The EU UK Trade and Co-operation Agreement (TCA) sets out the principles for a replacement UK subsidy control system as well as a range of new terms for old state aid subsidy definitions.
The UK government has chosen to implement the new subsidy control/compliance system from1 January 2021.
This means that in Great Britain state aid law will no longer apply to public funding/investment granted on or after 1 January 2021 though for certain activities it will still apply in Northern Ireland under the Northern Ireland Protocol. In the whole of the UK public support granted before the 1 January 2021 will remain subject to state aid law until 11 pm on the 31st December 2024.
The UK government have not had an opportunity to consult on the UK's new system (though we expect this will be undertaken shortly. In the meantime section 29 of the European Union (Future Relationship) Act 2020 (EUFRA) effectively incorporates the subsidy provisions of the TCA into domestic law.
The Department for Business, Energy & Industrial Strategy (BEIS) have published preliminary guidance to assist the public sector. This not only relates to consideration being given to subsidy under the TCA but also whether such subsidy is prohibited by the World Trade Organisation or is otherwise subject to control under the TCA or any other Free Trade Agreement which the UK has entered into.
BEIS guidance can be found here.
Our team have provided a review of the TCA's subsidy provisions and how the UK system might work in the future. Please view here.
If your public authority is about to imminently grant a public subsidy or make an investment it is highly likely that if it is made in accordance with existing state law it will be lawful (not least because the TCA subsidy provisions apply to the EU's state aid law as much as the UK). However, to ensure proper compliance any decision should reference EUFRA, the TCA and the Checklist provided under BEIS's guidance.
For less imminent funding decisions the public sector is likely to want to consider whether proposals are subject to subsidy prohibition or control and if so which structure best suits their objectives.
Our team is consistently monitoring the situation and is available to provide guidance/advice on both state aid compliance for aid granted before 1 January 2021; state aid compliance in Northern Ireland and new UK subsidy control requirements as they are adopted in Great Britain.
Register here for our webinar on the new framework on Thursday 14th January.
