Policy paper

Response to the CMA review of the effectiveness of the UK Subsidy Control Act and its impact on competition and investment in the UK

Published 12 August 2026

Summary of the CMA report

Background

Section 65 of the Subsidy Control Act 2022 requires that the Competition and Markets Authority (CMA) must undertake periodic reviews of the effectiveness of the operation of the act and its impact on competition and investment within the United Kingdom. As specified by the act, this first review covers the period between 4 January 2023, when the act came into force, and 31 March 2026.

The act requires the CMA to produce a report on each review period as soon as practicable after the end of each review period, and this report was laid in Parliament on 25 June. The next review will cover the period from 1 April 2026 until 31 March 2029.

Find more information on the CMA’s approach to the review, including the consultation it conducted in 2024 on its proposed approach and methodology.

Since the CMA report was laid before Parliament, the machinery of government changes announced on 20 July 2026 have created a new Department for Business, Innovation, Science and Trade (BIST). BIST has inherited responsibility for the Subsidy Control Act 2022 from the Department for Business and Trade (DBT).

Findings

The CMA finds that:

• the regime is broadly working as designed – it provides flexibility for public authorities while not leading to undue distortions of competition or investment. There is also evidence that public authorities have decided to not go ahead with some subsidies due to the requirements of the regime. This demonstrates the regime is a sufficient deterrent against poor subsidy-giving
• implementation challenges remain, especially for smaller public authorities. There remains demand for additional guidance on areas such as competition assessments, and public authorities relying heavily on external advice when conducting assessments
• enforcement attracts attention but it is too soon to conclude on its effectiveness – there are comments from some stakeholders that argue the small number of reviews in the Competition Appeal Tribunal (CAT) so far demonstrates that the regime’s enforcement mechanism is not sufficiently robust, however, given the regime is still relatively new, it is too soon to conclude on the effectiveness of the enforcement arrangements
• impact on competition and investment is unknown – evidence on this is limited, but the CMA received some evidence that subsidies were having a positive impact on competition, other public authorities are not monitoring the impact of their subsidies on competition or investment, and there is no evidence of systemic negative impacts on competition or investment
• there is some evidence of positive investment effects – subsidies are supporting projects that may not otherwise proceed, notably in energy and industrial sectors, promoting inward investment

Recommendations

The CMA report highlights 3 areas which it recommends BIST, the government department responsible for subsidy control policy, further considers:

1. Guidance and support: while generally effective in helping public authorities understand the regime and assess compliance of proposed subsidies and schemes, the report recommends that support for public authorities could be improved by clarifying elements of the statutory guidance and providing a wider range of practical support tools.

2. Streamlined routes: while streamlined routes offered greater legal certainty and are less burdensome, the report concludes there may be evidence that they may not have been used by public authorities to the extent intended. The CMA found there was a clear desire for additional streamlined routes across a range of sectors.

3. Transparency: although the regime provides for transparency in relation to the giving of subsidies, the report concludes that some aspects of this do not work well. In particular, that the subsidy database is not as effective as it could be in enabling a wider awareness and understanding of the subsidies that are given.

Impact of the regime on competition and investment

Whilst the CMA concludes that it is too soon to determine the impact of the regime on competition and investment within the UK definitively, it does provide the following observations:

• some public authorities reported redesigning their subsidies to mitigate impacts on competition and investment, during the process of considering subsidy control compliance, including considering the form and structure of subsidies
• some public authorities reported having not proceeded with proposed subsidies due to the requirements of the regime – while it cannot be guaranteed what specific element of the regime caused this decision, it does imply the regime has deterred subsidies that may have had significant distortive impact
• some public authorities have identified their subsidies as having early positive impacts on competition and/or investment in targeted markets. Others had not monitored this to any extent, and any changes are difficult to attribute directly to specific subsidies, given the presence of external factors which may play more significant roles

UK government response

Summary

The government welcomes the CMA’s overall finding that the UK subsidy control regime is operating effectively based on the available evidence.

BIST will implement changes based on the CMA’s 3 core recommendations as part of continual efforts to refine and improve the regime.

While evidence for the impact of the regime on competition and investment within the UK is limited, there are positive signs in terms of the regime deterring poor subsidy-giving and promoting competition and investment, and we expect the next CMA monitoring report in 2029 will be able to provide more observations on the impact of the regime.

BIST is committed to ensuring that the subsidy control regime facilitates interventions which support economic growth and allow public authorities to meet their policy objectives while protecting fair competition. As the CMA notes, the flexibilities within the regime have allowed the UK government to respond quickly to issues and themes which have arisen since the regime came into effect. This has included amending the threshold for mandatory referral for subsidies in non-sensitive sectors from £10 million to £25 million, and the creation of new streamlined routes. BIST will implement further changes based on the CMA’s 3 core recommendations as part of continual efforts to refine and improve the regime.

Responding to the CMA’s key recommendations

1. Guidance and support

Guidance

The purpose of the guidance and support BIST offers is to enable public authorities to make subsidy decisions and take advantage of the permissive nature of the regime. Since the regime came into effect in January 2023, BIST has produced a variety of materials and guidance to assist public authorities looking to give subsidies.

The current guidance offering consists of:

• the statutory guidance which explains the obligations and responsibilities public authorities must comply with when giving subsidies – since its publication in late 2022 it has been updated 4 times with iterative improvements and clarifications following feedback from public authorities
• the Subsidy Control rules: quick guide to key requirements for public authorities, commonly referred to as the ‘Quick Guide’, also published in late 2022
• new guidance on Compliance with the UK’s international obligations on subsidy control – including the Windsor Framework – published in June 2023
• a guide for beneficiaries published in December 2023
• principles assessment guides published in December 2024
• a subsidy of particular interest principles assessment case study published in March 2026

The CMA’s various engagement with public authorities as part of its evidence-gathering yielded positive responses about the statutory guidance. The CMA’s questionnaire of public authorities that had made referrals to it found that 95% of respondents had used the statutory guidance, the majority of those found it either fairly or very helpful. Similarly, the CMA’s research into public authorities’ experiences of the regime^{[footnote 1]} found 88% of public authorities surveyed had used the statutory guidance, and 85% of those found it fairly or very helpful.

The CMA also found that other guidance documents such as the principles assessment templates are commonly used and described as helpful. These findings are both reassuring and demonstrate the value of the guidance products BIST provides in supporting public authorities to make subsidy decisions.

The CMA report also highlights some evidence which suggested the length of the statutory guidance – 267 pages including annexes – can be challenging for those unfamiliar with it. The solution is therefore not simply to add to the volume of guidance. BIST will through future reviews of the statutory guidance consider ways of making it more concise, as well as clearer on areas of the regime which public authorities find particularly challenging.

The most recent public consultation on subsidy control, which BIST conducted from November 2024 to January 2025, received feedback from public authorities on the statutory guidance and other guidance documents provided on the subsidy control regime. This, combined with informal feedback received from public authorities via BIST’s casework function and outreach programme, has informed both previous revisions of the statutory guidance and ongoing plans to improve the accessibility of all the guidance products BIST offers.

The CMA also received evidence calling for alternative, more digestible, formats of guidance. BIST is reviewing the Quick Guide with a view to make it more useful for those unfamiliar with subsidy control to grasp the basic requirements of the regime without needing to digest the full statutory guidance. Within the limits of accessibility requirements, BIST will consider including visual graphics and alternative means of explaining subsidy control requirements – in addition to written guidance.

Some evidence called for reflections from CAT rulings and Subsidy Advice Unit (SAU) reports could be incorporated. Adding guidance following the CAT’s rulings is something BIST has done in the past, though we also seek to balance calls for greater guidance with calls for the statutory guidance to be more concise and focused on the core obligations of the regime. Where we consider that revisions of the guidance following legal judgments is likely to be helpful to public authorities, we will continue to make them.

Other respondents called for a clearer process for determining what changes should be made to the guidance. On the calls for a more transparent and consistent approach to revising the guidance, BIST is keen to not overcomplicate the process of amending the guidance. Existing practice enables BIST to respond to issues as they arise and amend the guidance only when it is necessary to do so.

Outreach

BIST continues to operate a rolling outreach programme consisting of webinars and in-person teach-in events has supported public authorities to understand their obligations under the regime and how they can deliver targeted and impactful subsidies. This includes sessions focusing on a variety of topics and areas within the regime, including applying the Minimum Financial Assistance (MFA) and Services of Public Economic Interest (SPEI) exemptions, using streamlined routes and the subsidy database. Public authorities seeking to engage with this outreach programme should contact subsidycontrol.engagement@businessandtrade.gov.uk for more information.

Since the review period ended, BIST has developed a series of on-demand video recordings explaining the core obligations under the regime and other areas of importance for public authorities to understand. BIST plans to extend this on-demand video resource in the coming months, following significant initial uptake. Public authorities seeking to access these should register here.

Casework function

The BIST subsidy control casework team provides support and guidance to public authorities on individual subsidies and schemes. Public authorities seeking advice should contact subsidycontrol@businessandtrade.gov.uk.

The CMA’s finding that most respondents to its post-SAU report questionnaire found the BIST casework team fairly or very helpful is positive. Similarly, the CMA received evidence to its call for input which described the BIST casework function as approachable, helpful and friendly.

The main criticisms of the support provided by both BIST’s casework team and subsidy control teams in the devolved governments was that they do not provide definitive decisions on whether a proposed subsidy can go ahead. BIST maintains that an agile and flexible subsidy control regime without ex ante regulatory approvals empowers public authorities at local, regional and national levels to drive economic growth and meet their policy objectives.

Reliance on external advice

The CMA highlights throughout its report how many public authorities rely heavily on external advice when both assessing whether a measure is a subsidy, and when conducting subsidy principles assessments. The CMA notes this is especially the case with public authorities lacking in-house economic, legal, financial or policy expertise. Some respondents raised concerns around the cost and proportionality of external advice, and that this reliance on external advice has been far greater than was anticipated when the regime was designed.

The government agrees with the CMA’s acknowledgement that public authorities will become more confident as they become more accustomed to the regime. BIST will nonetheless take steps to continually improve the quality of guidance and support available to public authorities.

Future improvements to the statutory guidance and an expanded on-demand resource will better enable public authorities to understand their obligations and how to make effective subsidy decisions themselves.

Next steps on guidance and support

Over the next 6 to 12 months, BIST plans to:

• review the statutory guidance with a view to publishing the sixth version in autumn 2026
• review the Quick Guide to make it easier for public authorities to get an initial, basic understanding of subsidy control, with a revised version intended for publication in autumn 2026
• deliver additional training sessions for public authorities, targeting areas identified in the CMA report as needing further support, including sessions delivered jointly by BIST and the CMA on how to conduct competition assessments

2. Streamlined routes

Streamlined routes are a mechanism within the UK subsidy control regime by which the UK government can make it easier for public authorities to give routine subsidies that support government objectives and economic growth. The ability to create new streamlined routes has enabled the government to respond to emerging trends and policy priorities. BIST will continue to monitor the usage and effectiveness of the 6 existing streamlined routes and will consider creating new routes where they would improve the regime’s effectiveness.

Existing routes

Three of the 6 streamlined routes have existed since the regime came into effect in January 2023 – covering energy usage, local growth, and research, development and innovation.

DBT’s 2024 to 2025 public consultation confirmed the appetite for more streamlined routes. Following this, DBT developed 2 new routes covering community and regeneration, and arts and culture. After extensive engagement with central government departments, the devolved governments, and other public authorities, these were laid in Parliament in January 2026^{[footnote 2]}. In the 6 months since their introduction, at least £33 million in subsidies have been delivered through the community and regeneration route, and at least £5 million through the arts and culture route^{[footnote 3]}.

In April 2026, following extensive engagement with the Ministry of Housing, Communities and Local Government (MHCLG), the devolved governments, Homes England, the Greater London Authority (GLA), other public authorities, and private law firms, BIST introduced a housing streamlined route. This makes it easier to give subsidies which address viability gaps in housing projects, unlock stalled sites and accelerate housing delivery towards the government’s ambitious 1.5 million new homes target. The CMA received evidence in its call for input, which was conducted before the housing route was introduced, which called for changed to make it easier to give housing subsidies.

BIST continues to monitor usage of the 6 existing streamlined routes via subsidy database entries, and through engagement with public authorities.

This ongoing feedback has helped to identify areas in which the original 3 streamlined routes can be improved. We are now revising the research, development and innovation streamlined route to ensure public authorities are able to use it to its full potential. We expect a new version of the route to be laid in Parliament in the autumn, and we intend to revise the energy usage and local growth routes in due course.

New streamlined routes

BIST is open to creating additional streamlined routes where doing so would make the giving of routine subsidies easier and quicker. Although BIST does not intend to conduct further public consultations on this matter for the foreseeable future, public authorities and other stakeholders are welcome to suggest both amendments to existing routes and ideas for new routes via subsidycontrol@businessandtrade.gov.uk.

3. Transparency

Searchability and accessibility

The subsidy database is a central pillar of the UK’s subsidy control regime. It delivers the transparency required by the act and associated regulations^{[footnote 4]} while also supporting the UK’s international commitments on subsidy reporting, such as those under the World Trade Organization (WTO).

The database provides the means for public authorities to meet their legal obligations by being transparent about the use of public money, as well as being accessible to the public to scrutinise subsidies. As a result, the database not only complies with UK statutory requirements but also helps demonstrate the UK’s commitment to a transparent, rules-based approach to subsidy control.

BIST has received stakeholder feedback on the usability of the database since the regime came into effect in January 2023. This has included feedback gathered via public consultations and ongoing engagement with public authorities and others.

In response to this, BIST has undertaken an ongoing programme of enhancements to the subsidy database to make the information contained within it more accurate and searchable. These enhancements are prioritised and aimed at improving visibility and scrutiny of subsidies recorded on the database, to ensure proper transparency within the UK subsidy control regime. After introducing additional fields that have improved the quality of entries, we are now focussed on improving the search function, with its rollout aimed for later in the summer.

The CMA identified 2 main themes of stakeholder criticism of the database:

• the visibility of subsidies on the database and users’ ability to find them
• the accuracy and completeness of database uploads

In relation to the first point, the most recent enhancements to the database focus on improving the search function. This will integrate across all uploaded subsidies, with a simpler and more accessible interface. A more clearly laid out, navigable search page should enable database searches to quickly identify and monitor subsidies, addressing one of the most important issues raised by the CMA in its report. The CMA received some evidence from database users which described enhancements since 2023 as having made the database more user-friendly.

On the second point, many call for input respondents highlighted having encountered incomplete, duplicative or out of date information on the database, and that this compromised the ability of interested third parties to understand subsidy decisions.

Some evidence emphasised that complete database uploads enable businesses operating or investing in the UK to understand the reasoning behind the award of subsidies to potential competitors. Others requested additional information be required as part of database uploads.

BIST continues to monitor the database and contact public authorities in cases where uploads appear inaccurate or incomplete. Additionally, BIST continues to offer database outreach sessions to increase public authorities’ understanding of their transparency obligations and how to comply with them. As the CMA notes in its report, the responsibility for transparency uploads lies with individual public authorities when they are giving subsidies^{[footnote 5]}.

Database threshold

The CMA also received some evidence calling for the £100,000 reporting threshold to be lowered to ensure proper scrutiny of smaller subsidies. As the CMA notes, doing so would increase compliance costs for public authorities giving these smaller subsidies, and there is need to balance regulatory burden and transparency. BIST considers the current £100,000 threshold to be appropriate but will continue to monitor this as the regime continues to mature.

Increasing breadth of information requirements

Some respondents argued that publishing principles assessments, even if just for subsidies referred to the SAU, would better enable third parties to understand decision-making processes and enabling challenges to be brought more easily.

However, the information included in a database entry should be sufficient for interested third parties to decide whether to do one of the following:

• submit a Pre-Action Information Request (PAIR) under Section 76 of the act

• challenge a subsidy without having submitted a PAIR

A PAIR provides an interested party with additional information upon which it can decide whether to challenge the subsidy at the CAT.

BIST does not intend to require public authorities to publish their assessments of compliance, due to the chilling effects that could arise from additional administrative burden that would be placed on public authorities. When the UK was subject to state aid rules, public authorities were not required to publish their assessments of compliance on a database. This emphasises how requiring this would represent a significant increase in administrative burdens placed on public authorities.

We have through recent and ongoing refinements to the regime sought to make the administrative burdens associated with subsidy control compliance more proportionate. This has supported public authorities to take advantage of the flexible and permissive nature of the regime.

The CMA also received some evidence calling for ‘no subsidy’ decisions to be uploaded to the database or otherwise made publicly available. As the CMA notes, doing so raises practical questions and fundamentally the UK subsidy database is designed to record information once a measure has been deemed to be subsidy.

Requiring assessments to be published would significantly increase administrative burdens on public authorities, who would be required to potentially upload a broad range of non-subsidy transactions and other activities. Recording “no subsidy” decisions would also risk confusing interested third parties seeking to find information on subsidies that have been given.

Other themes identified in the report

Exemptions and prohibitions

MFA and SPEI

We are reassured by the CMA’s observation that MFA is the most well-used exemption under the subsidy control regime, and that both MFA and SPEI are generally seen to be working effectively. Between 2023 and 2025 the CMA found over 2,000 subsidies uploaded to the database were given as MFA, and 62 as SPEI. The CMA notes that these figures likely do not represent all the MFA or SPEI Assistance subsidies, as there is not a requirement to record MFA and SPEI Assistance subsidies with values of £100,000 or less on the database. This matches BIST’s understanding of MFA and SPEI usage based on anecdotal feedback from public authorities, and also via the public consultation which ran from November 2024 to January 2025.

Some respondents called for greater flexibilities such as disapplying the principles from SPEI subsidies altogether. However, this view is not universally held and the CMA does not consider the case has been made for a broader SPEI exemption.

The CMA recommends that BIST takes additional steps to ensure beneficiaries are sufficiently aware of their responsibility to record and track MFA awards they receive. BIST does provide a guide for beneficiaries, which details this requirement clearly^{[footnote 6]}. Although BIST has seen many cases in which public authorities have engaged early with beneficiaries, we will continue to encourage public authorities to discharge their subsidy control obligations in the least burdensome way, to avoid imposing undue administrative burdens on businesses.

Other exemptions

The CMA received limited evidence regarding the use of other exemptions that exist under the act, which is unsurprising given the limited usage of such exemptions to date and the limited number of public authorities likely to consider exercising them. There was one response which called for greater information to be published for future uses of the s64^{[footnote 3]} power to exempt a subsidy from referral to the SAU.

Fundamentally, the act requires that a direction given under s64(3) be laid before Parliament, sent to the public authority giving the subsidy, and published in a manner the Secretary of State considers appropriate. This does not require an explanation of the urgent and exceptional circumstances to be included in the notice itself.

Public authorities seeking guidance on how to apply exemptions under the act should contact the BIST subsidy control mailbox at subsidycontrol@businessandtrade.gov.uk.

Prohibitions

The CMA recommends that BIST ensures greater awareness among public authorities around the prohibitions that exist within the regime. The statutory guidance and Quick Guide already provide exhaustive descriptions of the prohibitions that exist.

In addition to the statutory guidance, BIST includes material on prohibited subsidies in outreach activities and via its casework function. The issue of public authorities’ awareness of subsidy control is not something that can be addressed purely through expanded guidance and is more a question of outreach and awareness-spreading activities.

BIST will continue to address the prohibitions through training sessions and the casework function. This should sufficiently mitigate the risk of prohibited subsidies being given, especially given the low likelihood that most public authorities would consider giving a subsidy that is prohibited – which the CMA acknowledges.

SAU referral process

The CMA report identifies several potential areas for improvement in how the SAU operates. Whilst it is for the SAU to consider this as the UK’s independent body, as the department responsible for subsidy control BIST will continue to work closely with the SAU to help deliver an effective SAU referral and monitoring function. Some stakeholders want reports to be clearer and include greater use of the SAU’s powers to comment on the subsidy design, in addition to consideration of the assessment against the principles.

Other requests from stakeholders called for the SAU to be more explicit on what they are criticising in relation to the assessment of compliance, rather than drafting style. The report also recommends that the SAU considers how it can enhance its engagement with public authorities. BIST will continue to work with the SAU to deliver joint outreach sessions for public authorities to better understand both the SAU referral process and how to conduct principles assessments for subsidies requiring referral. This should improve both public authorities’ experiences of engaging with the SAU via the referral process.

BIST considers that over time SAU reports have become easier for public authorities and others to understand and use. For example, the SAU introduced the structure of ‘should’ and ‘could’ recommendations in their reports in autumn 2024 to make reports easier to understand for both the referring public authority and interested third parties. BIST has received feedback that this structure has improved public authorities’ ability to action recommendations and that they have also been able to learn from other public authorities’ reports. However, there was some evidence the CMA received which called for the SAU website to be more searchable and for its non-confidential summaries to contain more information.

BIST will continue to work with the SAU to identify areas in which SAU reports could be more accessible to better enable third parties to understand subsidies being referred to the SAU.

Enforcement

Some respondents to the CMA’s call for input, and some external commentators, view the relatively small number of challenges brought to the CAT as evidence that the private enforcement regime is ineffective. As the CMA report highlights, most of these cases have been ‘subsidy/no subsidy’ decisions, whereby the challenger has claimed a public authority failed to treat financial assistance as subsidy. Only the Bristol Airport vs Welsh Ministers case focused on a public authority’s decision to give a subsidy.

The CMA reports that the number of challenges is not in itself an indicator of effectiveness, and that limited case law is not a sufficient evidence base from which to make definitive conclusions regarding the robustness of the enforcement regime. As of August 2026, the Court of Appeal has dismissed the appeal of the Weis vs GMCA case, and the Bristol Airport v Welsh Ministers case has requested permission to appeal, also to the Court of Appeal.

It is common for new legislative frameworks to experience limited litigation in the years immediately following their introduction. There has been an increase in litigation in the last 18 months, with 4 cases being brought before the CAT in 2025, which supports the view that litigation is likely to gradually increase as businesses become more accustomed to the new regime.

Since the CMA published its monitoring report, there has been another case brought before the CAT^{[footnote 7]}.

The CAT has found in all the subsidy cases it has heard so far that public authorities have made rational decisions. This suggests that the CAT has viewed the level of scrutiny public authorities are applying when designing and giving financial assistance as appropriate and robust.

It is also worth noting that during the UK’s membership of the European Union, there were only a handful of recovery orders made against the UK to address unlawful State aid. There were also very few state aid challenges in the European Courts involving the UK, with only 2 cases in the last 10 years – one in which the UK supported the European Commission’s ultimately successful defence of its decision to approve state aid for Hinkley Point C and another where the CJEU overturned an earlier judgment that a tax exemption for multinational groups constituted unlawful state aid.

The CMA reports that some stakeholders would support the creation of a more ‘proactive’ regulatory approach whereby an enforcement body would monitor subsidy-giving with a view to bringing challenges. Others supported increasing retrospective enforcement via giving the CMA or the CAT greater audit and clawback powers. The purpose of enforcement within the subsidy control regime is to allow for redress against subsidies which cause undue distortions to competition and investment, which in turns discourages and prevents poorly designed subsidies. We consider that the private enforcement model remains the best approach for the regime.

Impact of the regime on competition and investment within the UK

While noting that the CMA has deemed it too soon to determine meaningful impacts, there are some observations which BIST will consider.

The CMA describes how some public authorities it engaged with reported redesigning their subsidies. Other evidence described how the impact of the regime, and particularly the CMA referral process, has led to changes in public authorities’ proposed interventions to ensure compliance with the principles set out in the act. This has included some cases where the public authority was facing a threat of litigation by interested parties.

The CMA also received evidence that suggests that subsidies given in the UK have both positively impacted investment in the UK and brought other economic and social benefits to the UK. Respondents to the CMA’s call for input highlighted sectors such as social housing, automotive manufacturing, and heritage and culture as examples of this.

BIST will continue to work with public authorities through the subsidy control mailbox and outreach functions to support those public authorities in designing impactful and targeted subsidies that minimise negative distortion on competition and investment.

1. SAU. Report on the effectiveness of the Subsidy Control Act 2022 and its impact on competition and investment in the UK: appendix D ↩

2. DBT. Subsidy Control Act 2022: streamlined routes for the Arts and Culture and Community and Regeneration streamlined routes ↩

3. DBT. Search for UK subsidies: community and regeneration route and Search for UK subsidies: arts and culture route ↩ ↩²

4. The Subsidy Control (Subsidy Database Information Requirements) Regulations 2022, amended in May 2025 by The Subsidy Control (Subsidy Database Information Requirements) (Amendment) Regulations 2025 ↩

5. SAU. Report on the effectiveness of the Subsidy Control Act and its impact on competition in the UK, para 10.11. ↩

6. DBT. Subsidy control: a guide for beneficiaries ↩

7. CAT. McGill’s Bus Service Limited v The Scottish Ministers ↩