Subsidy control
Subsidy control
What are the UK subsidy control rules?
The UK subsidy legal framework is largely set out by the Subsidy Control Act 2022 (the 2022 Act).
In terms of the 2022 Act, public bodies, including the Council, have a statutory duty to ensure that any subsidy they give complies with a prescribed set of subsidy control requirements and does not constitute a subsidy that is specifically prohibited.
Who are the subsidy control rules aimed at?
The UK subsidy control rules are aimed at public authorities giving financial assistance to enterprises. The meaning of “enterprise” is broad and is not limited to commercial companies. It can, as such, include public bodies, universities and charities to the extent they are engaged in economic activity. The determining factor is whether the entity in question carries out an economic activity consisting of offering “products or services on a given market.”
What is a subsidy?
A subsidy is a form of financial support provided by a public authority to a business (an “enterprise”), which gives the enterprise an economic advantage that could not have been obtained on normal commercial terms.
Subsidies are typically used to support a specific investment project by an enterprise or to incentivise specific economic activity in a particular sector or region.
Subsidies can take on various forms, including grants, loans or discounts on goods and services if not on market terms.
There is a four-limbed test which must be considered and each limb satisfied in order for the assistance to be considered a subsidy.
- Limb A: The financial assistance must be given directly or indirectly from public resources by a public authority.
- Limb B: The assistance must confer an economic advantage on one or more enterprises.
- Limb C: The assistance must be specific, benefiting certain economic actors over others.
- Limb D: The assistance must have, or be capable of having, an effect on competition or investment within the UK or trade between the UK and another country or territory.
If all four criteria are met, the financial assistance is considered a subsidy. If any one of the criteria is not met, the assistance is not a subsidy.
To assist services in assessing whether proposed assistance would be classified as a subsidy, a pre-screening test is available, which can be completed, and which includes consideration of the 4 limbs. Once completed, the test should be sent to your service/Resource Subsidy Control Working Group representative (below), who will take it to the Council’s cross-service Subsidy Control Working Group for further revie,w after which feedback will be provided. Ask your resource rep for more information.
If the assistance that the council is proposing to provide might be classified as a subsidy, then this must be escalated immediately to the relevant Executive Director/Head of Service. This will enable it to be considered in more detail, including the action that is necessary to ensure the Council meets its legal duties.
Subsidies can still be awarded lawfully, but some rules need to be followed, including public reporting on a national database.
A failure to follow the rules exposes the Council to legal, financial and reputational risk.
Further guidance/Key contacts
This page is only intended to give a brief overview of the subsidy control regime. Any possible subsidies must be considered in detail, based on their specific facts, with advice sought from relevant officers.
For more detailed guidance, see the UK Subsidy Control Act 2022.
There is useful and detailed statutory guidance on the 2022 Act prepared by the UK Government.
There is also a separate “quick guide” from the UK Government.
There is also a presentation available, which was delivered to Council officers by an external law firm.
If you have a question about subsidy control, please contact your Service Area Subsidy Control Working Group representative below. They will direct any requests to the Subsidy Control Working Group or an appropriate service.
Education
Community and Enterprise
Finance and Corporate
- Iain Strachan/Donald McLardy
- Murray Husband
- Lorraine O’Hagan
- Emma Smith
- Michelle Milne
- Angie Moakler
Housing and Technical
South Lanarkshire University Health and Social Care Partnership
Last updated 10 December 2025
