in the Public Bill Committee, but no major amendments were agreed. The Committee passed five rather minor government amendments. These related to transparency obligations and drafting. No non-government amendments or new clauses were added to the Bill.
Opposition MPs argued that the Bill failed to provide an indication of how, where, and on what scale the Government wants to see subsidies spent. They proposed that two policy priorities are made more explicit in the Bill: targeting areas of economic deprivation and supporting the UK’s net-zero objectives.
A series of amendments aimed to enhance the role of the devolved administrations in the new regime. Others were to re-balance efficiency and oversight. They were mainly related to transparency requirements and to the role of the Competition and Markets Authority.
To limit the prospect of future legal challenges of subsidies that might not comply with subsidy control rules, Opposition MPs urged the Government to set out various definitions of key terms in primary legislation.