Consultation outcome: refining the UK subsidy control regime

Subsidy control in the UK is governed by the Subsidy Control Act 2022 (the Act). This enables the award of financial assistance by way of subsidies from public authorities while minimising distortion to competition. In November 2024, the Department for Business and Trade (DBT) issued a consultation on two key aspects of the subsidy control regime (thresholds for referral to the Competition and Markets Authority (CMA) and streamlined routes) for parties in the UK that are interested in subsidy control. On 7 April 2025, DBT published the UK government's response and decisions following consultation.

What you need to know

• DBT now intends to increase the non-sensitive mandatory referral threshold to £25 million.
• DBT also intends to create two new streamlined routes – community regeneration and arts and culture.
• DBT has proposed amending the Subsidy Control (Subsidy Database Information Requirements) Regulations 2022 to avoid in-scheme award uploads having to duplicate information already provided at the scheme-level.

Thresholds for referral to the CMA

Current thresholds

The current thresholds for CMA referral under the Act are set out below, and were the subject of the consultation.

Mandatory referrals: Subsidies or schemes of particular interest (SSoPI) and subsidies in sensitive sectors pose a higher risk of distortion and are required to be referred to and evaluated by the CMA. 

The current list of sensitive sectors includes manufacture of basic iron and steel and of ferro-alloys, aluminium production, copper production, manufacture of motor vehicles, building of ships and floating structures, manufacture of motorcycles, manufacture of air and spacecraft and related machinery and production of electricity.

The Subsidy Control (Subsidies and Schemes of Interest or Particular Interest) Regulations 2022 (Regulations) set out the current thresholds for mandatory CMA review. For SSoPI these include subsidies that are over: (i) £10 million or (ii) £1 million but in combination with related subsidies exceed £10 million over the last three financial years. Additionally, mandatory referrals are required for sensitive sectors where the threshold is lower at: (i) £5 million or (ii) £1 million but in combination with related subsidies exceed £5 million over the last three financial years.

Voluntary referrals: The second category of subsidies that has high distortive potential is subsidies or schemes of interest (SSoI). These can be voluntarily referred to the CMA for assessment, which can choose whether to accept such referrals. The Regulations note the current threshold is subsidies between £5 million and £10 million outside sensitive sectors. Subsidies not meeting the mandatory referral threshold can also be called in for CMA review by the Secretary of State for Business and Trade.

Consultation on revised thresholds

DBT believes high inflation and increased project costs over recent years have resulted in a greater number of mandatory referrals but no voluntary referrals. To check whether the mandatory and voluntary thresholds are appropriate DBT sought views as to what the mandatory threshold should be for SSoPIs and subsidies in sensitive sectors, and what the voluntary threshold should be for SSoIs. DBT also sought views as to whether the existing list of sensitive sectors is appropriate, and other comments on the CMA referral process.

• Decisions following the consultation Mandatory non-sensitive threshold: DBT proposes to increase the mandatory referral threshold for non-sensitive sectors to £25 million, with revised regulations being laid before Parliament in H2 2025. Reducing the number of lower value referrals made will allow the CMA to focus on referrals with the most potential for harm and ease administration for less impactful subsidies. This decision is in line with the majority of responses.
• Sensitive sectors: DBT does not propose to amend the mandatory referral threshold for sensitive sectors or modify the list of sensitive sectors. This allows for continued enhanced scrutiny for higher risk sectors, and is in line with limited supporting evidence for responses suggesting amendments to the list of sectors. DBT will, however, keep the list under review.
• Voluntary referrals: DBT does not propose to amend the SSoI threshold for voluntary referrals. This will enable authorities to refer subsidies below £25 million for CMA review where these would benefit from feedback.
• Threshold concepts: suggestions of alternative threshold concepts were rejected, due to complexity and limited supporting evidence.

Streamlined routes

Current streamlined routes

Subsidies awarded under streamlined routes do not need to be individually assessed against subsidy control principles, are not subject to CMA review, and are useful for high-frequency and low risk projects that are aligned with the UK's priorities. The current streamlined routes include the areas of research, development and innovation, energy usage and local growth. DBT sought views from those who have utilised current streamlined routes and also from those who have not, to understand their choices.

Consultation on new streamlined routes

The Act allows for the creation of new streamlined routes. DBT identified community regeneration and arts and culture as potential areas for such new routes and consulted on support for them. It also sought views on other frequently awarded subsidies that would benefit from streamlining.

Decisions following consultation 

• New routes: DBT intends to proceed with two new streamlined routes – community regeneration and arts and culture. It also intends to explore consultation responses suggesting the arts and culture route should be expanded to cover built and natural heritage projects, and that infrastructure projects should be covered under the community regeneration route.
• Continued review: DBT also intends to keep existing routes under review, and explore the need and demand for additional routes in line with consultation responses. 

Other issues

• Subsidy database: the remaining questions in the consultation related to the functioning of the CMA process. The DBT notes that it will propose amendments to the Subsidy Control (Subsidy Database Information Requirements) Regulations 2022 to avoid in-scheme award uploads having to duplicate information already provided at the scheme-level. It will also review whether any other changes are needed to ensure the smooth functioning of the regime.
• Continued review: DBT will also consider other consultation responses within its policy development, monitoring, and in its rolling regime of enhancements to the subsidy database. Consultation responses will also be considered when publishing revised versions of the Statutory Guidance.
• CMA report: the CMA has a statutory duty to report on the effectiveness of the Act, and the impact on competition and investment in the UK, with the first report being due in 2026.

Comment

The anticipated changes from the UK government's response to the consultation will reduce the administrative burden when awarding relatively low subsidies, and allow public authorities to deliver subsidies under a broader range of streamlined routes. While these changes are pending approval, the current thresholds and list of streamlined routes will continue to apply. We will issue a further briefing as this develops.