Key Facts

• Schedule 2 lists additional energy and environmental principles.
• The principles aim to ensure subsidies contribute to emission reductions and increased environmental protection.
• Clause 10 defines subsidy schemes and streamlined subsidy schemes.
• Streamlined subsidy schemes aim to support public authorities in delivering well-designed subsidies efficiently.
• Clause 10 of the Bill sets out procedural requirements for making streamlined subsidy schemes, including laying them before Parliament.
• The Government will work on developing these schemes as the Bill progresses towards commencement.
• Streamlined subsidy schemes are intended for commonly awarded subsidies in UK strategic priorities.
• The Government aims to provide flexibility without excessive bureaucracy or lengthy pre-approval processes.
• Guidance will clarify how principles should be applied by public authorities for levelling-up and economic development.
• Amendment 11 would require the Secretary of State to make regulations within three months after Royal Assent.
• Regulations under clause 11 are subject to the affirmative procedure, allowing debate and approval by both Houses.
• The government expects commencement in autumn 2022.
• The Government has had at least 34 official-to-official engagements with the devolved Administrations.
• There have been approximately 10 ministerial-to-ministerial engagements.
• Regulations under clause 11 may need to be amended quickly in response to changing economic conditions.
• The clause imposes a duty on public authorities to consider subsidy control principles before granting subsidies.
• Public authorities cannot grant subsidies unless they are consistent with the principles.
• Records must be kept by public authorities regarding their assessments and considerations.
• Public authorities can be challenged through judicial review if they do not comply with clause 76.
• The Competition Appeal Tribunal will apply the judicial review standard when hearing challenges.
• Guidance on practical application of provisions, including the duty to consider subsidy control principles, will be published in good time.
• Clause 15 prohibits subsidies in the form of unlimited guarantees of an enterprise’s debts or liabilities if they are either unlimited in monetary terms or in duration.
• Clause 16 prohibits subsidies that are contingent, whether in law or fact, on export performance.
• The prohibitions in clause 15 reflect commitments in article 12.7 of the UK-Japan comprehensive economic partnership agreement and article 367 of the EU-UK trade and co-operation agreement.
• Clause 17 prohibits local content subsidies as they are distortive to trade.
• Audio-visual sector subsidies are exempt from prohibition for cultural contributions.
• Certain types of subsidies, such as those incentivising enterprises to locate production or employ workers in the UK, are not considered local content subsidies.
• Clause 18 prohibits subsidies conditional on relocation from one part of the UK to another unless it occurs without the subsidy.
• The amendment seeks a report explaining how clause 18 aligns with reducing deprivation and freeport policy before implementation.
• Eight new freeports were announced in England to promote regional regeneration, job creation, and innovation.
• The clause aims to prevent relocation of existing economic activities without a subsidy.
• Freeport designations require mitigation of displacement and other factors demonstrated by bidders.
• Guidance will be provided for public authorities to apply subsidies in regenerative scenarios.
• Clause 18 prohibits subsidies explicitly requiring enterprises to relocate economic activities from one area of the UK to another.
• The Government is committed to ensuring the subsidy control regime supports disadvantaged areas and facilitates the levelling-up agenda.
• Freeports are highlighted as an example of a programme that aligns with the subsidy control principles set out in the Bill.
• Amendments 14 and 15 would ensure that rescuing and restructuring subsidies can be given to ailing or insolvent enterprises if they are of vital strategic importance.
• The amendment clarifies that protecting critical national infrastructure and industries of strategic national importance may constitute exceptional circumstances for rescue subsidies.
• Examples include the steel industry crisis, Morrisons takeover by Clayton, Dubilier & Rice, and AstraZeneca's attempted hostile takeover.
• Bill Esterson discusses the need for clarity in primary legislation regarding nationally significant businesses.
• Richard Warren from UK Steel testified that the UK steel sector pays between 80% and 100% more for electricity than its EU counterparts due to renewables and carbon taxes.
• The Institute for Government's written evidence supports additional processes for major infrastructure contributing towards net zero.
• Clause 45 provides a general exemption from subsidy control requirements for subsidies with the purpose of national security.
• Clauses 19 and 20 allow rescue and restructuring subsidies if they meet specific conditions, including public interest or exceptional circumstances.
• Amendments aim to specify certain exceptional circumstances but are not necessary according to Scully's analysis.
• The clause defines 'ailing or insolvent' for deposit takers, insurance companies and enterprises.
• Subsections (1)(b) and (c) use the existing insolvency test in the Insolvency Act 1986.
• Subsection 1(a) uses the TCA definition of ‘ailing or insolvent’.
• Clause 24 is agreed to.
• Clause 25 defines 'deposit taker'.
• Clause 26 defines 'insurance company' and includes future amendment provisions by the Treasury with consultation of regulatory authorities.
• Clause 27 permits subsidies for insurers providing export credit insurance under certain conditions.
• Clause 28 establishes conditions on subsidies granted to air carriers for route operations.
• Clause 29 sets out requirements for giving subsidies for services of public economic interest.
• Clause 30 sets out how prohibitions and requirements apply in relation to subsidy schemes.
• Clause 31 prohibits a subsidy or scheme that has not been properly referred to the subsidy advice unit of the CMA.
• Seema Malhotra supports clause 31 but notes Labour will seek to amend clause 54 at a later date.