As the Subsidy Control Bill is now before Parliament, I thought it would be useful to collect together resources on the Bill, debates on it, and articles being written about it. I will also try to summarise key issues that are debated and pick up any statements likely to be useful in interpretation of the legislation under Pepper v Hart principles.
Please let me know (gperetz@monckton.com) if there is anything that I have missed – in particular any further articles and comment that I could usefully link to. I will try to keep this post updated.
Bill texts
Text of Bill as introduced to the House of Commons
Explanatory Notes to Bill as introduced
Text of Bill as introduced to the House of Lords
Other material published by the Government in relation to the Bill
On the definition of “Subsidies/Schemes of Interest/Particular Interest“
These definitions will control what subsidies/schemes must be, or may be, considered by the CMA
Draft Guidance
Clause 79 of the Bill permits the Secretary of State to issue guidance to which granting authorities must have regard. Illustrative guidance has been published
Streamlined routes
Clause 10 of the Bill provides for “streamlined subsidy schemes” made by the Secretary of State and laid before Parliament. The CMA does not consider those schemes (clause 64(1)(a)). The government has published a statement of policy intent, and two examples (clean heat and R&D).
Debates and evidence
Commons
Second Reading debate (Commons)
Evidence given to, and debates of, the Public Bill Committee (Commons)
Witnesses were: Professor Fothergill of the Industrial Communities Allieance and Dr Pazos-Vidal of the Convention of Scottish Local Authorites; Thomas Pope of the Institute for Government and Dr Stephanie Rickard of the LSE; Dr Roger Barker of the Institute of Directors; George Peretz QC of Monckton Chambers; Alex Rose and Jonathan Branton of DWF, and Richard Warren of UK Steel; Daniel Greenberg, Counsel for Domestic Legislation at the House of Commons; Rachel Merelie, senior director for the Office for the Internal Market at the Competition and Markets Authority; Ivan McKee, Scottish Government Minister for Business, Trade, Tourism and Enterprise.
Various points on interpretation of the legislation arising from the debates so far (rewferring to pages of the consolidated evidence and debates above):
On the subsidy principles, the Committee rejected an amendment to principle G that that would have required all granters of subsidies to consider as negative effects any adverse effects on the UK meeting its net zero climate commitments. The Minister stated that “it is unnecessary explicitly to require public authorities on the face of the Bill to consider the negative effects of subsidies on the UK’s net zero commitment as part of their compliance with principle G. Public authorities will clearly need to consider the effects of subsidies in the round before awarding them, but the amendment would give undue prominence to net zero considerations with respect to subsidies that may have entirely unrelated objectives, such as high street regeneration or providing training opportunities for young people.” [97]
The Committee rejected an amendment that would have enabled devolved administrations to make streamlined subsidy schemes (subsidy schemes that are not liable to be referred to the CMA). The Minister stated that “The Government intend that streamlined subsidy schemes
will be a pragmatic means of establishing schemes for commonly awarded subsidies, including in areas of UK strategic priority, that all public authorities in the UK would able to use if they wish. They will therefore function best when they apply across the entire UK.” [108] It also rejected an amendment that would have required the Secretary of State to consult with the devolved governments before making regulatations that define the categories of subsidy “of particular interest” that must be referred to the CMA: the Minister stated that the UK government was committed to engagement with the devolved administrations but that the amendment would lead to delay
The Minister confirmed that clause 18 applies only to “subsidies that explicitly require enterprises to relocate economic activities from one area of the UK to another, where this relocation would not have occurred without the subsidy” [128]. Since subsidies that explicitly require relocation are going to be rare (at least when legal advice is taken) clause 18 is unlikely to have much application.
The Committee rejected amendments that would have required granting authorities to furnish compete and accurate information to the database and for there to be an audit of the database. The Minister stated that as a matter of general public law, the obligation to put information on the database included an obligation for that information to be complete and accurate, and that if the public authority did not properly fulfil its obligation to upload the required information, the clock for the end of the limitation period would not start, so the subsidy or scheme could be challenged indefinitely [151].
There was a discussion of the reason for the 6 month/1 year (tax) time limit for plaing subsidies on the database. The Minister argued that those periods were necessqary to ensure accurate information. He also stated that guidance would be given on the meaning of “tax declaration” [168].
On standing to challenge a subsidy control decision in the CAT, the Minister said, on the key concept of “interested party” that “an interested party is any person whose interests may be affected by the decision in question. We are setting out a new UK-specific subsidy regime with unique rules. In that context, we have set out an intentionally broad definition of whatc onstitutes an interested party. That said, the Competition Appeal Tribunal can exercise its discretion. We want to ensure that in each case the right people are determined to be interested parties. By exercising that discretion, the Competition Appeal Tribunal
can build up a jurisprudence that is specific to and optimally used for the subsidy control context. The Competition Appeal Tribunal is an expert body in competition matters and has the right knowledge to make appropriate decisions on these questions of standing.” He went on to suggest that the clause 70 test was not necessarily narrower than the general test of standing in judicial review in England and Wales. [300] He also stated that a devolved administration or local authority could be an interested party if it was concerned about negative effects of the subsidy on businesses in its area [308-309]
The Minister also confirmed that where tranparency obligations have not been complied with, a subsidy could be challenged at any time [311]: this will be important in cases where granting authorities incorrectly take the view that a measure is not a subsidy and so do not place it on the transparency register.
Written evidence to the Bill Committee by Alex Rose and Jonathan Branton, by Rolls Royce plc, by Antony Collins Solicitors, by the Centre for Public Data, by Ardtornish Hydro, and by the Minister for Business, Trade, Tourism and Enterprise, Scottish Government.
The Rose/Branton paper discusses the absence of any express preference for aid to disadvantaged areas, and argues for a streamlined subsidy scheme to facilitate subsidies in disadvantaged areas vis-a-vis richer ones; for improvements to the transparnecy database; and for it to be possible to challenge subsidy schemes at the point when a subsidy under them is granted (NB as explained here I think the better view is that the CAT would, by analogy with cases such as Boddington, allow challenges to the lawfulness of a scheme at the point of challenge to a subsidy under it, but agree that it would be better to be clear about that).
The Rolls Royce paper seeks clarity about the definition of “ailing and insolvent enterprise”, urges caution about defining subidies of interest and particular interest solely by reference to amounts granted and sector, and welcomes the fact that “national security” is (as is standard) left undefined.
The Antony Collins paper opposes the extension of the definition of “subsidy” to include measures with an impact on competition in the UK but no sufficient effect on international trade or investment.
The Centre for Public Data propose removing the exemptions from the requirement to register for subsidies that fall within the definition of minimal financial assistance and for subsidies that fall under schemes and are for less than £500,000.
Ardtornish Hydro seeks to exclude relief from non-domestic rates for hydroelectric power from the scope of the Bill.
The Scottish Minister sets out in detail the Scottish Government’s concerns on the impact of the Bill on the devolution settlement and the role of the devolved governments under the Bill, and also on the includion of agricultural subsidies.
Report stage and Third reading in the Commons
“Will write” letters
These are letters that set out answers to questions that arose in debate and where the Minister promised to write with an answer to the concerns raised. The foillowing issues are covered
Clause 8: “common control” for the purposes of defining an enterprise
Clause 37: procedural requirements for minimal financial assistance
Clause 60(2): test applied by the Secretary of State in making post-award referrals to the CMA
Clause 68 (subsidy advice unit)
Clauses 70 and 76(2) (appeals to the CAT against subsidies made under a scheme; disputes about whether sufficient pre-action information has been provided) [NB that though the analysis of appeals against subsidies granted under schemes correctly points out that the CAT can review whether the subsidy does actually fit under the scheme, it does not grapple with the question of whether a challenger to a subsidy granted under a scheme can challenge the scheme itself (even where the time for challenge to the scheme itself has passed)]
Lords
Second reading debate on 19 January 2022
Devolution texts
Statement by the Welsh Government on the Bill, and draft Senedd Legislative Consent Memorandum (recommending refusal of consent)
Scottish Government Legislative Consent Memorandum (recommending refusal of legislative consent)
Trade and Cooperation Agreement Subsidy Control Provisions
See Part One, Heading One, Title XI, Chapter 3, Articles 363-375.
Articles and comment
See the list of blog posts on this site.
In addition, see my summary of the Bill, and my articles on the tax implications, devolution implications, and on the public law and constitutional implications of the Bill.
Gordon Downie has written a summary of the Bill’s provisions.
The Institute for Government has commented on the Bill.
Alex Rose’s Twitter thread sums up his concerns about the Bill as it passed the Commons.
Seminars on the Bill
Institute for Government, 21 January 2022
Pinsent Mason/UKSALA 1 December 2021 (dealing with enforcement, CMA, appeals and devolution)
Shearman & Sterling/UKSALA 24 November 2021 (dealing with subsidy definition and scope, schemes, the subsidy control principles)