Notice

Annex 1 - Subsidy control guidance for applicants

Updated 26 October 2023

This notice was withdrawn on 23 May 2024

This call has closed.

The UK Space Agency supports organisations to invest in research, development and innovation. The support we provide is consistent with the UK’s international obligations and commitments to Subsidy Control (see further information in Annex 2).

Before awarding subsidies, the UK Space Agency must ensure that the subsidy scheme meets the terms of the principles as determined in the Subsidy Control Act 2022.

The principles are that: 

• subsidies should pursue a specific public policy objective to remedy an identified market failure or to address an equity rationale such as local or regional disadvantage, social difficulties, or distributional concerns (“the objective”)
• subsidies should be proportionate to their specific policy objective and limited to what is necessary to achieve the objective
• subsidies should be designed to bring about a change of economic behaviour of the beneficiary that is conducive to achieving the objective and that would not be achieved in the absence of subsidies being provided
• subsidies should not normally compensate for the costs the beneficiary would have funded in the absence of any subsidy
• subsidies should be an appropriate policy instrument to achieve a public policy objective and that objective cannot be achieved through other less distortive means
• subsidies’ positive contributions to achieving the objective should outweigh any negative effects, in particular the negative effects on trade or investment between the parties
• subsidies should be designed to achieve their specific policy objective while minimising any negative effects on competition or investment within the United Kingdom

To ensure this competition provides funding in line with the UK’s obligations and commitments to Subsidy Control, the intervention rates detailed in Annex 2 shall apply unless: 

1. the bidder seeks to claim exemption from having to make a contribution under the Minimal Financial Assistance Allowance (previously known as de-minimis under State Aid and Small Amounts of Financial Assistance under Trade & Co-operation Agreement) rules 
2. the bidder is a research or public sector organisation or charity

When referring to research organisations, the UK Space Agency uses the definition from the framework for state aid for research and development and innovation which states:  

“‘research and knowledge dissemination organisation’ or ‘research organisation’ means an entity (such as universities or research institutes, technology transfer agencies, innovation intermediaries, research-oriented physical or virtual collaborative entities), irrespective of its legal status (organised under public or private law) or way of financing, whose primary goal is to independently conduct fundamental research, industrial research or experimental development or to widely disseminate the results of such activities by way of teaching, publication or knowledge transfer. Where such entity also pursues economic activities, the financing, the costs, and the revenues of those economic activities must be accounted for separately. Undertakings that can exert a decisive influence upon such an entity, for example in the quality of shareholders or members, may not enjoy a preferential access to the results generated by it.”  

Within the UK Space Agency, this means:  

• universities - higher education institutions
• non-profit research and technology organisations (RTOs), including “catapults”
• public sector organisations (PSOs)
• public sector research establishments (PSREs)
• research council institutes
• research organisations (ROs)
• charities

This list is not comprehensive and is subject to change and exceptions

Research organisations undertaking non-economic activity will be funded as follows:  

• universities: 80% of full economic costs
• all other research organisations: 100% of eligible costs

Research organisations should be non-profit distributing to qualify. They should explain how they will disseminate the output of their project research as outlined in the application.  

Research organisations which are engaged in economic activity as part of the project will be treated as business enterprises for the purposes of funding. 

1. Public sector organisation or charity  

Public sector organisations and charities can work with businesses to achieve innovation through knowledge, skills, and resources. These organisations must not take part in any economic activity or gain economic benefit from a project. They can apply for 100% of funding for their eligible costs under the following conditions:  

• they are undertaking research (this may be experimental, theoretical, or critical investigation work to gain knowledge, skills or understanding vital to the project)
• they meet requirements for dissemination of their project results, and they state in the application how they will do this
• they include their eligible costs for research purposes in the total research organisation involvement
• they make sure they are not applying for funding towards costs which are already being paid by the public purse such as labour and overheads.

2. Third sector  

Third sector organisations are primarily voluntary and community, such as associations, self-help groups, mutuals and cooperatives. Third sector organisations can be non-funding partners in a project.  

Bidders must identify the work proposed, and this must be consistent with the work programme described in the technical case. Note that the company size defines the maximum ‘Intervention’ rate (and hence the minimum required PV level) that is permitted (see Annex 2). Bidders will be expected to justify the category of work selected. 

Bidders must ensure that they supply the correct information that allows UK Space Agency to award grants within the scheme. It is the responsibility of the grant funder to ensure compliance with the relevant subsidy control rules and the bidder to assist the funder in doing this by acting within the terms and conditions of the scheme. Further guidance about subsidy control is available on the gov.uk website. Further guidance about subsidy control is available on the gov.uk website.