Subsidy control
Scope:
This section gives guidance on current subsidy control rules.
Applicability:
The guidance applies to subsidies provided by any public authority to which the Scottish Public Finance Manual (SPFM) is directly applicable.
Definitions:
| Term | Intention |
|---|---|
| Shall/Must | Denotes a requirement; a mondatory element |
| Should | Denotes a recommendation; an advisory element |
| May | Denotes approval |
| Might | Denotes a possiblity |
| Can | Denotes both capability and possibility |
| Is/are | Denotes a description |
Links to relevant guidance:
| Principles/Guidance | Links |
|---|---|
| Principles | Subsidy control obligations are now established by the Subsidy Control Act 2022 |
| SG Guidance | Is available on the SG Intranet |
| Detailed SG Procedural Guidance | Is available on the SG website: Subsidy Control: Guidance |
| Public Sector Bodies Guidance | Public Bodies can use SG Guidance as applicable and where not applicable are required to use the principles defined in the SPFM to develop their own guidance and procedures |
Review/update
Lead area: Subsidy Control Team
For update/review of this principle please refer to the Guidance and Procedure available on the SG intranet or from the Governance and Accountability team, this includes information on ministerial approval
Accessibility guidance is available on the SG intranet
Scope:
This section gives guidance on current Subsidy Control rules (previously European Commission (EC) State aid rules). It applies to subsidies provided by any Public Authority to which the Scottish Public Finance Manual (SPFM) is directly applicable.
Key points:
This guidance applies to all public authorities who grant subsidies. Public authorities are responsible for ensuring they understand their obligations in relation to awarding subsidies
The EU State aid regime was effectively revoked from UK law from 1 January 2021 except in limited circumstances (under the Northern Ireland Protocol and certain other cases set out in the UK-EU Withdrawal Agreement). Subsidy control obligations are now established by the Subsidy Control Act 2022.
Consideration must also be given to the UK’s international obligations including various Free Trade Agreements and those arising as a consequence of World Trade Organisation membership.
Subsidy control should be considered as early as possible in the policy development stage.
The Scottish Government’s Subsidy Control Team should be consulted on proposals being awarded under the new subsidy control regime.
Background
A four-limbed approach has been developed to determine when Subsidy Control rules apply. In general terms, a subsidy is a measure which:
-
is given, directly or indirectly, from public resources by a public authority;
- will confer an economic advantage on one or more enterprises;
- is specific, that is, is such that it benefits one or more enterprises over one or more other enterprises with respect to the production of goods or the provision of services; and
- will have, or is capable of having, an effect on—
- (i) competition or investment within the United Kingdom,
- (ii) trade between the United Kingdom and a country or territory outside the United Kingdom, or
- (iii) investment as between the United Kingdom and a country or territory outside the United Kingdom.
All of these limbs must be met for a measure to be a subsidy. The Department for Business and Trade have produced statutory guidance.
Compliance
All subsidies provided by public authorities subject to the requirements of the SPFM shall comply with the UK’s Subsidy Control Act 2022. It is the responsibility of both policy makers and grant administrators to consider subsidy control and ideally this should be done as early as possible in the policy development stage, in consultation with the Subsidy Control Team. If subsidies are not awarded in compliance with the Subsidy Control Act this can result in judicial review, clawback of the subsidy or trade tariffs being imposed.
Subsidy Control Team
The Subsidy Control Team should be consulted on all proposals which may have subsidy implications. The Team can help make an early assessment of whether a proposed project or policy objective should be considered a subsidy. The Subsidy Control Team can also provide advice on fulfilling transparency requirements and guidance on undertaking a subsidy principles assessment.