Government announces new "agile and flexible" subsidy system in wake of Brexit

The government has announced that it is introducing a new subsidy control system in the aftermath of the UK’s departure from the EU.

The Subsidy Control Bill will support the implementation of a new system, which will start from the basis that subsidies are permitted if they follow “UK-wide principles”, which the government defines as delivering good value for the British taxpayer.

The government said that the new system will allow public authorities to deliver subsidies - including grants, loans and guarantees - without the restrictions and bureaucracy of the previous system.

Before leaving the EU, the UK followed the EU’s State aid regime, which meant that all subsidies except those under a block exemption regulation had to be approved by the European Commission.

Kwasi Kwarteng, the UK’s business secretary, commented: “Today we’re seizing the opportunities of being an independent trading nation to back new and emerging British industries, create more jobs and make the UK the best possible place to start and grow a business.

“We want to use our newfound freedoms as an independent, sovereign country to empower public authorities across the UK to deliver financial support - without facing burdensome red tape.

“While the UK’s new system will be more agile and flexible, I have been clear that we will not return to the failed 1970s approach of the government trying to run the economy, picking winners or bailing out unsustainable companies. Every subsidy must deliver strong benefits for local communities and ensure good value for money for the British taxpayer.

“Today’s bill marks a clear departure from the EU State aid regime and will ensure our new subsidy system will maintain the UK’s competitive, free market economy that has been central to our economic success and national prosperity for decades.”

Paul Scully, UK business minister, said: “The UK’s new bespoke subsidy system will be simple, nimble, and based on common-sense principles – free from excessive red tape.

“Our modern regime will support the UK government, devolved administrations in Edinburgh, Cardiff and Belfast, and local authorities in swiftly and strategically supporting our economic recovery while ensuring a consistent, level playing field for subsidies across the entire country.”

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