Part 6 continued    

• “subsidy control principles” means the principles set out in Schedule 1;

• “subsidy control requirements” has the meaning given by section 1(2);

• “subsidy database” means the database of subsidies established under
  section 32;

• 5“subsidy scheme” has the meaning given by section 10(1);

• “subsidy scheme of interest” and “subsidy scheme of particular interest”
  have the meanings given by section 11;

• “the Trade and Cooperation Agreement” and “supplementing
  agreement” have the same meanings as in the European Union (Future
  10Relationship) Act 2020 (see section 37(1) of that Act);

• “working day”, in relation to a part of the United Kingdom, means a day
  other than—

  (a)

  a Saturday or Sunday, or

  (b)

  a day which is a bank holiday under the Banking and Financial
  15Dealings Act 1971 in that or any other part of the United
  Kingdom.

(2)Section 30 of the European Union (Future Relationship) Act 2020
(interpretation of agreements: public international law) applies where a court
or tribunal has regard to the Trade and Cooperation Agreement or a
20supplementing agreement for the purposes of interpreting a provision of this
Act.

90 Extent

(1)Subject to subsection (2), this Act extends to England and Wales, Scotland and
Northern Ireland.

(2)25Section 48(4) extends to England and Wales and Scotland only.

91 Commencement

(1)The following come into force on the day on which this Act is passed—

(a)Part 1;

(b)any power to make regulations under Part 2, 3 or 4 or Chapter 1 of this
30Part;

(c)this Chapter.

(2)The rest of this Act comes into force on such day as the Secretary of State may
by regulations appoint.

(3)Different days may be appointed for different purposes.

(4)35The Secretary of State may by regulations make transitional or saving
provision in connection with the coming into force of any provision of this Act.

(5)The power to make regulations under subsection (4) includes power to make
different provision for different purposes.

(6)Regulations under this section are to be made by statutory instrument.

92 40Short title

This Act may be cited as the Subsidy Control Act 2021.

SCHEDULES

Section 9

Schedule 1 The subsidy control principles

Common interest

A5Subsidies should pursue a specific policy objective in order to—

(a)remedy an identified market failure, or

(b)address an equity rationale (such as social difficulties or
distributional concerns).

Proportionate and necessary

B10Subsidies should be proportionate to their specific policy objective and
limited to what is necessary to achieve it.

Design to change economic behaviour of beneficiary

C(1)Subsidies should be designed to bring about a change of economic
behaviour of the beneficiary.

(2)15That change, in relation to a subsidy, should be—

Costs that would be funded anyway

DSubsidies should not normally compensate for the costs the beneficiary
20would have funded in the absence of any subsidy.

Least distortive means of achieving policy objective

ESubsidies should be an appropriate policy instrument for achieving their
specific policy objective and that objective cannot be achieved through other,
less distortive, means.

25Competition and investment within the United Kingdom

FSubsidies should be designed to achieve their specific policy objective while
minimising any negative effects on competition or investment within the
United Kingdom.

Beneficial effects to outweigh negative effects

GSubsidies’ beneficial effects (in terms of achieving their specific policy
objective) should outweigh any negative effects, including in particular
negative effects on—

(a)5competition or investment within the United Kingdom;

(b)international trade or investment.

Section 9

Schedule 2 The energy and environment principles

Aim of subsidies in relation to energy and environment

A10Subsidies in relation to energy and environment shall be aimed at and
incentivise the beneficiary in—

(a)delivering a secure, affordable and sustainable energy system and a
well-functioning and competitive energy market, or

(b)increasing the level of environmental protection compared to the
15level that would be achieved in the absence of the subsidy.

Subsidies not to relieve beneficiary from liabilities as a polluter

BSubsidies in relation to energy and environment shall not relieve the
beneficiary from liabilities arising from its responsibilities as a polluter
under the law of England and Wales, Scotland or Northern Ireland.

20Subsidies for electricity generation adequacy, renewable energy or cogeneration

C(1)Subsidies for electricity generation adequacy, renewable energy or
cogeneration—

(a)shall not undermine the ability of the United Kingdom to meet its
obligations under Article 304 of the Trade and Cooperation
25Agreement (provisions relating to wholesale electricity and gas
markets),

(b)shall not unnecessarily affect the efficient use of electricity
interconnectors provided for under Article 311 of the Trade and
Cooperation Agreement (efficient use of electricity interconnectors),
30and

(c)shall be determined by means of a transparent, non-discriminatory
and effective competitive process.

(2)But a non-competitive process may be used to determine a subsidy for
renewable energy or cogeneration if appropriate measures are put in place
35to prevent overcompensation and—

(a)the potential market supply is insufficient to ensure a competitive
process,

(b)the eligible capacity is unlikely to have a material effect on any of the
following—

(i)40competition or investment within the United Kingdom,

(ii)trade between the United Kingdom and any country or
territory outside the United Kingdom, and

(iii)investment as between the United Kingdom and any country
or territory outside the United Kingdom, or

(c)the subsidy is given for a demonstration project.

(3)Sub-paragraph (1)(c) is without prejudice to Article 304(3) of the Trade and
5Co-operation Agreement (capacity mechanisms in electricity markets).

(4)In this paragraph and paragraph D, “subsidy for electricity generation
adequacy” means a subsidy that provides an incentive for a capacity
provider to be available in times of expected system stress.

DSubsidies for electricity generation adequacy may be limited to installations
10not exceeding specified CO2 emission limits.

ESubsidies for renewable energy or cogeneration shall not affect beneficiaries’
obligations or opportunities to participate in electricity markets.

Subsidies in the form of partial exemptions from energy-related taxes and levies

F(1)Subsidies in the form of partial exemptions from energy-related taxes and
15levies in favour of energy-intensive users shall not exceed the total amount
of the tax or levy concerned.

(2)“Levy” does not include network charges.

Subsidies in the form of compensation for increases in electricity costs

GSubsidies in the form of compensation for electricity-intensive users given in
20the event of an increase in electricity costs resulting from climate policy
instruments shall be restricted to sectors at significant risk of carbon leakage
due to the cost increase.

Subsidies for the decarbonisation of emissions linked to industrial activities

HSubsidies for the decarbonisation of emissions linked to industrial activities
25in the United Kingdom shall—

(a)achieve an overall reduction in greenhouse gas emissions, and

(b)reduce the emissions directly resulting from the industrial activities.

Subsidies for improvements of the energy efficiency of industrial activities

ISubsidies for improvements of the energy efficiency of industrial activities
30in the United Kingdom shall improve energy efficiency by reducing energy
consumption, either directly or per unit of production.

Section 78

Schedule 3 Subsidies provided by primary legislation

Introductory

135This Schedule provides for the application of this Act in the case of subsidies
provided by means of primary legislation.

2(1)In this Schedule—

• “appropriate authority” means—

  (a)

  in relation to a subsidy provided by means of an Act of
  Parliament, a Minister of the Crown or the Commissioners
  for Her Majesty’s Revenue and Customs;

  (b)

  5in relation to a subsidy provided by means of an Act of the
  Scottish Parliament, the Scottish Ministers;

  (c)

  in relation to a subsidy provided by means of an Act or
  Measure of Senedd Cymru, the Welsh Ministers;

  (d)

  in relation to a subsidy provided by means of an Act of the
  10Northern Ireland Assembly, the appropriate Northern
  Ireland department;

• “appropriate court” means—

  (a)

  in relation to a subsidy provided by means of an Act of the
  Scottish Parliament, the Court of Session;

  (b)

  15in relation to a subsidy provided by means of an Act or
  Measure of Senedd Cymru, the High Court in England and
  Wales;

  (c)

  in relation to a subsidy provided by means of an Act of the
  Northern Ireland Assembly, the High Court in Northern
  20Ireland;

• “devolved legislature”, in relation to devolved primary legislation,
  means—

  (a)

  the Scottish Parliament, in the case of an Act of that
  Parliament;

  (b)

  25Senedd Cymru, in the case of an Act or Measure of Senedd
  Cymru;

  (c)

  the Northern Ireland Assembly, in the case of an Act of that
  Assembly;

• “devolved primary legislation” means primary legislation that is not an
  30Act of Parliament;

• “promoter”, in relation to a Bill introduced in Parliament, means
  (subject to sub-paragraph (2)) the member of Parliament in charge of
  the Bill;

• “promoter”, in relation to proposed devolved primary legislation,
  35means (subject to sub-paragraph (2))—

  (a)

  in the case of a Bill introduced in the Scottish Parliament—

  (i)

  the Scottish Ministers, or

  (ii)

  where the member of the Scottish Parliament in
  charge of the Bill is not a member of the Scottish
  40Government, that member of the Parliament;

  (b)

  in the case of a Bill or proposed Assembly Measure
  introduced in Senedd Cymru—

  (i)

  the Welsh Ministers, or

  (ii)

  where the member of the Senedd in charge of the Bill
  45or Measure is not a member of the Welsh
  Government, that member of the Senedd;

  (c)

  in the case of a Bill introduced in the Northern Ireland
  Assembly, the member of the Assembly in charge of the Bill;

• “proposed devolved primary legislation” means—

  (a)

  50in the case of devolved primary legislation of the Scottish
  Parliament, a Bill for an Act of that Parliament;

  Subsidy Control BillPage 55

  (b)

  in the case of devolved primary legislation of Senedd Cymru,
  a Bill for an Act of the Senedd or, in the case of a proposed
  Assembly Measure, a Measure of the Senedd;

  (c)

  in the case of devolved primary legislation of the Northern
  5Ireland Assembly, a Bill for an Act of that Assembly;

• “proposed primary legislation” means—

  (a)

  a Bill introduced in Parliament or proposed devolved
  primary legislation, or

  (b)

  a proposal to introduce any such Bill or proposed devolved
  10primary legislation;

• “subsidy proceedings” means proceedings before the appropriate court
  in connection with this Act in relation to a subsidy provided by
  means of devolved primary legislation.

(2)Where a subsidy provided by means of primary legislation resulted from an
15amendment to the proposed primary legislation concerned, the “promoter”
of the proposed primary legislation for the purposes of this Schedule, so far
as relating to that subsidy, is the member who tabled or lodged the
amendment.

3(1)The definition of “subsidy” in section 2 applies for the purposes of this
20Schedule (so far as the context requires) as if the reference in subsection
(1)(a) of that section to financial assistance given by a public authority were
a reference to financial assistance provided by means of primary legislation.

(2)Section 4 applies for the purposes of this Schedule as if—

(a)the reference in subsection (4) of that section to financial assistance
25given by a public authority were a reference to financial assistance
provided by means of primary legislation, and

(b)the reference in subsection (5)(c) of that section to the public
authority whose normal taxation regime it is were a reference to the
legislature concerned.

(3)30The definition of “subsidy scheme” in section 10 applies for the purposes of
this Schedule as if the reference in subsection (1) of that section to a scheme
made by a public authority were a reference to a scheme made by primary
legislation.

4In this Schedule references to a subsidy provided by means of primary
35legislation—

(a)include references to a subsidy given by a public authority under a
duty imposed by that legislation;

(b)do not include references to a subsidy given by a public authority
under a power conferred by that legislation (but see section 1(7)).

540In this Schedule—

(a)references to a subsidy provided by means of primary legislation
include references to a subsidy scheme made by that legislation;

(b)references to a subsidy given by a public authority include references
to a subsidy scheme made by the authority.

Application of principles

6(1)Chapter 1 of Part 2 (application of principles) applies to subsidies provided
by means of devolved primary legislation as it applies to subsidies given by
public authorities.

(2)5For this purpose—

(a)references in that Chapter to a public authority are to be taken as
references to the devolved legislature in relation to the devolved
primary legislation concerned;

(b)in subsidy proceedings before the appropriate court in connection
10with this paragraph, the requirements imposed by that Chapter on
public authorities to consider and form a view are to be assessed by
reference to the considerations and views of the promoter of the
proposed devolved primary legislation.

Prohibitions etc and exemptions

7(1)15Chapter 2 of Part 2 (prohibitions and other requirements), and Part 3
(exemptions), applies to subsidies provided by means of devolved primary
legislation as they apply to subsidies given by public authorities.

(2)For this purpose—

(a)references in Chapter 2 of Part 2, and in Part 3, to a public authority
20are to be taken as references to the devolved legislature in relation to
the devolved primary legislation concerned;

(b)in subsidy proceedings before the appropriate court in connection
with this paragraph, the requirements imposed by Chapter 2 of Part
2 on public authorities to be satisfied of any matter are to be assessed
25by reference to the promoter of the proposed devolved primary
legislation;

(c)(c)sections 21 and 23 apply as if, for subsection (4) in each of those
sections, there were substituted—

“(4)The condition in this subsection is that there has been, or
30there is a reasonable expectation that there will be, proper
remuneration for the subsidy.”; ”

(d)section 29 applies as if, for subsection (6), there were substituted—

“(6)Where a subsidy is given to a SPEI enterprise by means of
devolved primary legislation, there must be arrangements in
35place for—

(a)regular reviews to take place as to the use of the
subsidy to ensure the condition that the amount of the
subsidy is limited to what is necessary to deliver the
SPEI services continues to be met, and

(b)40the taking of steps to recover a subsidy to the extent
that the condition ceases to be met.”;

(e)sections 37 and 39 are to be ignored.

Transparency

8(1)Chapter 3 of Part 2 (which provides for the subsidy database) applies to
45subsidies provided by means of primary legislation as it applies to subsidies
given by public authorities.

(2)For this purpose—

(a)references in that Chapter to a public authority are to be taken as
references to the appropriate authority;

(b)the references in section 33(1)(a) and (b) to a subsidy given, or a
5subsidy scheme made, by the authority are to be taken as references
to a subsidy or scheme provided by means of primary legislation.

CMA referrals

9(1)Sections 56, 57 and 59 (voluntary referrals to the CMA) apply to subsidies in
proposed primary legislation as they apply to subsidies to be given by public
10authorities.

(2)For this purpose—

(a)references in those sections to a public authority are to be taken as
references to the appropriate authority and (if different) the
promoter of the proposed primary legislation concerned;

(b)15section 56 is to be read as if—

(i)in subsection (1), after “of interest”, there were inserted “or
particular interest”;

(ii)in subsection (2)(c), after “of interest”, there were inserted “or
particular interest”;

(c)20section 57 is to be read as if—

(i)in subsection (1), after “section 56(2)” there were inserted “in
respect of a subsidy, or subsidy scheme, of interest”;

(ii)in subsection (2), after “section 56(1)” there were inserted “in
respect of a subsidy, or subsidy scheme, of interest”;

(iii)25after subsection (2) there were inserted—

“(2A)The CMA must, before the end of five working days
beginning with the day on which a request is received
under section 56(1) in respect of a subsidy, or subsidy
scheme, of particular interest, give notice to the
30appropriate authority—

(a)that the request complies with the
requirements under section 56, or

(b)providing reasons as to why the request does
not comply with those requirements.”;

(iv)35in subsection (3), after “subsection (2)(a)” there were inserted
“or (2A)(a)”;

(v)in subsection (5), after “subsection (2)(a)” there were inserted
“or (2A)(a)”.

Recovery orders

10(1)40Section 74 applies in subsidy proceedings before the appropriate court as it
applies to proceedings under Part 5 before the Competition Appeal
Tribunal.

(2)For this purpose—

(a)section 74 is to be read as if, for subsection (1), there were
45substituted—

“(1)The appropriate court may make a recovery order if—

(a)in exercise of its powers, it determines that relief
should be granted in respect of a subsidy provided by
means of devolved primary legislation, and

(b)in reaching that determination the appropriate court
5finds that the giving of the subsidy, or the making of
the subsidy scheme under which it was given, did not
comply with a requirement of Chapter 1 or 2 of Part
2.”;

(b)subsection (2)(a) of that section is to be read as if, for the words from
10“a public authority” to “that subsidy”, there were substituted “the
appropriate authority to recover a subsidy provided by means of
devolved primary legislation”;

(c)subsection (2)(b) of that section is to be read as if the reference to the
public authority were a reference to the appropriate authority;

(d)15subsection (4) of that section is to be ignored.

Pre-action information

11(1)Section 76 (duty to provide pre-action information) applies to subsidies
provided by means of devolved primary legislation as it applies to subsidies
given by public authorities.

(2)20For this purpose—

(a)references in that section to a public authority are to be taken as
references to the appropriate authority;

(b)the reference in subsection (1) of that section to a subsidy or subsidy
scheme that the authority has given or made is to be taken as a
25reference to a subsidy or subsidy scheme provided by means of
devolved primary legislation;

(c)subsection (2)(b) of that section is to be read as if—

(i)for the words “a review of a subsidy decision under section
70” there were substituted “relief in subsidy proceedings
30before the appropriate court”;

(ii)for “the decision” there were substituted “the subsidy or
scheme in question”.

Time limits

12The power under section 86 to make consequential provision includes
35power to make provision, in relation to subsidy proceedings before the
appropriate court, corresponding or similar to provision made by section 71
in relation to proceedings under Part 5 before the Competition Appeal
Tribunal.