New laws to give government more freedom to support businesses
By David Wood | 30th June 2021
New legislation that is set to replace EU rules will grant the government and councils greater freedom to support businesses, claims the Business Secretary.
The Subsidy Control Bill will replace EU-wide state aid rules, which require member states to seek approval for government assistance to firms, reports the BBC.
The rules will allow the government to help companies with grants or loans faster, say ministers.
It has been dubbed "the most important bit of post-Brexit legislation yet".
Business Secretary Kwasi Kwarteng said the government was using its "newfound freedoms" following Brexit to "empower public authorities across the UK to deliver financial support - without facing burdensome red tape".
"We're seizing the opportunities of being an independent trading nation to back new and emerging British industries, create more jobs and make the UK the best possible place to start and grow a business," he added.
According to the BBC, the government has said the new bill would allow it to be more agile, targeted and timely in its interventions with businesses.
The government said the announcement would not "signal a return to the failed 1970s approach of government picking winners or bailing out unsustainable companies".
Historically, the UK has extended far less government support to private business than France and Germany and officials have historically said they do not expect the overall level of state aid to increase significantly.
The government said it will judge cases for support on whether they deliver good value for money and help hit targets such as "levelling up" and decarbonising the economy.
There will also be safeguards to ensure that devolved government departments and local authorities do not engage in bidding wars of support that could cause a relocation of businesses and jobs from one part of the UK to another.
However, the wording of the bill is set to be closely studied by the European Commission, which has expressed concerns the UK may distort competition by failing to ensure UK and EU firms operate on a so-called "level playing field". Competition lawyers have also warned the new rules may prove controversial.
The UK will still be subject to World Trade Organisation rules and any decisions made can be contested in the law courts.
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