Reporting requirements under the Subsidy Control Act 2022

Public authorities awarding a subsidy or making a subsidy scheme may be caught by two reporting requirements under the Subsidy Control Act 2022 (the Act).

Part One: reporting information on the BEIS subsidy database

The Act introduces new transparency requirements for public authorities. The first requirement is to upload information onto a subsidy database maintained by the Department for Business, Energy & Industrial Strategy (BEIS) which is accessible and searchable by the public.

What needs publishing?

Public authorities are required to upload details about certain subsidies or subsidy schemes on the BEIS subsidy database. Section 33 of the Act details that the following are required to be uploaded:

• All standalone subsidy awards that are not:
  • MFA (minimal financial assistance) or
  • SPEI (services of public economic interest) or
  • SPEIA (services of public economic interest assistance) or
  • exempt under part 3 of the Act applies.
• Any individual subsidy awards that are MFA or SPEI or SPEIA that are over £100,000.
• All subsidy schemes (unless an exemption under part 3 of the Act applies).
• Any subsidies awarded under a scheme that are over £100,000 (even if paid in smaller payments that are below the £100,000 threshold).

The Act contains certain exemptions to the transparency requirements which are set out in Part 3. The exemptions cover subsidies relating to natural disasters, those given in response to a national or global economic emergency, and those given to safeguard national security.

When must details be uploaded?

Details of the subsidy and/or scheme must be uploaded by the public authority within a 3-month period from the date their decision to give the subsidy or make the subsidy scheme is confirmed.

Where there is a gap between a decision to make a subsidy award being confirmed and it being paid, the uploading to the database may occur before payment of the subsidy.

For subsidy schemes there can be different dates when the scheme’s rules are formally confirmed and put into operation, such as the date the scheme’s design is confirmed or the date the scheme is opened for applications. The public authority should choose the most appropriate date and upload within 3 months of the selected date.

Where there is a tax subsidy scheme, the scheme must be uploaded within the standard 3-month period but a tax subsidy award can be uploaded within one year beginning with the date of the tax declaration.

A subsidy control number (SC number) will be given to uploaded schemes. When awarding subsidies under the subsidy scheme they will be associated with the SC number.

Where are the details uploaded?

Section 32 of the Act requires for a subsidies database to be created and the BEIS Manage UK Subsidies Portal is in place for the public authority’s upload.

An account needs to be created by the public authority to use the Portal; to create this account, email here. Access can also be granted to public authorities and intermediaries who wish to upload this information on behalf of another public authority by contacting the BEIS subsidy control team.

What information needs uploading?

The Subsidy Control (Subsidy Database Information Requirements) Regulations 2022 sets out the information that is required to be uploaded to the database, with further guidance contained in the Statutory Guidance. The specific information depends on whether the upload relates details to be uploaded depend on whether the upload relates to a subsidy scheme, a subsidy awarded under a scheme or a standalone subsidy award.

The information to be uploaded for a subsidy scheme is as follows:

• The name of the scheme and the public authority making the scheme.
• The budget for the entire scheme and the maximum individual awards (or an estimated amount to be amended once known).
• The form the subsidy may take and the sectors it is available for.
• A description of the subsidy scheme which has to cover a minimum of information set out in the Statutory Guidance.
• The legal basis, policy objective and purpose of the scheme.
• The date the decision to make the scheme was confirmed.
• The duration of the subsidy scheme.
• Whether the subsidy scheme is a Scheme of Interest or Particular Interest, and whether the SAU has published a report.

Where a subsidy is awarded under a published subsidy scheme, the information to be uploaded includes:

• The name of the subsidy award beneficiary and the name of the public authority giving the award.
• The amount and form of the subsidiary award.
• The size of the beneficiary and a unique identifier (such as charity number or company number).
• Whether the subsidy award is for goods, services or both.
• The location of the economic activity being subsidized and the sector awarded to.
• The legal basis, policy objective and purpose of the award.
• The date the decision to award the subsidy was confirmed.

Where a standalone subsidy is awarded, the information set out above for a subsidy awarded under a scheme must be included along with a description of the subsidy award. Details of what to include in the description are set out in the Statutory Guidance and includes details about any time limits or conditions attached to the subsidy award and how the award was calculated.

Information relating to subsidy awards can be uploaded individually or in bulk. Public authorities can also provide information in other locations where it cannot be uploaded on the database, such as by providing a link to the information on a publicly accessible website.

How long is information recorded on the database for?

From the date of the upload, information on the subsidy database must be maintained for a period of at least six years. Where the subsidy scheme runs for a duration longer than six years, the information must be maintained for a period that is as long as the subsidy scheme.

Where a public authority modifies a subsidy scheme or award, permitted modifications must be uploaded to the database or a new upload should take place where the modification creates a new scheme or award.

Uploads of MFA, SPEI or SPEIA subsidies or subsidies given under a scheme will also need to occur where any modifications takes the value of the subsidy above the £100,000 threshold. 

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Part Two: reporting to the Subsidy Advice Unit

Before awarding certain subsidies, the Subsidy Control Act 2022 introduces a requirement for public authorities to make advance referrals to the Subsidy Advice Unit (SAU) as part of the Competition and Markets Authority. The referral portal went live in January 2023.

The SAU’s role is to support public authorities in their decision-making when designing and assessing subsidies. The SAU aims to ensure the public authority has a strong assessment of their compliance with the Act’s requirements as the basis of their decisions.

What subsidies need reporting?

Clause 52 of the Act sets out the requirement for public authorities to make either a ‘mandatory’ or voluntary’ referral. This depends on whether the subsidy in question is a:

• subsidy or scheme of particular interest (SSoPI) requiring a mandatory referral or
• subsidy or scheme of interest (SSoI) which can be voluntarily referred.

When deciding if a voluntary referral should be made, the Statutory Guidance provides a list of features that should be considered including whether there is evidence of a subsidy race, if the same or similar subsidies have been repeatedly made to the same recipient, and the nature of the costs being covered.Under clause 55 of the Act, the Secretary of State can also “call-in” subsidies by directing the public authority to make a referral for a report from the SAU regarding their proposed subsidy or scheme.

What is a SSoPI or SSoI?

The Subsidy Control (Subsidies and Schemes of Interest or Particular Interest) Regulations 2022 sets out the full definitions of SSoPIs and SSoIs.

A subsidy of particular interest is one which:

• if given outside of sensitive sectors, is for a value over £10 million or is over £1 million and cumulates to more than £10 million with other related subsidiaries given over the previous 3 financial years;
• if granted inside of sensitive sectors, is for a value of over £5 million or is over £1 million and cumulates to more than £5 million with other related subsidiaries given over the previous 3 financial years;
• is a ‘restructuring subsidy’ i.e. a subsidy granted to an ailing or insolvent business that has a credible restructuring plan and the authority is satisfied the subsidy contributes to an objective of public interest; or
• is for a value over £1 million that is explicitly conditional on relocation and is not generally prohibited as it meets the conditions for an exemption (section 18 of the Act)

A subsidy scheme that provides for the public authority to give one or more subsidies of particular interest is classed as a scheme of particular interest.

The Statutory Guidance lists the sensitive sectors based on the SIC (Standard Industrial Classification) code that applies to the economic activity. Amongst others, the list currently includes steel manufacture, motor vehicle and aircraft production, and the production of electricity. The sensitive sectors will be periodically reviewed and updated.

General subsidy schemes not designed for specific enterprises, or those based on objective factors (e.g. number of employees or geographical location), will be exempt from the lower thresholds for sensitive sectors even if some applicants carry out economic activities within the defined SIC codes.

A subsidy of interest is one which:

• does not meet the SSoPI criteria and is for a value between £5 million and £10 million, or will cumulate to a value in this range together with other related subsidiaries given over the previous 3 financial years;
• is a rescue subsidy i.e. a subsidy granted to an ailing or insolvent business that needs the subsidy urgently or it will go out of business;
• is a tax subsidy; or
• is for a value of £1 million or less that is explicitly conditional on relocation and is not generally prohibited as it meets the conditions for an exemption (section 18 of the Act).

A subsidy scheme that provides for the public authority to give one or more subsidies of interest is classed as a scheme of interest.

The Act sets out exemptions from the requirement to make a referral to the SAU. These include any subsidies given under a streamlined subsidy scheme, those given as minimum financial assistance under section 36 of the ACT, and any given in respect of a natural disaster or for the purpose of safeguarding national security.

When is a referral made? A public authority must make the referral to the SAU:

• For a subsidy scheme – at the design stage i.e. before the scheme is made.

The public authority must only make the referral once at scheme level, and any subsidies subsequently granted under the scheme can be made without an additional referral. This means the authority cannot grant an award under the subsidy scheme until the SAU’s review process is concluded.

• For a subsidy – before the subsidy is awarded.

The Secretary of State can make a post-award referral of a subsidy or scheme to the SAU in certain circumstances; generally, where it is considered there has been a failure to comply with the Subsidy Control requirements or there is a risk that competition or investment in the UK will be negatively affected. The public authority will be required to provide information to the SAU when a post-award referral is made (see ‘How is a referral made’ below).

The SAU also encourages public authorities to make an early assessment of whether their scheme or subsidy may require a referral and, if it does, to engage in pre-referral discussions with them. The SAU can support the authority with preparing the information for the referral submission to reduce the risk of rejection. This is a voluntary consideration, strongly encouraged in complex or novel subsidies, and is done by emailing SAU@cma.gov.uk.

How is a referral made?

Referrals to the SAU are submitted through the SAU’s online Public Authority Portal (PAP).

The public authority has to register for access to the PAP first. Once registered, the Portal acts as a secure channel for the public authority to communicate with the SAU.

To make the referral, the public authority must submit required documents and relevant evidence in a readable and searchable format. The SAU has produced guidance on what information should be included. As a minimum, the referral request must contain:

• a document explaining the public authority’s consideration of how the subsidy or subsidy scheme meters the definition of SSoPI or SSoI.
• a separate document containing the public authority’s Assessment of Compliance with the Subsidy Control requirements which explains the reasons for reaching their conclusion.
• any evidential documents relevant to the Assessment of Compliance to allow the SAU to evaluate the assessment. The SAU guidance suggests this can include copies of documents describing the scheme to recipients, grant agreements, or documents explaining the assessment process for applicants.
• all of the information required to be uploaded to the subsidy database (as set out in section 34 of the Act).

An index of documents should also be submitted (as set out Annex A of the SAU’s guidance) and the public authority must detail which parts of the submitted material is confidential and the reasons why.

Where a post-award referral has been made by the Secretary of State, the public authority will be directed to provide the SAU with the following information within 20 working days:

• any document containing the public authority’s advance assessment as to whether the subsidy or scheme would comply with the subsidy control requirements and any evidence relevant to the assessment.
• where no such assessment can be provided, material containing the reasons why the assessment cannot be provided.
• any information the public authority has not entered on the subsidy database (as set out in section 34 of the Act).

What is the timeline once a report is made?

• Pre-referral discussions

These discussions do not trigger any statutory timeframes. The SAU encourages public authorities to contact them in good time in advance of a referral request to discuss the specific circumstances of the proposed subsidy or scheme.

• Preliminary assessment of referral (mandatory or voluntary)

Beginning the day the referral request is received, the SAU has five working days to carry out a preliminary assessment.

With an SSoI the SAU applies specific principles to determine whether to prioritise the request or not. If not, the SAU will give the public authority notice confirming a report will not be prepared and the reasons for this decision.

For an SSoPI and where the SSoI request is prioritised, the SAU will review the request to check it contains the relevant information. Where the referral is compliant, notice will be provided to the public authority that a report will be prepared. If information is missing from the request, the SAU will notify the public authority that the request is non-compliant and a new compliant request must be submitted.

• The reporting period

Beginning the day the public authority is notified that the referral request is accepted, or from the date information is received in a post-award referral, the SAU has a 30-working day reporting period.

Information about the referral will also be published on the SAU’s website as soon as practicable after the referral acceptance notice is issued, and generally within five working days.

The SAU will evaluate the public authority’s Assessment of Compliance (as detailed  in the Analytical framework section of the SAU’s guidance) and prepare their report. The report will:

• • identify where the public authority’s assessment or evidence is strong or has shortcomings;
  • advise on making improvements to the assessment; and/or
  • advise on making modifications to the proposed subsidy or scheme to ensure compliance with the Act’s requirements.

The 30-working day reporting period can be extended with agreement from the public authority or with an extension direction from the Secretary of State.

• Publishing the report

Once the report is prepared the SAU will:

• • where possible and practicable before publication, communicate the outcome verbally to the public authority on a strictly embargoed basis;
  • publish the report of their website; and
  • provide a copy of the report to the public authority and the Secretary of State.

 

Next steps

It is important to remember the SAU’s report is advisory only. The SAU cannot prohibit the public authority from making a subsidy scheme or granting any subsidies.

Once the report has been published, it’s for the public authority to decide whether they follow any advice offered by the SAU, such as making amendments or improvements, before they make their final assessment to make the subsidy scheme or grant the award. The public authority can make the subsidy scheme or give the subsidy:

• where a voluntary referral for an SSoI has been made, at any time during the referral process.
• where a mandatory referral of an SSoPI has been made, following the expiration of a 5-working day cooling-off period after the SAU’s report is published. The cooling-off period can be extended up to a maximum of 30 working days.

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If you have any queries on the topics discussed, get in touch with Nathan Holden.