What is Subsidy Control? [2026 update]
9th September, 2026
Subsidy Control is the legal framework that regulates how public authorities in the United Kingdom can use the public funds, rights and assets within their control to subsidise businesses and other organisations engaged in economic activities, recognising the risk that such transactions can have upon fair competition.
The government’s Managing Public Money guidance expressly states that all “government departments, local authorities and devolved administrations – have a duty to comply with the Subsidy Control Act 2022“. A breach of Subsidy Control law may lead to a litigation and the recovery of the subsidy with compound interest from the recipient. It will also cause significant reputational damage for all public authorities involved. Therefore although it is the public authority which assesses compliance with Subsidy Control law, it is in the interests of both the public authority and the beneficiary to ensure that the measure is Subsidy Control compliant.
How to identify when a measure will confer a subsidy under the Subsidy Control Act 2022?
A ‘subsidy’ is defined under the Subsidy Control Act 2022 as any financial assistance with the following characteristics:
(a) given, directly or indirectly, from public resources by a public authority;
(b) conferring an economic advantage on one or more enterprises;
(c) is specific in that it benefits one or more enterprises over one or more other enterprises with respect to the production of goods or the provision of services; and
(d) has, or is capable of having, an effect on:
(i) competition or investment within the UK;
(ii) trade between the UK and a country or territory outside the United Kingdom; or
(iii) investment as between the UK and a country or territory outside the UK.
It is a public authority’s responsibility to determine whether the proposed financial assistance constitutes a subsidy or not. In doing so, the public authority needs to have regard to each of the clarifications set out within the Subsidy Control Statutory Guidance and case law.
At the same time as assessing the presence of subsidy, the public authority must also determine whether any other elements of the regime, for example the Windsor Framework, may be applicable.
When can a subsidy be lawfully awarded under the Subsidy Control Act 2022?
The award of subsidy may be lawfully made under the UK’s Subsidy Control regime provided that specific requirements set out within the Subsidy Control Act 2022 are satisfied, this includes the application of one of six exemption routes and checks being carried out against the list of prohibited subsidies.
| Minimal Financial Assistance (MFA) | Under Section 36 of the Subsidy Control Act 2022, the Minimal Financial Assistance route allows awards of up to £315,000 in a three year period, subject to satisfying the ‘MFA notification’ requirements and fulfilling transparency obligations. |
| Subsidy Control Principles | Under Section 12 of the Subsidy Control Act 2022, a public authority may award a subsidy where it has properly considered each of the Subsidy Control Principles listed at Schedule 1 of the Act (and, for relevant subsidies, the Energy and Environment Principles) and, having done so, reached a reasoned “view that the subsidy is consistent with those principles“.
This is a detailed process which requires evidence to be collected and each Principle to be applied in line with the clarifications set out within the Subsidy Control Statutory Guidance. Transparency obligations apply. |
| Streamlined Routes | Streamlined Routes are subsidy control exemptions which may be created by a Minister of the Crown under Section 10 of the Subsidy Control Act 2022 and used to lawfully award subsidies by any public authority that is able to satisfy all the relevant conditions.
There are currently six Streamlined Routes, these being:
Only where all the relevant conditions of the Streamlined Route are met will Subsidy Control cover be provided. Transparency obligations apply. |
| Subsidy Schemes | A subsidy scheme can be created under Section 10 of the Subsidy Control Act 2022 by a public authority for the purpose of awarding multiple subsidies that fall within the scope of the scheme conditions. To validly establish a subsidy scheme the public authority must publish the conditions of the scheme apply the Subsidy Control Principles.
The Subsidy Control Act 2022 also recognises “Legacy Schemes“, these being subsidy schemes established prior to 4 January 2023. |
| Service of Public Economic Interest (SPEI) | Under Section 38 of the Subsidy Control Act 2022 a public authority can make an award of subsidy for the purpose of delivering a Service of Public Economic Interest.
SPEIs “are essential services provided to the public and may include postal services, social housing, and certain transport networks, particularly in rural or less populated areas of the country. Without these subsidies, these services would not be supplied in an appropriate way or may not be supplied at all by the market“. Strict requirements apply in respect of the identification and entrustment of the Service of Public Economic Interest. The public authority must apply the Principles to an award of an SPEI (unless provided under the cover of SPEIA) and transparency conditions apply. |
| Services of Public Economic Interest Assistance (SPEIA) | Section 29 of the Subsidy Control Act 2022 allows subsidy to deliver SPEI with a value that is equal or less than £725,000 in a three year period subject to entrustment conditions being met, a declaration being completed and transparency conditions. |
What are the prohibited categories in subsidy control law?
Part 2 of the Subsidy Control Act 2022 identifies some subsidies which are subject to an absolute prohibition (for example, unlimited state guarantees) and other subsidies that are prohibited unless certain conditions are met (for example rescue and restructuring subsidies, relocation subsidies and financial subsidies to air carriers for operating flight routes).
When must a subsidy or subsidy scheme be referred to the Competition and Markets Authority?
The Subsidy Control regime has been designed so that additional scrutiny is applied to measures which are regarded to have “greater potential to lead to undue distortion and negative effects on competition or investment“.
What this means in practice for public authorities is that there is a legal duty under Section 52 of the Subsidy Control Act 2022 to refer a Subsidy of Particular Interest (“SoPI”) to the Subsidy Advice Unit within the Competition and Markets Authority for review in advance of the public authority making its decision whether to proceed. The failure to make a referral (or the award the subsidy / creation of the subsidy scheme prior to the cooling off period expiring) is prohibited under Section 31(1) of the Subsidy Control Act 2022.
What constitutes a SoPI under the Subsidy Control Act 2022?
A SoPI arises when a public authority plans to award a subsidy (or to create a subsidy scheme which will be used to award a subsidy in due course) with a value that:
- exceeds £25m;
- exceeds £5m and relates to a sensitive sector;
- exceeds £1m and will fund relocation activities;
- exceeds £1m and will fund restructuring activities; or
- exceeds £1m and the cumulative value of the related subsidies awarded in the last three years exceeds £25m (£5m if within a sensitive sector)
As of September 2026, the sensitive sectors are:
- manufacture of motor vehicles
- building of ships and floating structures
- manufacture of motorcycles
- manufacture of air and spacecraft and related machinery
- production of electricity
- manufacture of basic iron and steel and of ferro-alloys
- aluminium production
- copper production.
Making a referral to the CMA under the Subsidy Control Act 2022
Ward Hadaway’s Subsidy Control unit has extensive experience advising on major public funded projects and our specialist Subsidy Control lawyers have worked on over 15 referrals to the Competition and Markets Authority since the Subsidy Control Act 2022 came into force. That means we have the expertise and experience to support your project through the referral process with the minimum of fuss. Our tips on the referral process can be found here.
Litigation under the Subsidy Control Act 2022
Subsidy control litigation is rare, but the number of cases brought against public authorities has increased significantly in recent years and it remains a high profile risk against which public authorities must prepare.
Should a subsidy control challenge be brought (or a pre-action information request be submitted under Section 76 of the Subsidy Control Act 2022) a public authority will want advice from a credible expert with experience of successfully handling Subsidy Control litigation.
Ward Hadaway’s subsidy control unit is able to draw upon the experience of Alexander Rose who played a prominent role in The Durham Company Limited v Durham County Council. This was the first case brought under the Subsidy Control Act 2022 and Alexander successfully advised Durham County Council in the Competition Appeal Tribunal and in seeing off a complaint made under EU State aid law.
Why should you choose Ward Hadaway’s Subsidy Control team?
Subsidy control advice is important – the correct advice protects public funding and the reputation of the awarding public authority. At the same time, genuine expertise is in short supply.
Ward Hadaway is recognised as one of the UK’s leading law firms for subsidy control law. Experts include Alexander Rose whose experience includes advising the Parliamentary Select Committee designing the regime, advising on multiple referrals to the Competition and Markets Authority and helping Durham County Council win the first case brought under the Subsidy Control Act 2022. Our lawyers have contributed to leading textbooks on subsidy regulation, speak at major conferences on this subject and have contributed to the Lexis Nexis practice notes for this area of law.
Ward Hadaway can assist you in all matters relating to Subsidy Control, including providing opinion letters, drafting Grant Funding Agreements and training.
Please note that this briefing is designed to be informative, not advisory and represents our understanding of English law and practice as at the date indicated. We would always recommend that you should seek specific guidance on any particular legal issue.
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