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31 March 2021 | Finance

CONSULTATION RESPONSE: UK’s New Subsidy Control Regime


CONSULTATION RESPONSE: UK’s New Subsidy Control Regime

Following the end of the UK’s transition period with the EU, the UK is now able to develop and implement a new domestic subsidy control regime to replace EU State Aid rules. SCDI welcomes the opportunity to respond to the Department for Business, Energy and Industrial Strategy’s proposals on this important issue for the Scottish economy.

Our response on behalf of our members includes the following key points:

  • Subsidies should help businesses and organisations to invest in R&D and innovation, address market failures, reduce inequalities and increase resilience
  • Subsidies should not contribute to unfair competition or fuel inefficient ‘subsidy races’
  • The UK’s new subsidy control regime will need to support a more activist and interventionist approach to industrial strategy, including to back domestic industries and supply chains. It should deliver against three strategic priorities:
  • We agree that the new regime should maintain a competitive and dynamic market economy and respect the UK’s international commitments and legal obligations
  • We have raised significant concerns about the potentially damaging impact and interpretation of the UK Government’s proposals to protect the UK Internal Market and in relation to Subsidy Control Principle 6. It is essential that the new regime:
    • Respects the devolution settlement
    • Does not weaken the subsidy powers of devolved and local public authorities in Scotland
    • Does not prevent pilots or trials of different interventions or policy innovations
    • Protects the ability of public authorities in Scotland to maintain existing or introduce new subsidy schemes independently and regardless of whether all other parts of the UK have comparable schemes
  • There should be some exemptions for subsidies granted as small amounts, relief for exceptional occurrences like climate crises or temporarily to address economic emergencies like COVID-19
  • The highest standards of transparency should be applied to the new regime
  • An independent oversight body with statutory representation from and of Scotland should be created to fulfill three key functions:
    • Information and enquiries
    • Review and evaluations
    • Scheme development and advice

You can download our full response below.