CMA: Subsidy Advice Unit opens for business

4 Jan 2023 10:08 AM

The Subsidy Advice Unit is ready to give advice to public authorities wishing to use subsidies to deliver important public objectives.

The Subsidy Advice Unit (SAU) is a new function of the Competition and Markets Authority (CMA) created by the Subsidy Control Act 2022. It forms part of the new regime for governing the provision of subsidies within the UK following its exit from the EU.

Subsidies are financial assistance – such as grants, loans or tax credits – that authorities can offer to companies to support policies that are in the public interest, to address a market failure or equity concern. For example, this could include car manufacturers being offered a subsidy to help lower the price of electric vehicles to support environmental targets.

The SAU will:

• evaluate authorities’ assessments of the highest-value subsidies and subsidy schemes put forward for review by public authorities in national, devolved and local government. These are generally over £5m in value, or schemes that allow subsidies of this value to be awarded. The SAU will then provide independent and non-binding advice regarding such assessments
• monitor and review the operation of the UK subsidy control regime

The SAU will not:

• carry out subsidy reviews on its own initiative – assessments must first be put forward by the public authority awarding the subsidy or creating the scheme. The Secretary of State for Business, Energy and Industrial Strategy may also refer a subsidy to the SAU
• decide whether subsidies should be awarded – this is a matter for public authorities

Rachel Merelie, Senior Director of the Subsidy Advice Unit, said:

We’re here to provide public authorities with expert advice to help inform their subsidy assessments and decisions – a role that will assist authorities in supporting important public objectives, such as becoming a low carbon economy, through subsidies.

From today, the CMA’s Subsidy Advice Unit is ready to take on referrals from public authorities and we look forward to playing our part in ensuring that UK consumers and businesses benefit from a leading subsidy control regime.

The CMA published guidance in November setting out the role of the SAU. It explains the SAU’s proposed approach to matters including the referral process, transparency, confidentiality, reporting and monitoring. It also provides information about the SAU’s online Public Authority Portal, which public authorities should use to submit referrals to the SAU once the new regime comes into effect.

Notes to editors

1. The establishment of the Subsidy Advice Unit is one of a series of new measures contained within the Subsidy Control Act 2022. The Act establishes a new system of subsidy oversight and control within the UK to replace the EU State Aid regime.
2. The Subsidy Control Act 2022, which was granted Royal Assent in April 2022, has led to the establishment of the Subsidy Advice Unit within the CMA as a Committee of the CMA Board. The SAU plays a defined role in the UK’s new subsidy control regime through its review and monitoring functions.
3. Subsidies can take various forms including; a cash payment, a loan with interest below the market rate, or a guarantee. Subsidies are administered by all levels of government in the UK. The definition of public authority is wide and captures any person who exercises functions of a public nature, including public authorities at any level of central, devolved, regional or local government and non-governmental bodies that are performing a public function.
4. Since 1 January 2021, the UK has complied with the commitments on subsidy control set out in its free trade agreements with other countries, notably the provisions of the UK-EU Trade and Cooperation Agreement (TCA), and the World Trade Organization (WTO) rules on subsidies, as well as the relevant provisions within the Northern Ireland Protocol.
5. The government is exempting a limited set of subsidies from the subsidy control principles, such as those required for safeguarding national security and subsidies granted temporarily to address emergencies such as flooding. All subsidies will still be subject to WTO rules.
6. Details of the subsidy control requirements are set out in BEIS Statutory Guidance, which includes relevant sources of guidance and support. Public authorities can request support and guidance on the subsidy control requirements from the subsidy control teams at BEIS, the subsidy control teams in the devolved governments and certain other government departments listed in BEIS Statutory Guidance.
7. Subsidies which can be referred to the SAU are those which fall under the definitions of a Subsidy or Scheme of Interest (discretionary referral) or Subsidy or Scheme of Particular Interest (mandatory referral). In many cases, a Subsidy of Particular Interest will be a subsidy of £10m and over, or £5m and over where it relates to a sensitive sector. A Subsidy of Interest will be in many cases a subsidy between £5m-10m, unless it relates to a sensitive sector. There are also additional criteria for rescue, restructuring, relocation and cumulating subsidies.
8. Full definitions have been set out in regulations made by the Secretary of State for Business, Energy and Industrial Strategy (BEIS).
9. Under the Subsidy Control Act 2022, the Secretary of State for BEIS can also call in any subsidy pre- or post-award to be treated as a Subsidy or Scheme of Particular Interest.