The Government has today set out plans for a new national subsidy control system aimed at providing “tailored” financial support to UK businesses.
Here’s what you need to know.
Replaces EU state aid regime
Made possible only after the end of the Brexit transition period, the new subsidy control system will replace the existing “inflexible and bureaucratic” EU state aid regime.
Under the new regime, the UK will no longer need prior approval from the European Commission before providing funds to businesses.
UK-wide principles
The new regime will be governed by a set of national principles to ensure that subsidies “deliver strong benefits” and “good value for money for the UK taxpayer”, but are awarded in a “timely and effective way”.
Power to the people
The new UK system will give local authorities, public bodies and the devolved administrations in Edinburgh, Cardiff and Belfast new powers to issue taxpayer subsidies.
A focus on innovation
According to the Department for Business, Energy & Industrial Strategy (BEIS), the new regime will allow the UK to be “more dynamic” in providing support to businesses, such as those in innovative, research & development-focused industries, to encourage “job creation and growth”.
Will help tackle climate change
The new system will help the UK Government tackle key domestic policy objectives – such as climate change, Covid-19 recovery and protecting the internal market – in a way that the existing EU scheme does not allow.
Will honour existing global commitments
It has been confirmed that the new system will honour existing international obligations, such as the World Trade Organisation (WTO) rules, the UK-EU Trade and Cooperation Agreement and other free trade agreements.
Launching later this year
A consultation will now run for a period of eight weeks, with full legislation likely to be presented to Parliament later this year.
What the Government says
Commenting on the announcement, Business Secretary Kwasi Kwarteng said: “This is a significant milestone on our historic journey as an independent, sovereign nation.
“Our new, more flexible system will empower public authorities and devolved administrations, and ensure fair competition for businesses across the UK.
“With a modern, tailored approach to supporting businesses, we will also be able to press ahead with our long-term ambitions to tackle climate change and to level up opportunity as we build back better from the pandemic.”
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