Public expenditure usually falls within the scope of a subsidy control regime when it is provided directly or indirectly to certain enterprises or entities that engage in economic activities, provides these with an economic advantage and has or could have an effect on trade and competition internationally or within the UK.
Until the UK left the European Union, the EU's State aid rules controlled how UK and discretionary EU funding was provided to enterprises and entities that engage in economic activities. Now the UK has left the EU, it is no longer bound by the State aid rules (except when Article 10 of the Northern Ireland Protocol applies) and is developing its own domestic subsidy control regime.
Article 10 of the Northern Ireland Protocol
Article 10 of the NI Protocol provides that EU State aid rules will continue to apply to the UK in respect of measures which affect trade in goods between Northern Ireland and the EU (including the production of and trade in agricultural products) and the production of wholesale electricity in NI (i.e. measures impacting on the Single Electricity Market).
The Department for Business Energy and Industrial Strategy (BEIS) has also provided guidance which covers the interpretation of Article 10 of the Northern Ireland Protocol on the EU State aid rules.
Further information
- State aid - Rules, Regulations and Guidance
- State aid: A Beginner's Guide for Public Bodies in Northern Ireland
The UK Subsidy Control Regime
The EU-UK Trade and Cooperation Agreement
The UK and EU agreed to terms on a Comprehensive Free Trade Agreement and Chapter 3 of Title XI of this agreement contains provisions related to subsidy control.
Since 1 January 2021, aid providers have had to comply with the provisions set out in the agreement, except on the occasions where the aid falls within the scope of Article 10 of the Northern Ireland Protocol.
The Subsidy Control Bill
The Subsidy Control Bill was introduced to Parliament on 30 June 2021. It set out the government’s legislative proposal for a new UK subsidy control regime.
The Subsidy Control Act 2022
The Subsidy Control Bill received Royal Assent on 28 April 2022 and became the Subsidy Control Act.
Under the Subsidy Control Act 2022, a subsidy means any financial assistance given directly or indirectly through public resources by a public authority that confers a specific economic advantage on one or more enterprises, with respect to the production of goods or the provision of services, and which is capable of having, an effect on competition or investment within the United Kingdom or trade or investment between the United Kingdom and another country.
BEIS will be taking forward legislation to bring the main elements of the Act into force and this is expected to be in Autumn 2022.
Further information
Role of the DfE Subsidy Control Advice Unit
DfE Subsidy Control Advice Unit (SCAU) provides advice and guidance to Northern Ireland Departments and their Arm’s Length Bodies (ALBs) on both the State aid rules and the UK Subsidy Control regime and how measures can be designed so that they comply with the relevant regime. This includes:
- providing advice, at an early stage, on whether a subsidy might be present in a policy or funding/assistance proposal
- providing advice on whether or not proposals are within the scope of Article 10 of the Northern Ireland Protocol
- working with Northern Ireland Departments and their ALBs to make sure that any assistance they provide is in compliance with the State aid rules or the UK Subsidy Control regime
Training and Awareness Raising
SCAU provides training and awareness-raising activities for people in Northern Ireland Departments and their ALBs, helping them to identify when subsidies might be present in their projects/plans and how to deal with it.
If you think your organisation would benefit from a training/awareness raising session please contact subsidycontrol@economy-ni.gov.uk.