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UK’s plans for new state-aid system
Pic: Shutterstock

30 Jun 2021 / brexit Print

UK’s plans for new state-aid system

The British government has announced plans to introduce legislation that will replace what it describes as the “bureaucratic” state-aid rules in the EU.

The Subsidy Control Bill being introduced to parliament today (30 June) will create a new system to enable the British government to subsidise businesses after its departure from the EU.

It will be enforced through the UK’s courts and tribunal system, while jurisdiction to judicially review the award of subsidies will be given to the Competition Appeal Tribunal (CAT).

'No return to 1970s'

The British government said that the EU system, under which most state aid had to be notified to and approved by the European Commission in advance, led to delays in firms receiving “vital funds”.

“The new UK system will start from the basis that subsidies are permitted if they follow UK-wide principles,” a statement said.

Business Secretary Kwasi Kwarteng ruled out, however, a return to what he called “the failed 1970s approach of the government trying to run the economy, picking winners or bailing out unsustainable companies”.

Powers for devolved governments

Devolved governments in Scotland, Wales and Northern Ireland will be allowed to provide aid to companies, as long as they follow the principles detailed in the bill. Subsidies aimed at attracting jobs or investment from one part of the UK to another will, however, be prohibited.

Under the Northern Ireland Protocol agreed with the EU after Brexit, EU state-aid rules still apply to some measures that affect trade in goods and electricity between Northern Ireland and the EU.

They apply mainly to aid for manufacturers and the sellers of goods located in Northern Ireland that trade with the EU.

Gazette Desk
Gazette.ie is the daily legal news site of the Law Society of Ireland