Transparency in the Subsidy Control Bill

Think tank: Institute of Economic Affairs

Author(s): Matthew Lesh

March 9, 2022

This report from UK think tank the IEA looks at principles that public authorities must follow when granting subsidies.

The Subsidy Control Bill (‘the Bill’) could make it easier for public authorities to provide economically damaging subsidies – by moving away from the European Union’s state aid process and reducing transparency requirements. The Bill outlines principles that public authorities must follow when granting subsidies and disclosure requirements for when subsidies are provided. The Bill only requires transparency (through publication in a database) if a subsidy is worth £500,000 or more pursuant to a pre-published scheme or £315,000 or more if not part of a scheme. It is estimated that this could allow £4 billion of subsidies to escape transparency. There is a significant risk that billions of pounds in subsidies will escape public scrutiny and challenge and be wasteful or distortionary. A lower threshold for transparency requirements could help reduce this waste and increase democratic accountability, enable affected businesses to contest decisions, and lessen rent seeking and corruption.