UK Subsidy Control: Government responds to the CMAs first statutory review

The new Department for Business, Innovation, Science and Trade (BIST) recently published its formal response to the Competition and Markets Authority's review of the effectiveness of the UK Subsidy Control Act 2022.

Overall, the government accepts the CMA's principal findings and commits to implementing changes across three core areas - guidance, streamlined routes and transparency - while signalling a continued commitment to refining the regime.  We examine the CMA's assessment, the government's response, and the practical implications for public authorities and other stakeholders.

CMA report

Under section 65 of the Subsidy Control Act 2022, the CMA is required to periodically review the effectiveness of the subsidy control regime.  Its first report (covering the period from January 2023 to March 2026) concluded that the regime is broadly working as designed, offering public authorities sufficient flexibility without giving rise to undue distortions of competition or adversely affecting investment. The CMA also found evidence that the regime is acting as an effective check on poor subsidy-giving, with some public authorities opting not to proceed with proposed subsidies in light of the regime's requirements.

The CMA nevertheless flagged several areas requiring attention, including implementation challenges faced by smaller public authorities and highlighted the need for additional guidance. While some stakeholders have questioned the enforcement regime's robustness given limited challenges before the Competition Appeal Tribunal, the CMA considered it too early to draw firm conclusions. Evidence on the regime's impact on competition and investment remains limited, though early signs suggest subsidies are supporting projects in the energy and industrial sectors and promoting inward investment.

The CMA's three headline recommendations focused on: guidance and support for public authorities; the use and scope of streamlined routes; and the effectiveness of the subsidy transparency database.

Government response to key recommendations

In its response, BIST points out that the government has already responded quickly to issues which have arisen since the regime came into effect, such as increasing the threshold for mandatory referrals of subsidies in the non-sensitive sectors and creating new streamlined routes.  It agrees to implement further changes based on the CMA's three core recommendations as part of continual efforts to improve the regime, as follows:

1. Guidance and support

BIST's guidance suite for public authorities has expanded considerably since January 2023, and usage is high, with 88% of surveyed public authorities reporting that they had used the statutory guidance and found it helpful.  However, the CMA noted that the length of the statutory guidance (267 pages including annexes) can be challenging for those unfamiliar with the regime. BIST will consider ways of making it more concise and accessible and is also revising the Quick Guide to better serve as an introductory resource.

BIST plans to publish revised versions of both the statutory guidance and the Quick Guide (autumn 2026), and to deliver additional training sessions for public authorities, including joint sessions with the CMA on how to conduct competition assessments.

2. Streamlined routes

Streamlined routes make it easier for public authorities to give routine subsidies that support government objectives and economic growth.  Three of the six streamlined routes have existed since January 2023, covering energy usage, local growth, and research, development and innovation. Two new routes - community and regeneration, and arts and culture - were introduced this year and have already been used to deliver at least £38 million in subsidies.

In April 2026, the government introduced a housing streamlined route to address viability gaps in housing projects, unlock stalled sites and accelerate delivery towards the government's 1.5 million new homes target.

BIST is now revising the research, development and innovation route, with a new version expected in autumn 2026, and intends to revise the energy usage and local growth routes in due course. Suggestions for additional streamlined routes are welcomed from public authorities and other stakeholders.

3. Transparency

The subsidy database is a central pillar of the UK's subsidy control regime, delivering the transparency required by the Act and supporting the UK's international commitments on subsidy reporting.  The CMA identified two main themes of stakeholder criticism: the visibility of subsidies and users' ability to find them; and the accuracy and completeness of uploads.

On visibility, BIST has introduced additional fields to improve the quality of entries and is focused on improving the search function, with a simpler interface expected later in the summer.  On accuracy, respondents highlighted encountering incomplete, duplicative or out-of-date information. BIST continues to monitor uploads and contact public authorities where entries appear inaccurate or incomplete.

Other themes

Other themes identified in the report were as follows:

• Exemptions and Prohibitions: the CMA found that the MFA (Minimum Financial Assistance) and SPEI (Services of Public Economic Interest) exemptions are generally working effectively and it does not consider the case has been made for a broader SPEI exemption. BIST will continue to address prohibited subsidies through training sessions and the casework function.
• SAU Referral Process: the CMA identified areas for improvement in how the Subsidy Advice Unit (SAU) operates, with some stakeholders calling for clearer reports and greater use of the SAU's powers to comment on subsidy design. BIST will continue to work with the SAU to deliver joint outreach sessions for public authorities and identify areas in which SAU reports could be more accessible.
• Enforcement:  while some respondents and commentators view the limited number of CAT challenges as evidence that the private enforcement regime is ineffective, the CMA considered it too early to draw firm conclusions, noting that litigation has ramped up in the last 18 months with four cases brought before the CAT in 2025. In all subsidy cases heard to date, the CAT has found that public authorities made rational decisions, suggesting that the level of scrutiny being applied is appropriate and robust.

Looking ahead

While the CMA has concluded that it is too early to draw definitive conclusions on the regime's impact on competition and investment, early evidence is encouraging, with subsidies supporting investment and delivering economic and social benefits across sectors including social housing, automotive manufacturing, and heritage and culture.

The most significant near-term development for public authorities will be the publication of revised statutory guidance in autumn 2026. Public authorities should plan to review the updated guidance carefully upon publication and consider what changes may be needed to their internal subsidy decision-making processes. Those that have found competition assessments particularly challenging should look out for the joint BIST/CMA training sessions and additional guidance expected alongside the revised materials.

Alongside the guidance revisions, improvements to the subsidy database search function are expected later this summer, which should make  it easier for organisations to identify and scrutinise subsidy awards.  Organisations in sectors where subsidies are commonly awarded should monitor the database regularly once the improved interface is live and remain aware of the Pre-Action Information Request (PAIR) mechanism as a preliminary step before any potential challenge.

Ayla Skene, Partner specialising in subsidies at TLT said, "While the evidence base remains relatively limited at this stage, the CMA's review provides a degree of reassurance that the UK's subsidy control framework is operating as intended. The government's focus on guidance, streamlined routes and transparency reflects a pragmatic approach to improving the operation of the regime as stakeholder experience continues to develop."

The next CMA review will cover the period from 1 April 2026 to 31 March 2029.

This publication is intended for general guidance and represents our understanding of the relevant law and practice as at September 2026.  For more information see our terms & conditions.