The Statutory Guidance accompanying the Subsidy Control Act[1] (SCA) states that ‘Subsidy transparency is a fundamental part of the UK’s subsidy control regime’ given its importance in enabling ‘interested parties to view subsidies to decide if they want to challenge a subsidy before the Competition Appeal Tribunal’. With thanks to practitioners from multiple disciplines for their views and experiences, referenced below, this article looks at the UK’s Subsidy Database just over a year after the launch of the UK’s new regime and looks to put forward some constructive ways the Subsidy Database might be improved.
The Database
The transparency provisions in the SCA,[2] together with the Subsidy Database Information Requirements (the Requirements),[3] create a legal framework which offers the potential to deliver high levels of transparency in terms of publicly available data, which may be accessed by interested parties.
The Database[4] sits alongside the Competition and Markets Authority (CMA) case finder, where the reports of the Subsidy Advice Unit (SAU) on cases referred to them can be found.[5] At this time there isn’t a link between subsidies that have been referred to the CMA under section 52 of the SCA[6] and the reports which the Subsidy Advice Unit publishes. Interested parties considering bringing a challenge to a subsidy on the Database would be able to make more informed decisions if they were aware that the CMA had provided feedback on the public authority’s assessment. As the database grows it will be harder to link the two, noting the issues that already exist with searching the database. Functionality is a frequent complaint of those using the Database.
How the Database Could Help Inform Decisions on Legal Challenge
Focusing solely on domestic law challenges,[7] many practitioners have noted the importance of having an easily searchable database given the short window for legal challenge, effectively one month of the measure appearing on the website.
At the moment, the functionality of the Database falls short of what is needed. It is not possible to search the Database by public authority or many other useful terms. Nor is it possible to set alerts by sector etc.
Indeed, some practitioners point out that it can be very difficult to find subsidies which they know have been uploaded.
Although not a representative sample, a quick search of several subsidies on the Database, did not produce any cases with sufficient detail to complete a claim form or to ascertain whether a subsidy was given in accordance with the Subsidy Control Principles. In these cases, an interested party could not reach a conclusion as to whether to bring a challenge. Given this, there might be valuable changes made to ensure more useful information is there.
In the sample, several public authorities provide a link to their general website homepage rather than anything related to the subsidy. Several practitioners cited instances of incorrect legal basis. Incorrect detail and irrelevant links do not advance transparency in a meaningful way.
Should Schemes Be Subject to Additional Requirements?
At this time, the information which must be posted for schemes is very similar to individual awards. However, the challenge period for schemes runs from the point information about the scheme is posted, rather than the time the subsequent award is made. Given this, it might be useful to require the public authority, when establishing a scheme to clearly articulate the potential beneficiaries (or class thereof) so that an interested party can make a more informed decision as to whether their competitor is likely to receive support under a new scheme.
Is the Database Checked for Errors?
A quick search of the Database shows many apparent errors in the information posted. Additionally, practitioners shared experience of subsidies which are listed as being awarded in the future, as well as others apparently awarded decades ago.
There are instances of loans declared as subsidies where the value of the subsidy is calculated as the value of the loan, which seems very hard to reconcile with the granting authority having properly followed the Statutory Guidance on calculating the subsidy value of the loan.[8] There are also many instances which appear to have been put on the Database out of an abundance of caution, with amounts which seem almost certain to be covered by Minimal Financial Assistance.[9]
Some Pre-TCA[10] schemes have been uploaded to the Database even though these fall outside the requirements of the SCA. Similarly, there are instances of public authorities appearing to grant money to themselves, which raises interesting questions as to how they have understood the Durham case.[11]
Practitioners have shared instances of recipients and grantors of subsidies being misnamed or inconsistently named. Instances of joint funding also appear to be incorrectly entered/recorded, raising further questions about the accuracy of the data.
Erroneous-looking entries raise the question of whether greater scrutiny needs to be applied before information can be uploaded. There is also a risk some public authorities may be rushing subsidies onto the Database hoping no one will raise an issue in the one-month window, and they may be foregoing a light touch assessment of the public money committed.
Evaluation
In addition to those interested in legal challenges, the Database could provide a wealth of useful information to academics, consultants, non-governmental organisations and others. At the moment, the Database is not easily searchable and it does not seem to contain information that might be useful to them. For instance, none of the practitioners spoken to were able to use the Database to identify subsidies given under streamlined routes.
The lack of data also means there is little possibility of identifying good practice and learning from other granting authorities, quite aside from the benefits to be gained in saving time and public resources. This also means useful work identifying markets and assessing market impact (if this is actually being done) has to be done de novo by each authority considering similar subsidies.
CMA Evaluation
The CMA has an open consultation seeking views on the approach proposed by the Subsidy Advice Unit (SAU) in undertaking its monitoring function.[12] This closed on 28 March 2024. It will be interesting to see if the SAU is hampered by any of the issues outlined above and the extent to which this limits its ability to monitor and evaluate the effectiveness of the arrangements.
How Can the Database Be Improved?
The Database is designed to play a central role in the UK Subsidy Control regime. However, the teething problems risk interested parties missing the opportunity to challenge unlawful subsidies, allowing distortive and harmful subsidies to occur with the waste of public money.
Migrating current information onto a single more easily searchable database, with subscriber alerts for sectors and similar would be a step change from the current situation. Such databases exist on the government webpages for other purposes, so this would seem an easy win within reach.
Public authorities need to be supported and incentivised to upload accurate information. It appears at the moment there is insufficient support for good practice and also a lack of deterrent sanctions for poor practice. In fact, it is arguable the current arrangements incentivise poor practice – changing this would improve the Database.
Conclusion
At the moment, the Database is causing problems for the day-to-day operation of the Subsidy Control regime and its deficiencies may explain why so few cases have been brought to the Competition Appeal Tribunal. Given the errors apparent on face of some Database entries, it would be naive to think it is because the subsidies are all legally sound.
Comparatively simple adjustments to the regime could make the transparency processes much more effective. Improving the search functions of the Database, including allowing the information to be found through search engines would be a good start. Similarly, sanctions or consequences for incomplete information might also be useful in improving what goes on the Database.
The government could choose to go much further in transparency, as the EU have done in their new Guidelines on State aid for climate, environmental protection and energy.[13] These include a requirement to calculate the subsidy per tonne of CO2 (showing methodology) and mandate consultation windows to improve transparency and make it meaningful. It is open to the UK to pioneer transparency in this and other areas, enabling the most efficient allocation of public money to achieve policy goals.
There are many benefits to greater transparency around subsidies. It seems the right time for a discussion about what interested parties and other stakeholders would find useful, as well as what levels of information public authorities should provide on their spending of public money.