UK Subsidy Control: Keep Calm And Carry On

On 25 June 2026, the CMA Subsidy Advice Unit (SAU) released its first report on the effectiveness of the Subsidy Control Act 2022 (the Act), covering the period from the Act’s implementation on 4 January 2023 to 31 March 2026. The SAU concluded that, overall, the regime was operating effectively and as designed, but made a number of recommendations and observations. The Department for Business, Innovation, Science, and Trade (BIST) has now published its response to the SAU’s report.

Under the UK subsidy control regime, public authorities are empowered to self-assess whether subsidies they are considering granting comply with the requirements of the Act - save for certain larger subsidies, which must be notified to the SAU for it to issue a (non-binding) opinion. Subsidies granted must normally be registered on a central public database by the granting authority. Only the Competition Appeal Tribunal¹ (CAT) is able to rule on the lawfulness of a subsidy, following a challenge by an interested third party.

For information on the design and functioning of the regime, see our previous article.

The SAU’s report and recommendations

Whilst noting that the regime is still relatively new, and therefore there was limited evidence for it to draw upon, the SAU found that:

• the self-assessment model offers authorities flexibility in granting and reviewing schemes whilst still protecting against undue distortion across the UK’s competitive markets, and there are positive indications that subsidies being granted under the new scheme are generating investments that may not otherwise have been made;
• public authorities would find further guidance on key aspects of the regime helpful, and they would welcome additional and broader “streamlined routes” (these are schemes that provide an exemption from some of the Act’s requirements, including removing the need for a principles assessment, where certain criteria are satisfied);
• the subsidy transparency database is not as effective as hoped, as there can be issues with uploading subsidy information, and those seeking information can find it difficult to navigate the database;
• whilst feedback generally considered that the SAU performs its advisory role effectively, some stakeholders consider that its effectiveness is limited by the non-binding nature of its advice and a lack of enforcement capabilities; and
• there were concerns that the private enforcement regime under the Act may not be satisfactorily achieving its purpose, although the SAU noted that it is too early to draw conclusions from the very limited number of cases that have been determined by the CAT.

In light of the points raised above, the SAU made three core recommendations.

Guidance and support

Further materials should be developed to guide public authorities. This might include case studies of subsidy assessments, clarifications on assessment protocols (e.g. how to define a subsidy and assess economic concepts), and guidance drawn from case law.

Streamlined routes

BIST should establish a process to review the operation of streamlined routes and should consider the merits of establishing further streamlined routes.

Transparency

BIST should implement further improvements to the subsidy transparency database and regime. Specifically, BIST should: (i) consider ways to allow businesses and sectors to be monitored more easily; (ii) expand the database to include further information on the purpose behind a given subsidy; and (iii) improve the accuracy and consistency of the information on the database.

BIST’s response 

BIST has now published its response, focusing primarily on responding to the SAU’s three core recommendations and setting out goals which it plans to work towards over the next six to twelve months. 

Guidance and support

BIST stated that it would aim not to increase the volume of guidance, but would instead work on making it more concise and targeting areas that authorities find particularly challenging. It will seek to do so through more digestible means, such as quick guides, videos, and visual graphics. BIST additionally aims to provide training sessions for public authorities, run in conjunction with the CMA, on areas such as how public authorities should in practice conduct competition and subsidy assessments².

In response to criticisms that neither BIST nor the SAU provide definitive decisions on the suitability of a subsidy under the regime, BIST maintains that the flexibility provided to authorities to self-regulate and self-assess is fundamental to encouraging public authorities to drive economic growth and meet their policy objectives. 

Accordingly, there is no indication that calls for an ex-ante review body to be put in place to regulate the subsidy regime (akin to the European Commission’s role in the State aid regime) are being taken on board. The CAT will therefore remain the sole route for legal challenges to subsidy decisions. 

Streamlined routes

Streamlined routes reduce the administrative burden for granting authorities and provide a quicker and easier means of granting subsidies. There are now six streamlined routes across a variety of sectors and activities. BIST has stated that it remains open to establishing additional streamlined routes and will welcome suggestions from stakeholders and public authorities on this matter. BIST is also committed to monitoring the success of existing streamlined routes by tracking entries on the transparency database and by considering feedback received from public authorities. 

Transparency

Whilst the transparency database is widely recognised as a central pillar of the subsidy control regime, BIST accepts there are shortcomings. It has already sought to improve the quality of the entries by introducing additional fields, and is now focused on improving the database’s search function and interface. 

Calls from third parties for public authorities to publish their subsidy compliance assessments on the database were, however, firmly rejected by BIST, citing concerns that the administrative burden of such a requirement could have a chilling effect on investment. 

BIST also rejected calls for public authorities to publish “no subsidy” decisions on the database, as this would be similarly burdensome and run contrary to the purpose of the database, which is to record subsidies. Whilst this decision may be understandable, it does mean that third parties concerned about public funding provided to competitors may remain unaware of relevant funding decisions - impairing their ability to test and challenge the robustness of “no subsidy” decisions reached by the granting authorities.

In sum, although BIST has committed to remedying some of the concerns about the database by addressing the “low-hanging fruit” (i.e. coding and formatting improvements), it remains unclear how much of an impact these changes will have.

Additional commentary 

In addition to the areas in which action was recommended by the SAU, BIST commented on other topics such as subsidy exemptions and prohibitions, the SAU referral process, and enforcement.

Notably, on the matter of enforcement, BIST considered that, with limited CAT case precedent, it was too soon to reach any conclusions on the effectiveness of the enforcement regime. BIST considered that, as with any new regime, it is typical for litigation to be limited in the initial years and, in any case, the number of challenges is not an indicator of effectiveness. 

BIST in particular considered that the failure of challenges to date “suggests that the CAT has viewed the level of scrutiny public authorities are applying when designing and giving financial assistance as appropriate and robust”. BIST therefore continues to maintain that, in its view, the self-assessment and private enforcement model remains the best approach for the regime.

Concluding remarks

Although the additional steps outlined by BIST are welcome, many may consider that the changes focus on easy wins and side-step the more difficult questions around the structure of the regime - most notably the lack of an independent regulator with decision-making powers.

For now, both the CMA and BIST maintain that the regime should remain essentially unchanged, even as the effectiveness of its enforcement mechanisms remains unclear. More case law is needed before a proper assessment can be made in this regard, but that requires third parties to shoulder the burden of bringing private claims before the CAT – including identifying measures that can be challenged, financing the proceedings, and (as explored in our recent article) overcoming certain procedural obstacles. Interested parties should therefore continue to monitor developments in this area.

Footnotes

1. Or other relevant court in the devolved nations.

2. This will build upon work the CMA has already been doing - in June it issued updated guidance on competition law for public authorities.

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