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Summary
- The UK has announced its new subsidy control bill, based on a set of UK-wide principles.
- The new system will be more flexible and based on common sense principles.
- The new system will be quicker compared to the prior 1970s EU’s strict regime.
The UK has announced its new subsidy control bill on Wednesday, which will provide quicker and more flexible support to businesses across the UK.
As per the UK business secretary, Kwasi Kwarteng, this new subsidy control system move would bring good value and financial support across the UK. With this bill, the UK is seizing an opportunity of being a new independent trading nation providing support to British Industries, which would create more jobs and make the country a favourable place where one can establish their businesses.
The new subsidy system will be flexible and follow a quick approach rather than the 1970s approach. In 1970s, all subsidies, except those which were under the Block Exemption Regulation, had to undergo a lengthy rigid process to get approval by the European Commission in advance, delaying the disbursement of funds and vanishing the purpose.
Adding further, Kwarteng said the move would empower the devolved UK government to provide financial support to the business rather than facing burdensome red tape. Previously, when the UK was a part of the EU, the EU’s State aid regime was followed by the UK, deciding the awarding of subsidies such as grants, loans, and guarantees.
As per the new Subsidy Control Bill, the Scottish Government will now be able to decide which businesses to support with taxpayer subsidies by following a set of UK-wide principles. However, this decision previously required approval from the European Union (EU).
The bill marks a clear departure from the EU’s state aid regime. Now, the UK will establish its new subsidy system to maintain its competitive and free-market economy that has been the success mantra of the UK for decades.
As per the Government, this move will strengthen the union by preventing subsidy races among public authorities, competing to attract the same business by prohibiting the awarding of subsidies that will result in the relocation of jobs and businesses from one part of the UK to another.
The UK Business Minister Paul Scully said the new subsidy system would be free from excessive red tape. It will be simple and based on common-sense principles. The new bill will support the UK Government, local authorities and devolved administrations in Edinburgh, Cardiff and Belfast, in supporting the economic recovery strategically.
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The new regime will contribute to meeting the UK’s international commitments on subsidy control, following the World Trade Organization rules in the area, and those in free trade agreements, upholding the UK on the international stage.
Under the new regime, enforcement will be through the UK’s courts and tribunal system, with reviews through the Competition Appeal Tribunal. The new regime will be applicable in 2022, subject to Parliamentary approval.
