Brexit: UK to set up new state aid rules for business

Business Secretary Kwasi Kwarteng sets out plans for a new UK-wide subsidy control system, for providing more flexible and tailored financial support to businesses.

Business Secretary wants local authorities and regional governments to have more power.

The EU rules were there to stop governments from providing companies with unfair advantages through cheap loans, tax breaks or funding. Now it has left the EU, the UK needs its own rules.

"Our new, more flexible system will empower public authorities and devolved administrations, and ensure fair competition for businesses across the UK," Mr Kwarteng said. His Department for Business, Energy & Industrial Strategy will put together proposals on how to keep any support to business transparent.

The new subsidy control system, which will be the long-term replacement for the EU’s prescriptive state aid regime, will allow the UK to be more dynamic in providing support to businesses, including in innovative, R&D-focused industries, to encourage job creation and growth across all parts of the UK.

Any system will be built to ensure "big companies cannot play off the regions, nations, towns, and cities of the UK against each other in a competition to benefit from taxpayer subsidy - protecting the dynamic and competitive market economy across the UK," the department said.

Under the proposed UK subsidy system, local authorities, public bodies and the devolved administrations in Edinburgh, Cardiff and Belfast will be empowered to decide if they can issue taxpayer subsidies by following a set of UK-wide principles. These principles will ensure subsidies are designed in such a way that they deliver strong benefits and good value for money for the UK taxpayer, while being awarded in a timely and effective way.