New UK subsidy regime – where are we now?

Two recent blogs on this site (here and here) have described the subsidy control provisions in the Trade and Cooperation Agreement (TCA) to which the current UK government signed up on Christmas Eve. Those obligations bite on 1 January 2021: the obligation to have an independent authority playing an “appropriate role”, and the right of affected parties to apply to the court for a review of decisions granting subsidies that must be prohibited under the TCA or which fail to comply with the principles that the TCA lays down.

As matters stand, there appears to be no implementing legislation in place (though the extraordinary Henry VIII powers in the EU (Future Relationship) Act 2020 (as it will be by the time most people read this) would in theory allow the government to put in place a whole new regime by a statutory instrument made at 1059pm on 31 December, without having even been placed before Parliament (see paragraph 14 of Schedule 5 to that Act).

In default of legislation, and given the removal of EU State aid law from the UK lawbook by SI 2020/1470, all that will be in place is the provisions of section 29 of the EU (Future Relationship) Act, which (in effect) provides that the TCA is law if not otherwise implemented. That means that the subsidy control provisions in the TCA become law. But it is law that fails to give any functions or powers to the independent authority it contemplates, and no framework in which courts are supposed to adjudicate on the application of the broad principles laid down. It is a recipe for extrordinary confusion and uncertainty.

There is one day left for the government to get a more coherent position in place. As I said in my blog, the obvious short-term patch is to keep a “repatriated” version of the EU State aid rules going. Let us hope that the current Prime Minister’s boast in the debate today on the Bill that his government had removed the EU State aid regime from the UK has not put paid to that sensible option.


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