DWF has a specialist Subsidy Control team who can advise you on how to satisfy the relevant legal requirements.
The Subsidy Control rules are the new legal requirements that apply to the award of subsidies in the United Kingdom with effect from 11pm 31 December 2020.
There are five core considerations which a public body must take into account to satisfy the Subsidy Control rules, these being:
In most cases other than those involving Northern Ireland, only the TCA will be important. However it is in the interests of both the funder and the applicant to ensure that the legal requirements are correctly satisfied. Failure to do so may result in the funding being recovered following a legal challenge.
Under Article 3.1 of the TCA, a “subsidy” means financial assistance which:
(i) arises from the resources of the Parties, including:
(a) a direct or contingent transfer of funds such as direct grants, loans or loan guarantees;
(b) the forgoing of revenue that is otherwise due; or
(c) the provision of goods or services, or the purchase of goods or services;
(ii) confers an economic advantage on one or more economic actors;
(iii) is specific insofar as it benefits, as a matter of law or fact, certain economic actors over others in relation to the production of certain goods or services; and
(iv) has, or could have, an effect on trade or investment between the Parties.
Where a "Subsidy" is present, it is necessary to consider further steps (including the application of the Small Amounts of Financial Assistance Provision or the Common Principles).
The above tests largely replicate the previous tests for what is a State aid.
A public body may award a subsidy under the TCA by demonstrating compliance with the six Common Principles listed at Article 3.4 of the TCA.
The Common Principles are that the:
a) subsidies pursue a specific public policy objective to remedy an identified market failure or to address an equity rationale such as social difficulties or distributional concerns (“the objective”);
b) subsidies are proportionate and limited to what is necessary to achieve the objective;
c) subsidies are designed to bring about a change of economic behaviour of the beneficiary that is conducive to achieving the objective and that would not be achieved in the absence of subsidies being provided;
d) subsidies should not normally compensate for the costs the beneficiary would have funded in the absence of any subsidy;
e) subsidies are an appropriate policy instrument to achieve a public policy objective and that objective cannot be achieved through other less distortive means;
f) subsidies’ positive contributions to achieving the objective outweigh any negative effects, in particular the negative effects on trade or investment between the Parties.
Each of the requirements needs to be substantiated and a record of the assessment created. To assist with this we have provided a 'Subsidy Control Assessment Form' in these Subsidy Control FAQs.
Where the Common Principles are applied the funder is usually obliged to publish details of the award on the UK transparency database or other public website. Under the TCA, information published should include:
(a) the legal basis and policy objective or purpose of the subsidy;
(b) the name of the recipient of the subsidy when available;
(c) the date of the grant of the subsidy, the duration of the subsidy and any other time limits attached to the subsidy; and
(d) the amount of the subsidy or the amount budgeted for the subsidy.
Further information on the Transparency requirements is due to be published by the Subsidy Control unit at the Department for Business, Energy and Industrial Strategy in due course.