Closed consultation

Consultation response: refining the UK subsidy control regime

Updated 7 April 2025

This document is a UK government response which summarises the responses received through the consultation on refining the UK subsidy control regime, which the Department for Business and Trade (DBT) ran from 26 November 2024 to 21 January 2025. This document also sets out the next steps the government plans to take in response to this consultation.  

The consultation covered 2 main topics:  

• amending the threshold for referring subsidies to the Competition and Markets Authority (CMA)  
• creating new ‘Streamlined Routes’ 

Executive summary  

There were 55 responses: 27 through the Qualtrics online form and 28 in writing to subsidycontrol.engagement@businessandtrade.gov.uk. Of the 55 total responses, 45 offered views on the thresholds for referring subsides to the CMA or otherwise provided comments on the CMA referral process, and 53 responses offered views on creating new Streamlined Routes.  

Responses by type:   

• 28 public authorities (including devolved governments, arms-length bodies, local authorities, and other public authorities)  
• 10 law firms 
• 6 businesses and trade associations  
• 5 others (including charities and the CMA Subsidy Advice Unit) 
• 6 individuals  

Most responses to questions relating to thresholds for referring subsidies to the CMA suggested thresholds should be increased, especially the mandatory referral threshold. Views on the sensitive sectors and voluntary threshold were more mixed, including opinions on which sectors should be deemed sensitive.  

Responses in relation to Streamlined Routes were generally positive. Many viewed them a means to lower the burden on public authorities, however experiences of using the existing Streamlined Routes were mixed. Respondents overwhelmingly supported both an arts and culture route and a community regeneration route, and suggestions for other potential new routes were wide-ranging and spanned multiple sectors and areas.  

Background 

The Subsidy Control Act 2022 (the Act) created a new domestic subsidy control regime, designed to suit the needs of the UK. The Act has been in force since 4 January 2023. The regime enables public authorities, including devolved governments and local authorities, to give subsidies that are tailored to their local needs, and that drive economic growth, while minimising distortion to competition. 

DBT is the UK-wide policy owner for subsidy control. It is responsible for the overall functioning of the regime, including providing guidance to public authorities on compliance with our domestic and international subsidy control obligations, working with other UK government departments and conducting appropriate monitoring and evaluation to support the effective implementation of the regime. 

Amending thresholds for referring subsidies to the CMA 

The subsidy control regime includes 2 distinct categories of subsidy or subsidy scheme that have been identified as having greater potential to lead to distortive effects on competition: 

• subsidies or schemes of interest (SSoI) 
• subsidies or schemes of particular interest (SSoPI) 

The thresholds for these categories are set out in the Subsidy Control (Subsidies and Schemes of Interest or Particular Interest) Regulations 2022. 

Subsidies over £10 million, or over £1 million but cumulating to over £10 million with other related subsidies over the previous 3 financial years, are deemed subsidies of particular interest (SSoPI). These must be referred to the Subsidy Advice Unit, part of the CMA. A subsidy scheme is a scheme of particular interest if it allows for one or more subsidies of particular interest to be given under it.

Public authorities intending to give or make a SSoPI have a statutory obligation to refer it to the CMA before they do so, providing an assessment of the subsidy or scheme against the principles set out in the Act. The Act requires the CMA to evaluate all SSoPI assessments referred to them.

Subsidies between £5 million and £10 million outside of sensitive sectors are deemed subsidies or schemes of interest (SSoI). Public authorities intending to give or make SSoI may voluntarily refer their assessment of the subsidy or scheme to the CMA for review before the subsidy or scheme is granted or made.

The CMA can choose whether to accept SSoI referred to them, according to its prioritisation principles. 

Creating new ‘Streamlined Routes’

The Act allows ministers to create Streamlined Routes, a type of subsidy scheme which is pre-assessed by DBT, applicable to all public authorities across the UK, and not subject to review by the CMA.

Streamlined Routes are voluntary mechanisms that can be used by UK public authorities to give certain subsidies. There is no need to assess subsidies given under a streamlined route against the subsidy control principles, providing they comply with conditions set out in the Streamlined Route.

One of the benefits of Streamlined Routes is that they promote confidence and greater legal certainty to public authorities and businesses undertaking projects that are high-frequency and low risk and aligned to the government’s priorities.

Amending the threshold for referring subsidies to the CMA

Responses by question

Question 1: What in your view should the threshold for mandatory referral of subsidies of particular interest be? Please include any supporting evidence for the appropriateness of your suggested threshold. For context, the current threshold is £10 million.

There were 45 responses to this question, with 23 suggesting the mandatory referral threshold should be raised, 11 suggesting it should be maintained, 5 offering no comment and a further 6 providing neutral comments or suggested alternatives for more nuanced approaches to thresholds. Of the 23 who suggested increasing the threshold, 18 provided specific suggestions for what the threshold should be:

• 6 suggested between £10 million and £20 million
• 7 suggested between £20 million and £30 million
• 5 suggested between £30 million and £50 to £100 million

A further 5 responses suggested the current threshold was too low but did not offer specific suggestions for what it should be raised to.

Commonly cited reasons for raising the threshold included accounting for inflation and rising construction costs, reducing administrative burdens, and lowering resourcing costs associated with delivering smaller and less distortive subsidies. Referral causing delays to projects was raised by 3 responses.

Of the 45 responses to this question, 3 respondents suggested introducing an inflation-linked review mechanism to the thresholds, and 9 recommend implementing a category or sector-based variable threshold, depending on the relative risk of subsidies in each category or sector having distortive impacts on competition, trade, or investment. Subsidies for services of public economic interest (SPEIs) and community regeneration were highlighted as examples of less distortive subsidies and potentially suitable for a higher mandatory referral threshold.

Additionally, 3 responses focused on the impact of raising the mandatory referral threshold could have in reducing the number of CMA referrals, and a further 6 responses noted the expected increase in referrals resulting from inflation, rising construction costs and increased government focus on infrastructure development as a contributor to achieving economic growth. Similarly, 3 responses argued that subsidies of £10 million, when seen in proportion to the wider economy and global context, are unlikely to have significant distortive impacts.

A further 3 respondents commented on the figure at which cumulation is triggered, suggesting that it be raised from £1 million to at least £2 million, or even £5 million to reduce the number of mandatory referrals.

A total of 11 suggested keeping the £10 million threshold unchanged. A small number of others suggested the threshold should differ by category of public authority to give local authorities greater confidence in their actions. These respondents often emphasised the benefits of having more CMA analysis available through reports to inform public authorities’ compliance approach.

Only 1 response suggested lowering the thresholds for local authorities, with others arguing that doing so would likely increase the burden on public authorities handling routine projects that do not significantly affect competition, trade, or investment.

Question 2: What in your view should the threshold for mandatory referral of subsidies of particular interest be where the subsidy or scheme concerns a sensitive sector? Please include any supporting evidence for the appropriateness of your suggested threshold. For context, the current threshold is £5 million.

There were 36 substantive responses to this question. A majority of 16 responses suggested raising the sensitive sectors threshold to between £7 million and £50 million, with 8 responses supporting maintaining threshold at £5 million, a further 2 suggesting more nuanced approaches and 5 providing no firm view due to having no experience of referring subsidies in sensitive sectors. There were fewer responses to this question compared to Question 1, and responses to this question offered less detail because many respondents had limited interaction with the sensitive sectors.

Of the 36 responses, 5 responses referred to the Industrial Strategy’s objectives and noted inflationary pressures due to rising construction and material costs. Another response argued that, due to higher distortion risks, the threshold increase should be proportionally smaller than the increase to the threshold for non-sensitive sectors.

Responses that supported increasing the sensitive sectors threshold suggested setting the threshold between £5.5 million and £50 million, with most suggesting between £7 million and £15 million.

However, 8 recommended maintaining the existing £5 million threshold. A response noted that there have not been many referrals relating to the sensitive sectors since the Act came into force, so a moderate increase in the thresholds would be unlikely to have a significant impact.

Another 2 responses noted the UK’s international commitments and emphasised that these should be considered in any potential adjustments to the threshold.

Question 3: Do you consider that the existing list of sensitive sectors is appropriate? Should any sectors be added to, or removed from, the list? Please give reasons. 

There were 23 responses to this question. A majority of 13 were content with the existing list of sensitive sectors, with a further 3 providing recommendations for further inclusions and exclusions, reflecting government policies. A further 2 responses questioned the necessity of the sensitive sectors list, but others suggested the list be reviewed regularly, with emphasis on analysing the supporting evidence for the inclusion of sectors.  

Additionally, 2 respondents suggest that renewable energy for domestic markets (or a subset of it) should be excluded from the list of sensitive sectors.

A further 2 respondents proposed removing manufacturing sectors such as automotive, aerospace, and shipbuilding from the list. These sectors were argued to deliver export potential, critical capabilities, national security and competitiveness, and having them on the list could potentially discourage investment, if businesses do not feel they can receive the support they need.

Only 3 responses suggested adding sectors to the sensitive list. Suggested additions included the development of building projects, the extraction of peat, the manufacture of fertiliser and nitrogenous compounds, and artificial intelligence. These responses linked their suggested additions to government policy objectives such as environmental protection and net zero.

Alternatively, 2 responses suggested removing the sensitive sectors distinction altogether. These responses linked manufacturing sectors and the production of critical minerals to growth and prosperity, and suggested such sectors may have only been included in the original list due to historic dispute cases. They argued that if doing so was not possible then manufacturing sectors should be removed from the list.

Another respondent suggested the list of sensitive sectors should be kept under review on a regular basis, and another response suggested the sensitive sectors could be more focused on highly concentrated sectors where negative distortion arising from subsidies is more likely.

Question 4: What in your view should the threshold for voluntary referral of subsidies to the CMA be? For context, the current thresholds mean subsidies between £5 million and £10 million can be referred voluntarily.  

Of the 31 responses to this question, 13 supported increasing the threshold, with suggestions ranging from £6 million to £60 million. A further 8 responses suggested maintaining thresholds, and 6 suggesting lowering the voluntary threshold or removing the category entirely. Another 4 responses provided broader comments around the merits of voluntary referrals without offering views on what the threshold should be.

Many responses which proposed increasing the mandatory threshold also supported increasing the voluntary threshold, with significant overlap in reasoning with the responses to responses to Questions 1 and 2.

Of those supporting raising the existing voluntary threshold, the most common suggestion was £10 million but suggestions ranged from £6 million to £60 million.

A response to Question 11 is of relevance here, with 1 respondent describing the lack of case law under the new regime as potentially deterring subsidy-giving – and by extension arguing that the voluntary threshold should remain at £5 million to make a greater number of CMA reports available to public authorities who may have interest in challenging subsidy decisions.

However, a common theme was a desire for clearer guidance on criteria and value of the voluntary referral process. This was presented by 3 responses as a possible reason for no voluntary referrals having been made since the new regime came into effect in January 2023.

Government response

Having considered the responses received, we intend to amend the mandatory referral threshold (for Subsidies or Schemes of Particular Interest) as currently set out in The Subsidy Control (Subsidies and Schemes of Interest or Particular Interest) Regulations 2022. Revised regulations will be laid before Parliament during the second half of 2025.

The £10 million threshold for mandatory referral in non-sensitive sectors will be increased to £25 million. The threshold for mandatory referral in sensitive sectors will be maintained at £5 million and the list of sensitive sectors will remain the same. The remaining SSoPI monetary thresholds, concerning relocation subsidies and the cumulation of related subsidies, will remain the same. The threshold for voluntary referral SSoI will also remain the same.

Increasing the £10 million SSoPI threshold to £25 million will reduce the number of lower value referrals being made to the CMA. Removing these subsidies from mandatory referral will, as highlighted by respondents, have 2 effects: providing the CMA with additional capacity to focus on the referrals of the largest subsidies with the most potential for harm; and easing the administrative process required for awarding these relatively less impactful subsidies.

While suggestions of alternative threshold concepts had merit, there is currently limited evidence to support a sector-specific threshold approach, and the complexity of market share type threshold risks public authorities miscategorising subsidies.

Retaining the existing voluntary SSoI threshold ensures public authorities are still able to refer subsidies below £25 million to the CMA and benefit from their feedback.

Maintaining the sensitive sector threshold and list will retain enhanced scrutiny for higher-risk sectors. Whilst suggestions were made for the removal or addition of sectors to the sensitive sector list, supporting evidence was limited. We will continue to monitor the list periodically to ensure it remains an accurate reflection of sectors in which subsidies pose the greatest risk of trade disputes and having greater potential to be distortive.

Creating new ‘Streamlined Routes’ for subsidies

Responses by question

Question 6: Have you used the existing Streamlined Routes? If you have, how would you describe your experience? If you have not, why not?

There were 37 responses to this question. Generally, responses viewed Streamlined Routes as an effective policy instrument and component of the subsidy control regime, due to their ability to lower the burden on public authorities and facilitate the giving of high-frequency, low-risk subsidies.

Of these responses, 10 respondents described having direct experience of awarding subsidies using Streamlined Routes, predominantly the research, development and innovation (RDI) and energy usage routes. These responses described positive experiences and noted that the DBT guidance on using routes had been helpful when navigating the process.

Conversely, 20 respondents described the process of using Streamlined Routes as bureaucratic and restrictive, especially the RDI and local growth routes. Of these, 8 respondents noted that for the RDI route the maximum intervention rates were low, particularly for large enterprises and companies in investment-intensive industries such as automotive, aerospace, and nuclear. Respondents felt that such restrictions resulted in Streamlined Routes being a poor fit for projects compared to the approach under the EU State aid law.

Similarly, on the local growth route, 7 respondents commented that the maximum subsidy rates were also too low, especially for large enterprises involved in development and regeneration projects. Furthermore, 1 respondent emphasised that small rural enterprises require a proportionately greater level of financial support to address market failure and geographic disadvantages due to lack of access to capital or other external funding.

Additionally, 2 respondents suggested the guidance accompanying the existing Streamlined Routes could be improved to reduce confusion around what costs are eligible and what evidence is required to demonstrate compliance.

Question 7: Would you support the creation of a new Streamlined Route focused on community regeneration? If so, what would you like to see a route cover?

Out of 44 respondents who provided substantive views in response to this question, 38 supported creating a streamlined community regeneration route, 2 opposed and 4 provided neutral comments without offering a firm view.

A total of 15 responses suggested a community regeneration Streamlined Route could have significant public benefit and would help to deliver on government priorities. Additionally, 5 responses argued a community regeneration route would provide a simplified, less burdensome and more legally certain process for public authorities compared to typical subsidy control requirements. These responses highlighted the low distortive risk of subsidies for local infrastructure projects and other community regeneration.

Of the 44 responses to this question, 19 provided views as to what a community regeneration route would cover. These suggestions ranged from housing schemes and land remediation to environmental and sustainability projects, to building and maintaining community leisure facilities. Infrastructure projects was suggested by 17 responses as an area this route should cover. Additionally, 3 respondents suggested that a community regeneration route should cover both capital and revenue costs.

Another respondent proposed taking a geographic approach and restricting this route to more disadvantaged areas based on evidence. Alternatively, 4 respondents noted potential overlap with a separate arts/culture route for certain activities linked to cultural regeneration within communities, and recommended each route be clearly defined.

Question 8: Would you support the creation of a Streamlined Soute focused on arts and culture? If so, what would you like to see a route cover? 

Out of 47 respondents who provided views on this question, 41 supported the creation of a Streamlined Route in arts and culture, 3 provided neutral comments and a further 3 noted having insufficient experience to offer views. Generally, respondents welcomed measures that aligned the UK approach with exemptions that exist under EU State aid rules.

A total of 20 respondents recognised that market failures are common in this area and suggested the route should include:

• assistance for charities and not-for-profit organisations operating in this space
• public arts projects of national and/or cultural importance
• built and natural heritage projects, including regeneration and projects benefiting the natural environment

Furthermore, 8 respondents suggested there was scope for including heritage under the arts and culture Streamlined Route.

Additionally, 7 respondents also noted there was an equity rationale argument for the development of an arts and culture Streamlined Route, and so suggested the routes should also cover projects aimed at improving accessibility and participation amongst disadvantaged communities and projects specifically aimed driving footfall into areas reliant on a tourism economy.

Covering capital investment into cultural infrastructure was mentioned by 4 responses, including building repair and maintenance, and core operational and revenue support.

Clarity on the definition of arts and culture was mentioned by 6 responses as important to ensure public authorities could verify their activities fall within the remit of the route. They also emphasised the importance of consulting with stakeholders working in this area and expressed willingness to support the delivery of an arts and culture Streamlined Route.

Question 9: Are there any other frequently awarded subsidies with low risk of distortion that you distribute or receive, that you consider could be more effectively conducted through a Streamlined Route?

There were 38 responses to this question, of which 28 suggested additional areas new Streamlined Routes could cover. A further 6 provided neutral comments, and 4 opposed the creation of new routes. Suggestions included skills and training, business/ SME support, manufacturing, brownfield land development and housing, infrastructure and development, public transport, community leisure, and social issues, and support for voluntary and third sectors. Of those that provided suggestions, 7 responses linked their proposed Streamlined Routes to broader government priorities including the Industrial Strategy and driving economic growth.

Government response

Having considered the responses offered, we will proceed with 2 new Streamlined Routes – focusing on arts and culture, and community regeneration.

We note the feedback to expand the scope of the arts and culture route to cover built and natural heritage projects and we will explore this further.

A significant number of respondents suggested infrastructure projects should be covered under the community regeneration route, and we will explore the feasibility of a combined ‘community regeneration and local infrastructure’ streamlined route.

As resources allow, we will continue to explore the demand and need for additional Streamlined Routes, including those in areas suggested by respondents. We will focus on areas where Streamlined Routes could improve the ability of public authorities to deliver high-frequency, low risk subsidies with greater ease. The government will consider how to further support public authorities in creating subsidy schemes to deliver their policy objectives, in areas where schemes or primary public authority schemes1 would be more appropriate than Streamlined Routes.

Additionally, we will continue to keep existing routes under review in line with feedback from respondents.

Other consultation questions

Responses by question

Question 5: Do you have any other comments or views on the CMA referral process?

There were 21 responses to this question. These were some positive reflections, including the benefits of pre-referral discussions and consistency in providing reports within the 30-day period. For example, a respondent with experience of a CMA referral noted that the CMA clarified the proportionate level of evidence required for a referral and would encourage the CMA to offer training sessions to increase public authorities’ awareness of this (especially those yet to make a referral).

Most responses called for some form of refinements to CMA referrals. These included:

• structuring the Subsidy Advice Unit by sector
• the creation of more informal avenues to seek advice from the CMA outside of the referral process
• fixed structure of CMA reports limiting the detail of feedback
• streamlining of repeat referrals, for examples those made under the same fund or under recurring schemes
• the CMA’s reports to be given a more binding status

Question 10: We invite respondents’ views on whether changing the threshold for mandatory referral of subsidies to the CMA, or whether existing or future Streamlined Routes, may have any potential impact on people who share a protected characteristic (age, disability, gender re-assignment, marriage or civil partnership, pregnancy and maternity, race, religion or belief, sex (gender) or sexual orientation), in different ways from people who do not share those characteristics. Please provide any evidence that may be useful to assist our analysis of these impacts.

There were comparatively few responses to this question. Of the 18 responses, 10 stated they did not believe the proposed refinements to the subsidy control regime would disproportionately impact groups who share a protected characteristic. The remaining 8 responses suggested creating new Streamlined Routes could be disproportionately beneficial for groups who share protected characteristics, particularly through the creation of Streamlined Routes on arts and culture, and community regeneration.

Similarly, responses suggested that raising the mandatory referral threshold could enable subsidies or schemes which would otherwise require CMA referral to be implemented more quickly, enabling subsidies to address inequalities faced by those who share protected characteristics to be given more easily and reducing administrative costs for the public authority.

We will continue to work with other departments to ensure that both changes to the mandatory referral threshold and the creation of new Streamlined Routes incorporate consideration of potential impacts on people who share a protected characteristic.

Question 11: Do you have any other suggestions for how the subsidy control regime could be improved?

There were 43 responses to this question, however many responses to other questions also offered views about the regime more broadly. Common areas of focus included enhancing the guidance provided for public authorities, reducing administrative burdens, strengthening compliance and improving transparency.

A total of 19 responses mentioned either the Statutory Guidance or provided other comments about guidance for public authorities. Areas highlighted for potential improvement included addressing ambiguities around when a subsidy scheme is deemed to be made, and clearer guidance around what constitutes economic activity. Other suggested improvements to the Statutory Guidance included:

• providing a more detailed explanation of the four-limb test
• adding a discussion of the interaction between subsidy control and public procurement rules
• updating the explanation of Streamlined Routes to clarify definitions such as eligible costs and other requirements

Additionally, 9 respondents gave views on either transparency requirements or the subsidy database. Functionality and searchability were common areas of suggestion for improvement, with others suggesting the threshold for uploading subsidies to the database be increased or having the database require more detailed information such as location.

Another theme raised by respondents was the view that more legal challenges would help develop case law and enhance legal certainty in some areas, though suggestions on how best to address this were limited in most responses. Suggestions included extending the limitation period and linked limited case law to the need for enhanced searchability of the transparency database.

Alternatively, 2 responses called for efforts to ensure a level playing field for UK businesses, highlighting inequality in subsidy-giving compared to international competitors and noting the rise of subsidy races in sectors such as automotives.

Government response

We thank respondents for providing their views. We will continue to factor these into our ongoing policy development and monitoring of the regime, as well as future revisions of the Statutory Guidance.

It is also worth noting that the Statutory Guidance was updated since the consultation closed on 21 January 2025. Changes included clarifying when a scheme is ‘made’, clarification around what constitutes economic activity, adding examples of how Minimal Financial Assistance and Services of Public Economic Interest Assistance subsidies cumulate, and reflecting enhancements to the transparency database.

Transparency is a critical part the functioning of the subsidy control regime, and a rolling programme of enhancements to the database is continuing. Suggestions raised through consultation responses will be factored into the enhancements programme.

Where UK industries are being damaged by unfair international trading practices, action will be taken. The government takes an evidence-based and proportionate approach to deploying a range of tools against the impact of market distorting practices, such as trade remedies (ie, anti-dumping, countervailing and safeguard measures). 

Finally, the CMA has a statutory duty to report on the effectiveness of the operation of the Act and its impact on competition and investment within the UK. The first such report is due next year.

Next steps

We have considered the views offered via the consultation and we have worked with other departments and the CMA to incorporate their views. We recognise that a range of views were offered, and we thank respondents for taking the time to respond to the consultation.

The government plans to proceed with the following refinements to the UK’s subsidy control regime:

• amend the Subsidy Control (Subsidies and Schemes of Interest or Particular Interest) Regulations 2022 to increase the non-sensitive mandatory referral threshold from £10 million to £25 million
• amend the Subsidy Control (Subsidy Database Information Requirements) Regulations 2022 to remedy the current undesirable situation where in-scheme award uploads are required to duplicate information already provided at the scheme-level. We will also review whether any other changes are needed to ensure the smooth functioning of the regime
• create a Streamlined Route for arts and culture subsidies
• create a Streamlined Route for community regeneration subsidies

This will be followed by further updates to the Statutory Guidance to both reflect these legislative changes as they come into effect and to continue to improve the guidance based on the feedback from stakeholders, including through this consultation.

As resources allow, we will continue to explore the demand and need for additional Streamlined Routes, including those in areas suggested by respondents. We will focus on areas where Streamlined Routes could improve the ability of public authorities to deliver high-frequency, low risk subsidies with greater ease.

DBT will continue to work with public authorities, including other departments, the devolved governments and local authorities across the UK, to ensure that the changes made enable the UK’s subsidy control regime to operate effectively.