Part 6: Miscellaneous and general
Chapter 1: Miscellaneous
Section 78: Subsidies and schemes in primary legislation
- This section introduces Schedule 3, which applies the subsidy control provisions of this Act to financial assistance or schemes made directly by primary legislation. The subsidy control requirements only apply to primary legislation, be it legislation made in Westminster or by the Devolved Administrations, so far as provided for by Schedule 3 to the Act.
Schedule 3: Subsidies provided by primary legislation
- Schedule 3 deals with the application of this Act in the case of subsidies provided by means of primary legislation. This may occur, for example, where an Act grants a subsidy or makes a scheme on its face, or places prescriptive spending provisions which would amount to a subsidy. This would not otherwise capture broad powers to grant financial assistance which are to be exercised at the discretion of a public authority.
- The Schedule primarily deals with application to devolved primary legislation (i.e. Acts of the Scottish Parliament, Acts or Measures of Senedd Cymru, or Acts of the Northern Ireland Assembly). It is a constitutional principle that one Act of UK Parliament cannot bind future Acts of Parliament. This instrument does not purport to restrict the ability of the UK Parliament to pass Acts in the future that directly grant subsidies but does require Ministers (or HMRC Commissioners) to place any subsidy measures on the subsidy database.
- Paragraphs 2 to 5 set out relevant definitions for the purpose of this Schedule.
- Paragraph 6 applies Chapter 1 of Part 2 (principles) to subsidies or schemes provided by means of devolved primary legislation. In any proceedings, the appropriate court would be required to consider provisions by reference to the considerations and views of the promoter of the proposed legislation (that is, Ministers or other members of the devolved legislature introducing an Act, or members who lodge amendments amounting to subsidies). Court proceedings in relation to such cases would be heard in the Court of Session, High Court in England and Wales, or High Court in Northern Ireland, as relevant, rather than the Competition Appeal Tribunal as in Part 5 of the Act.
- Paragraph 7 makes similar provision for Chapter 2 of Part 2 (prohibitions and other requirements) and Part 3 (exemptions), together with technical modifications to certain provisions in those Parts to ensure that they operate properly. The paragraph disapplies section 37 (minimal financial assistance procedural requirements) and section 39 (services of public economic interest assistance procedural requirements) for this purpose.
- Paragraph 8 requires Scottish Ministers, Welsh Ministers or a Northern Ireland department (as relevant) to place subsidy measures, or modifications to subsidies and subsidy schemes, in primary legislation on the subsidy database (in conformity with Chapter 3 of Part 2). This also applies to Ministers of the Crown or the Commissioners for HMRC in relation to a subsidy measure or modification to a subsidy or subsidy scheme in an Act of Parliament.
- Paragraph 9 enables voluntary referrals to the CMA in respect of subsidies of interest, or subsidies of particular interest, in proposed primary legislation (devolved or UK). Mandatory referrals (for subsidies of particular interest or following a Secretary of State call-in direction) do not apply in respect of subsidies in primary legislation.
- Paragraph 10 applies (and makes modifications to) section 74 to enable the appropriate courts to make recovery orders, requiring Scottish Ministers, Welsh Ministers or NI Department (as relevant) to recover a subsidy provided by means of devolved primary legislation.
- Paragraph 11 requires Scottish Ministers, Welsh Ministers or a Northern Ireland Department to provide pre-action information within the meaning of section 76 to interested parties ahead of any proceedings.
- Paragraph 12 makes explicit that the power to make consequential provisions in section 86 includes power to make provisions for similar time limits for proceedings in the Court of Session or High Court, as in section 71 for proceedings in the CAT.
Section 79: Guidance
- Section 79 describes the power the Secretary of State has in relation to issuing guidance on the application of this Act, including the meaning and effect of the principles.
- This section gives the Secretary of State power to issue guidance on the practical application of the provisions in this Act, including the definition of a subsidy, the principles, prohibitions and other requirements, the transparency requirements, the exemptions, the mandatory referral provisions, the misuse of subsidy provision, and the duty to provide pre-action information.
- Guidance would provide greater detail on how to apply elements of the definition of subsidy (for example with regard to establishing that financial assistance is given on commercial terms) and how the principles should be used to assess subsidies and subsidy schemes, including:
- methodologies that could be used for assessing benefits and distortive effects, including on UK competition and investment and on international trade;
- the level and type of analysis that could be considered proportionate depending on the type of subsidy (this would be linked to the Subsidies and Schemes of Interest and Particular Interest criteria);
- what kinds of features may be generally considered ‘best practice’ examples of subsidy design making a subsidy more likely to be consistent with the principles, such as fair and open competitions for subsidies; and
- what kinds of features might merit closer attention from a public authority to ensure that negative effects on other parties had been properly taken into account, such as subsidy races.
- The guidance could, for example, be used to explain how subsidies might be given to support disadvantaged areas in a way that is consistent with the principles, by indicating characteristics or criteria that a public authority may choose to use when deciding whether an area could be considered disadvantaged and how that might be used to justify more ambitious or extensive subsidy interventions consistent with the principles. The guidance could also indicate that those kinds of interventions may not be consistent with the principles in more advantaged areas. This guidance will be nuanced and will reflect that different areas face different types and levels of disadvantage depending on their geographical, economic and social situation.
- The Government would look to the Green Book: Central Government Guidance on Appraisal and Evaluation as an example of detailed guidance for authorities making spending decisions (albeit in the notably different context of spending control, rather than subsidy control) and would consider any relevant read-across as well as ensuring that the guidance was mutually compatible (to provide for situations where both Green Book and subsidy control guidance applied simultaneously, for central Government subsidies).
- The section allows the Secretary of State to revise or review the guidance. The section also places obligations on the Secretary of State. The obligations are to publish the guidance, keep it under regular review and consult persons that the Secretary of State deems appropriate before issuing the guidance. The Secretary of State may launch a consultation on the guidance before the Act comes into force.
- The final effect of the section is to oblige public authorities to have regard to the guidance when designing a subsidy scheme or giving a standalone subsidy.
Section 80: Disclosure of information
- This section establishes that any duty or power to divulge information provided for in this Act does not override the provisions of data protection legislation.
- The section also makes amendments to the disclosure of information provisions of the Enterprise Act 2002 and establishes that CMA functions under this Act are subject to absolute privilege (for the purpose of defamation law).
Section 81: Modifications to subsidies and schemes
- This section establishes that changes to subsidies or schemes are regarded as being a new subsidy or scheme. Consequently, the public authority will have to comply with the subsidy control requirements.
- However, in relation to transparency requirements modifications only need to be uploaded as modifications under section 33(5), not as new subsidies or schemes under sections 33(1) or (3). Where the modification is a ‘permitted modification’ as defined under subsection (3) it is only the transparency requirements that apply, as they apply to other modifications, unless the kind of ‘permitted modification’ is otherwise exempt from subsidy control requirements, including from transparency requirements.
- This section also explains the definitions of ‘legacy subsidy’ and ‘legacy scheme’ that are found in section 48.
Section 82: Gross cash and gross cash equivalent amount of financial assistance
- This section gives the Secretary of State the power to set out a methodology for calculating the gross cash equivalent of a subsidy that is not provided in cash terms (for example, a loan or guarantee), in order to determine whether particular thresholds have been met for the purposes of sections 33, 36, 38 and 41 (thresholds for minimal and SPEI financial assistance and transparency requirements for subsidies granted under a scheme). This methodology would also apply to any provision regulations or schemes made under this Act. For example, we would expect to refer to this section in any regulations made under section 11 (Subsidies and Schemes of Interest and of Particular Interest), which make reference to the value of a subsidy.
Section 83: Minor amendment to the Financial Services Act 2021
- This section makes consequential amendment to the Financial Services Act 2021, specifically in relation to the meaning of ‘insurance company’, ‘deposit taker’, and ‘insurer’ in that Act.
Chapter 2: General
Section 84: Financial provision
- This section sets out that expenditure incurred under the terms of this Act is to be met from supplies provided by Parliament.
Section 85: Crown application
- This section states that the Act applies in full to the Crown, except to Her Majesty in Her private capacity, Her Majesty in right of the Duchy of Lancaster, or the Duke of Cornwall.
Section 86: Power to make consequential provision
- This section provides for the Secretary of State to make consequential provision by regulations (that is, to make necessary corrections to other law, in light of any consequences of this Act, intended or otherwise) to repeal or amend any primary or secondary legislation, or retained EU legislation. This power applies only to law in force before this Act is passed.
- This section also explains what Parliamentary procedure applies to any regulations.
Section 87: Regulations
- This section sets out various procedural matters that are relevant where regulations are made under powers in this Act.
- It also provides that any power to make regulations under Part 4 to amend a provision of this Act cannot be exercised after the period of one year beginning with the day on which the CMA publishes its second report dealing with the effectiveness of the operation of this Act, and its impact on competition and investment within the UK (see section 65 (monitoring and reporting on subsidy control)).
- The provisions of this section do not apply to regulations under section 91 (commencement).
Section 88: Directions
- This section explains that any directions made under this Act must be made in writing, may be varied or revoked.
Section 89: Interpretation
- This section sets out definitions for various terms used in this Act, whether these terms are defined elsewhere in the Act or in external sources of law.
Section 90: Extent
- This section establishes that the Act applies to the entirety of the United Kingdom of Great Britain and Northern Ireland. The exception here (Section 48(4)) is for the omission of Article 9 in the application of Regulation (EC) No 1370/2007, which specifies that ‘common market’; this omission does not apply to Northern Ireland.
Section 91: Commencement
- This section sets out what parts or sections of the Act come into force, and when. Some parts of the Act, listed in this section and including regulation-making power, come into effect on the day the Act is passed. The remaining parts of the Act come into force on a date specified by the Secretary of State in regulations.
- The section also provides for the Secretary of State to make transitional regulations via statutory instrument.
Section 92: Short title
- This section establishes the short title for the Act.