Notice

Annex 2: Subsidy control

Published 25 April 2023

This notice was withdrawn on 13 June 2023

This call closed on 6 June 2023.

Subsidy Control (and State aid where relevant)

The UK Space Agency supports UK based businesses to invest in research, development, and innovation. The support we provide is consistent with the UK’s international obligations and commitments to Subsidy Control. These include:

• WTO rules

• the EU-UK Trade and Cooperation Agreement (TCA), (see EU-UK TCA summary and BEIS (Dept. for Business, Energy & Industrial Strategy) guidance)

• in certain circumstances (e.g. under the Northern Ireland Protocol) EU State aid regulations may also be applied

• other bilateral UK FTAs (Free Trade Agreements) where relevant

• Subsidy Control Act 2022.

1. What is a subsidy?

For the purposes of UK international commitments, a subsidy is a measure which:

1. Is given by a public authority. This can be at any level; central, devolved, regional or local government or a public body.

2. Makes a contribution (this could be a financial or an in-kind contribution) to an enterprise, conferring an economic advantage that is not available on market terms. Examples of a contribution are grants, loans at below market rate, or a loan guarantee at below market rate or allowing a company to use publicly owned office space rent free. An enterprise is anyone who puts goods or services on a market. An enterprise could be a government department or a charity if they are acting commercially.

3. Affects international trade. This can be trade with any World Trade Organisation member or, more specifically, between the UK and a country with whom it has a Free Trade Agreement. For example, if the subsidy is going towards a good which is traded between the UK and the EU this could affect trade between the EU and the UK. It is not necessary to consider whether the subsidy could harm trade, just whether there could be some sort of effect. Subsidies to very local companies or a small tourist attraction are unlikely to be a problem as this is unlikely to affect international trade.

The BEIS Subsidy Control regime (or where relevant EU State aid regulations) are designed to prevent unfair advantages and distortion of trade: Complying with the UK’s international obligations on subsidy control

More information on the principles of awarding subsidies can be found in the BEIS guidance.

This award is being given under the streamlined route for research, development and innovation (SC10780), more details can be found here.

The following table summarises the maximum funding levels for projects and the maximum intervention thresholds allowable under this grant call. The categories provided align to category 1 & 2 of the Research, development and innovation streamlined route.

Streamlined Scheme	Category	Large Enterprise	Medium Enterprise	Small Enterprise
Research Development & Innovation	Category 1- Feasibility Study	50%	60%	70%
Research Development & Innovation	Category 2-Industrial Research*	50%	60%	70%
Research Development & Innovation	Category 2-Experimental Development Projects*	25%	35%	45%

* An uplift of 15% to the intervention rate on eligible costs may be authorised for effective collaborations:

· Between Enterprises, where at least one of the Enterprises is a SME, or.

· Between an Enterprise and one of more research and knowledge dissemination organisation, which must have the right to publish its one research results.

When assessing which category applicants are applying for the definitions within the streamlined scheme guidance is to be used:

‘Feasibility study’ means the evaluation and analysis of the potential of a project, which aims at supporting the process of decision-making by objectively and rationally uncovering its strengths and weaknesses, opportunities and threats, as well as identifying the resources required to carry it through and ultimately its prospects for success.

‘Industrial research’ means the planned research or critical investigation that is aimed at the acquisition of new knowledge and skills for developing new products, processes or services; or that is aimed at bringing about a significant improvement in existing products, processes or services.

This would include digital products, processes or services, in any technology, industry or sector (including, but not limited to, digital industries and technologies, such as super-computing, quantum technologies, block chain technologies, artificial intelligence, cyber security, big data and cloud technologies). Industrial research comprises the creation of component parts of complex systems, and may include the construction of prototypes in a laboratory environment or in an environment with simulated interfaces to existing systems as well as of pilot lines, where necessary for the industrial research and notably for generic technology validation.

‘Experimental development’ means acquiring, combining, shaping and using existing scientific, technological, business and other relevant knowledge and skills with the aim of developing new or improved products, processes or services.

This includes digital products, processes or services, in any technology, industry or sector (including, but not limited to, digital industries and technologies, such as for example super-computing, quantum technologies, block chain technologies, artificial intelligence, cyber security, big data and cloud or edge technologies).

This may also encompass, for example, activities aimed at the conceptual definition, planning and documentation of new products, processes or services. Experimental development may comprise prototyping, demonstrating, piloting, testing and validation of new or improved products, processes or services in environments representative of real-life operating conditions where the primary objective is to make further technical improvements on products, processes or services that are not substantially set. This may include the development of a commercially usable prototype or pilot which is necessary for the final commercial product and which is too expensive to produce for it to be used only for demonstration and validation purposes.

Experimental development does not include routine or periodic changes made to existing products, production lines, manufacturing processes, services and other operations in progress, even if those changes may represent improvements.

The following table summarises the UK definition of what constitutes an SME in accordance with the Companies Act 2006:

Company category	Staff headcount	Turnover	or	Balance sheet total
Medium sized	< 250	≤ £36m	≤ £18m
Small	< 50	≤ £10.2m	≤ £5.1m

To qualify for any category, the company must meet at least two of the above conditions (staff headcount, Turnover or Balance sheet total) within both the current financial year and the year previous.

Anything above the limits for a medium sized company is designated as a large company. For more information on company sizes, please refer to the company accounts guidance. This is a change from the EU definition unless you are applying under State aid.

Other sources of public funding are not eligible as a Private Venture (PV) / match funding contribution.

Academic partners will be funded in all cases at 80% of Full Economic Cost (FEC).

2. Previous project subsidies

In accordance with para 6.23 of the streamlined route guidance, cumulation rules apply for any award issued under this call. This limits the Agencies ability to fund projects that have received previous project funding that exceeds the total allowable under the streamlined route. To accurately assess compliance with the financial thresholds laid down in the streamlined schemes, all applicants are to identify any previous project funding from any public body over the last 3 years. Any applicant that has received over £3million in total (including that been sought under this call) will be ineligible for this call.

Date of Award	Awarding body	Total value of awarded funds
	Total:

Please provide a nil response if required.

3. Minimum Financial Assistance

The Subsidy Control Act 2022 has provision relating to Minimal Financial Assistance (MFA)

For organisations applying under MFA, the total subsidy which can be given to each organisation is up to a maximum of £315,000 over a rolling 3 fiscal year period. This threshold is subject to change and grant recipients should consult the subsidy control guidance for regular updates.

When calculating eligibility for the application of the MFA provision bidders must include cumulation of EU State aid de minimis grants under the EC’s de minimis regulation and Small Amounts of Financial Assistance (SAFA) under the EU Trade and Co-operation Agreement (TCA) for the same 3 fiscal year period. The maximum total under the EC regulation is €200,000, the maximum total under SAFA is £340,000 or 325,000 Special Drawing Rights. This is for all project types and for most purposes, including operating aid. You must complete and provide UK Space Agency with a declaration as part of your response.

The declaration asks you to tell us about any awards, including those made under de minimis and SDR, (from any source of public funding) over a rolling 3 fiscal year period.

If you have received an award under de minimis or SDR for the same period, this will be added to your total allowance under MFA. This means that the total award must not exceed £315,000) for any one organisation. You must declare this allowance to any other funding body who requests it.

4. Disclaimer

This guidance is not a substitute for taking independent legal advice on your eligibility status, before applying for funding. Every applicant is responsible for securing their own independent legal advice to ensure they are lawfully eligible.

Please note the UK Space Agency is unable to award organisations that are considered to be ailing and insolvent companies. We will conduct financial viability and eligibility tests to confirm this is not the case following the application stage.

If you see an error in this guidance, please email Commercial@ukspaceagency.gov.uk.