Subsidy Control Act 2022
UK legislation replacing EU state aid rules; sets the framework for public sector subsidies to businesses post-Brexit.
Definition
The Subsidy Control Act 2022 replaces EU state aid rules for the UK post-Brexit. It establishes the framework under which public authorities can grant subsidies to businesses without breaching the UK's WTO commitments or trade agreements. While distinct from procurement, the Act intersects with public procurement at several points: contracts let on terms more favourable than market conditions can constitute subsidies; grants accompanying procurement (start-up support, growth funding) need subsidy control compliance; innovation procurement combining R&D investment with subsequent purchase has specific subsidy implications.
How it works in practice
The Act creates a permissive regime compared with EU state aid: authorities can grant subsidies provided they meet seven principles (proportionate, designed to deliver a specific policy objective, minimum necessary, addresses an equity rationale or market failure, balances benefits against effects on competition, considers international obligations, has the necessary transparency). The Subsidy Control Database publishes subsidies above defined thresholds, providing transparency. The Competition and Markets Authority (CMA) has oversight; the Subsidy Advice Unit can review subsidies on referral. For procurement bidders the practical implication is when a bid is supported by public funding (innovation grants, start-up programmes, regional development funding) the funding needs to be transparent and proportionate to avoid subsidy concerns later in the procurement. Authorities running innovation-procurement programmes (combining R&D investment with later purchase) need to design the funding leg of the programme to meet subsidy control principles. Suppliers in receipt of public funding should keep the funding history transparent in bid responses; under-declaration creates exposure both under subsidy control and under PA 2023 transparency requirements.
Common questions
Does the Subsidy Control Act apply to public sector contracts?
A contract awarded at market terms via competitive procurement does not normally constitute a subsidy. Contracts awarded on more favourable terms than market (below-market pricing, exclusive grants of valuable IP, preferential operating rights) can constitute subsidies and need to comply with the subsidy control regime.
Is the Subsidy Control Act stricter than EU state aid?
Generally more permissive. EU state aid required pre-notification and approval for many subsidies; the UK Subsidy Control Act operates on transparent self-assessment against principles with post-award review available. The trade-off is greater authority freedom but ongoing exposure to CMA review.
What is the Subsidy Control Database?
A public database of UK subsidies above defined thresholds. Authorities granting subsidies above threshold must publish them; the database provides transparency for businesses, competitors, and trading partners. It is the UK equivalent of the EU Transparency Aid Module.