Does the UK Subsidy Control Regime have an Effective Enforcement Mechanism?

This paper examines whether the UK Subsidy Control regime has an effective enforcement mechanism. The regime was designed to allow for the flexible award of effective subsidies by making awarding authorities responsible for compliance with the principles set out in the Subsidy Control Act 2022. It is unique in applying to the UK’s internal market, and not just its international obligations. Unlike EU State aid, there is no formal regulator to investigate, approve or prohibit subsidies. Instead, public bodies must publish details of their subsidy awards to facilitate possible challenges by interested parties. The CMA’s Subsidy Advice Unit only provides non-binding advice in relation to high value subsidies. A legal and empirical analysis of the regime’s first three years reveals that the SAU reports are of great value in promoting compliance, but that there are significant obstacles to challenging subsidy decisions. The transparency database contains inadequate and inconsistent information, and judicial review sets a high bar for demonstrating the authority acted irrationally in applying the principles. The paper recommends three actions to mitigate these weaknesses in enforcement: (1) enhanced transparency; (2) periodic auditing; and (3) the enhanced use of streamlined routes.