The UK government has announced the new UK subsidy control regime (as envisaged under the Subsidy Control Act 2022 (the “Act”)) will come into force fully on 4 January 2023.  Whilst some elements of the Act came into force upon receiving Royal Assent in April of 2022, this announcement confirms that all remaining elements of the Act (including the “competition law” regime), will now take effect on 4 January 2023.    

In practice, this means that subsidies awarded between now and 4 January 2023, will remain subject to the current regime – which is primarily based upon the provisions of the EU/UK Trade & Cooperation Agreement (the “TCA”).  Any subsidies awarded after that (from 4 January 2023 onwards), will be subject to the full provisions and force of the Act. 

Public bodies will see a variety of changes from that date, including, but not limited to, increased Competition and Markets Authority (“CMA”) referral mechanisms with respect to larger subsidies, and compliance with the “national transparency database” and related reporting requirements.   

The Department for Business, Energy & Industrial Strategy (BEIS) notes it will be hosting a number of events around the UK (in addition to online events), aimed at explaining the main features and principles of the new regime coming.  In addition, we await further information on statutory guidance to complement the Act, with only draft guidance available at present, which was published in July 2022.   

The Act provides a framework regulating the distribution of subsidies from public resources and replaces the previous EU State Aid regime. The UK government believes it to be one of the best opportunities to come from Brexit, capable of helping to “bolster” the drive towards a vibrant free market economy.

Following the full introduction of the new regime, and perhaps contrary to the proposed intention of the Act, it is likely that certain measures that may have previously fallen outside of the remit of the State Aid regime, may now fall within the remit of the new regime and Act.  Accordingly, public bodies should carefully consider any measures (or planned measures), and how matters may change following the full introduction of the Act.  Should you or your organisation have any questions at all in respect of the new regime or Act, please do not hesitate to get in touch with one of our public sector team.