For a subsidy or subsidy scheme to be permitted under the Subsidy Control Act 2022 a public authority must demonstrate they are compliant with the Subsidy Control Principles unless they are specifically prohibited:
If you are a public authority designing a subsidy, or subsidy scheme, you should carefully consider the Subsidy Control Principles as part of the subsidy design process and assess the subsidy or scheme for compliance with those principles.
You must not give a subsidy, or make a scheme, unless you reach the view that it is consistent with the Subsidy Control Principles.
The Seven Principles
| Principle A | Common interest - Objective to remedy market failure or address an equity rationale |
| Principle B | Proportionate and necessary - Proportionate and limited to what is necessary |
| Principle C | Designed to change economic behaviour of beneficiary - Brings about a change of economic behaviour of the beneficiary - something that would not happen without the subsidy |
| Principle D | Costs that would be funded anyway - No Compensation for costs the beneficiary would have funded in the absence of any subsidy, execpt in exceptional circumstances (natural disaster etc) |
| Principle E | Least distortive means of achieving policy objective -Subsidy is an appropriate policy instrument - objective cannot be achieved through other, less distortive means |
| Principle F | Competition and investment within the UK - Designed to minimise any negative effects on domestic competition and investment within the United Kingdom |
| Principle G | Beneficial effects should outweigh any negative effects -Positives (i.e. from achievement of policy objective) outweigh any negative effects, in particular negative effects on competition and investment within the United Kingdom, and international trade and investment |
Further Information
- State aid and subsidy control after EU Exit
- UK Subsidy Control/State aid flow chart
- Four limb test - is it a subsidy?
- Minimal Financial Assistance (MFA)
- Services of Public Economic Interest - (SPEI)
- Streamlined Route
- The Subsidy Control Act 2022
For further advice or assistance please contact the DfE Subsidy Control Advice Unit (SCAU).