Subsidy Control
Subsidy Control Act 2022 (the “Act”)
2.1. Any discretionary rate relief provided by the Council will comply with the UK’s domestic and international subsidy control obligations. The Act which governs the UK’s domestic regime (save in respect of trade in goods or the electricity market between Northern Ireland and the European Union, which continues to be governed by EU State aid rules) has been developed to support compliance with the UK’s international obligations.
Assessing whether discretionary relief is a subsidy.
2.2. The Council will first assess whether the provision of the discretionary relief to ratepayers, as a form of financial assistance, would amount to a subsidy for the purposes of the Act.
2.3. The Council will assess whether the proposed discretionary relief falls within the definition of a subsidy under section 2 of the Act taking into account the statutory guidance provided by the Department for Business and Trade.
2.4. Whether discretionary relief to ratepayers is a subsidy will frequently turn on whether the ratepayer is an enterprise for the purposes of the Act. An enterprise means a person (be it a natural or legal person), or group of persons under common control, who are engaged in an economic activity. In this regard the Council will consider Limb B1: Financial assistance provided to one or more enterprises of the statutory guidance.
2.5. To the extent the Council concludes the discretionary relief is not a subsidy it will maintain a record of its assessment during the period the discretionary relief is applied and for [6] years thereafter
Minimal Financial Assistance (“MFA”)
2.6. Following its assessment and to the extent the Council determines the discretionary relief is a subsidy, it will in the first instance seek to apply the MFA exemption, which enables the Council to award low-value subsidies without having to comply with the majority of the main substantive subsidy control requirements.
2.7. The MFA exemption is available if the enterprise (which is considered at company group level e.g. a parent company and its subsidiaries) has not reached the allowance threshold of £315,000 in a three-year period (consisting of the current financial year and the two previous financial years) and the provision of the discretionary relief will not breach this threshold. MFA subsidies cumulate with each other and with other subsidies that fall within the category of ‘Minimal or SPEI (services of public economic interest) financial assistance’.
2.8. The Council will follow the procedural requirements when seeking to apply the MFA exemption in accordance with paragraphs 7.11 to 7.20 of the statutory guidance.
Assessment against the subsidy control principles
2.9. To the extent the Council considers the discretionary relief is a subsidy and the MFA exemption is unavailable, the proposed subsidy will be assessed against the subsidy control principles (and, if relevant, the energy and environment principles) utilising the Government’s subsidy control principles assessment template and applying the relevant sections of the statutory guidance proportionate to the size and the risk profile of the relevant subsidy.
2.10. The discretionary relief will not be granted and the application for discretionary relief will be rejected unless the Council is satisfied that the discretionary relief as a subsidy is consistent with the subsidy control principles. The Council may require the proposed recipient of the subsidy to provide information to support the Council’s subsidy control analysis.
Transparency
2.11. The Council will comply with its transparency obligations by uploading details of the subsidy to the subsidy database to the extent it is:
(a) a standalone subsidy of any value; or
(b) above £100,000 and it is either:
(i) a MFA or SPEI award; or
(ii) awarded pursuant to a subsidy scheme
That a Local Authority is seeking to provide relief that falls below the Minimal Financial Assistance (MFA) thresholds, the Subsidy Control Act allows an economic actor (e.g. a holding company and its subsidiaries) to receive up to £315,000 in a three-year period (consisting of the 2024/25 year and the two previous financial years).3A subsidies cumulate with each other and with other subsidies that fall within the category of ‘Minimal or SPEI financial assistance’.
BEIS COVID-19 business grants and any other subsidies claimed under the Small Amounts of Financial Assistance limit of the Trade and Cooperation Agreement should be counted towards the £315,000 allowance.
