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Subsidy Control in ZEBRA 2 applications – Frequently Asked Questions

05 December 2023

The Department for Transport's £129m ZEBRA 2 challenge fund closes for applications at 4pm on Friday 15th December 2023.  The guidance states that applicants "must confirm they have received legal advice on subsidy control" which must "be attached as a clearly labelled annex". In this article Jonathan Branton and Alexander Rose discuss three points which will be relevant for all local transport authorities considering submitting an application for funding. 

What is ZEBRA 2?

The Zero Emission Bus Regional Areas 2 ("ZEBRA 2") programme is a £129m challenge fund, which aims to build upon the success of the first round of funding, which supported the purchase of 1,300 zero emission buses ("ZEBs").

Applications can be made by local transport authorities who are directed to use ZEBRA 2 funding towards ZEBs and associated infrastructure.  ZEBRA 2 will contribute up to 75% of the cost difference between a ZEB and a standard conventional diesel bus equivalent of the same total passenger capacity.

Will ZEBRA 2 funding constitute a subsidy?

Reducing the cost of commercially operated buses using public funds will constitute a subsidy.

Can the subsidies be awarded under the Department for Transport's ZEBRA subsidy scheme?

A scheme called SC10571 – Zero Emission Bus Regional Areas (ZEBRA) was established for awards made up until 31 March 2022.

Does a Principles assessment need to be made for ZEBRA 2 awards?

Applying the Subsidy Control principles at Schedule 1 of the Subsidy Control Act 2022 is one route to approach ZEBRA 2 grants. This would require the public authority to methodically work through each of the frames of reference building up arguments as to how each is met.

Do ZEBRA 2 grants need to be referred to the Competition and Markets Authority?

Depending on the features of the ZEBRA 2 grant it may be necessary for a referral to be made to the Competition and Markets Authority.  The public authority will need to assess whether the measure falls within scope of the Subsidy Control (Subsidies and Schemes of Interest or Particular Interest) Regulations 2022.

Can the Subsidy Control compliance of ZEBRA 2 grants be challenged?

Yes, as with any other subsidy the compliance of a ZEBRA 2 grant may be challenged in the Competition Appeal Tribunal by an interested party.  The UK's first case, The Durham Company Limited v Durham County Council was heard over the Summer and the decision published in July 2023.

Where can applicants for ZEBRA 2 grants obtain expert Subsidy Control advice?

DWF can provide expert written Subsidy Control advice to accompany applications for funding from the ZEBRA 2 programme. 

DWF are considered highly credible advisers in Subsidy Control having recently successfully advised upon UK's first Subsidy Control case. Jonathan Branton and Alexander Rose also appeared as expert witnesses to the Select Committee designing the Subsidy Control Act 2022 and DWF advised on the UK's first referral of a subsidy to the Competition and Markets Authority.

Further Reading