By: Tom Middleton
20 Jul 2026 11 min read
On 25 June 2026, the CMA published its review of the Subsidy Control Act 2022 (the Act). The verdict is positive: public authorities are using the regime, the SAU is functioning as intended, and there is no evidence that subsidies awarded under the Act are harming competition and investment within the UK by, for example, making markets less competitive, discouraging new businesses from entering, or reducing the incentive for firms to invest.
But the review also identifies where practice is falling short: assessments conducted too late, economic analysis that lacks rigour, and limited monitoring of what subsidies actually achieve. With £156.6 billion awarded in the first three years, the question of whether public money is working as intended matters.
Data from the subsidy database suggests the regime is broadly achieving its first aim: enabling public authorities to intervene where they identify a need to do so.
Over the review period, 33,950 subsidies were recorded with a combined value of £156.6 billion – roughly 1.8% of UK GDP. That number grew steeply from £20.4 billion in 2023 to £86.3 billion in 2025. But headline figures can mislead. The transparency database records long-term commitments up front, the Sizewell C scheme alone accounts for £50.3 billion, representing 75 years of contracted value as opposed to cash already disbursed. If you strip that out, the picture changes considerably. How much of that growth reflects genuinely new subsidy activity, and how much simply better recording, is not clear, so the headline numbers are best read with caution.
Subsidies have been awarded across a wide range of sectors. Energy dominates by value at around 70% of the total, reflecting the government’s Net Zero priorities. This represents roughly six times the value received by the next largest sector, transport and storage (around 11%). By volume, agriculture received the most awards (16% of the total), reflecting the large number of small, individual grants to farmers and rural businesses. SAU referrals follow the same pattern: energy accounts for the highest number.
Overall, public authorities of all types have generally been able to give the subsidies they judge necessary, and very few felt inhibited from doing so. That said, some public authorities, particularly smaller ones, told the CMA that uncertainty about interpretation and a lack of tailored guidance created hesitation in practice. The regime works well for those who know how to use it but that is not yet the norm across the board.
Public authorities are generally completing their assessments but there are important findings about what those assessments contain. The CMA found meaningful variation in quality across the regime, and this isn’t just about resources.
The most commonly reported challenge relates to the analysis required under Principle F and G. These principles involve economic assessments that require public authorities to define the relevant market, assess the impact of the subsidy on competition and investment within that market, and identify any potential distortive effects.
Specifically, Principle F requires authorities to assess the likely effects of a subsidy on competition and investment within the UK, while Principle G requires them to demonstrate, with appropriate evidence, that the positive effects of the subsidy outweigh any negative impacts. For many public authorities, particularly smaller local authorities with limited access to in-house economic expertise, these requirements represent both a technical skills gap and a significant administrative burden. Additionally, while authorities are generally comfortable identifying and explaining the intended benefits of a subsidy, they often find it more challenging to assess, evidence, and quantify its potential adverse effects on competition and investment.
The report findings also suggest that public authorities are often unclear about how much analysis is actually required. The Statutory Guidance sets out that the level of economic analysis should be proportionate to the scale and risk of a subsidy. However, without clear benchmarks or worked examples, public authorities struggle to calibrate this in practice.
But perhaps the most consequential finding may be one about timing, not capability or availability of resources. In most cases, assessments are typically conducted late in the policy development process, most often after the beneficiary has been selected and key design decisions have been locked in. At that stage, the assessment can’t shape the subsidy, it can only justify it. Assessments become a retrospective justification for decisions already taken, rather than an input into how the subsidy is designed. This matters because the evidence from the CMA's case studies shows that assessments carried out earlier, alongside scheme development, were more likely to influence the final design and to identify genuine improvements. Done earlier, the assessment process can help public authorities articulate clearer policy objectives, test whether a subsidy is the right tool for the job and consider less distortive alternatives. The requirements themselves are sound; what is missing is the habit of applying them early, while the design of the subsidy can still change.
This reflects a wider debate among practitioners about how the Subsidy Advice Unit (SAU) operates in practice. SAU reports are often described as reading more like peer review than adjudication: offering views on what a public authority might consider, rather than reaching a substantive view on whether a subsidy's effects are genuinely distortive or whether the principles are met. The recurring observation is that, while the SAU itself acknowledges the limits of its statutory powers, there is a reasonable case that it is not yet making full use of the powers it already has.
During the review period the SAU published 116 advisory reports covering 64 individual subsidies and 52 schemes, with a combined estimated value of £30.6 billion. While this covers 4% of all subsidies recorded on the database, it captures the largest and most complex interventions. DESNZ accounted for half of all reports, followed by DBT.
The SAU is generally well-regarded by those who have used it. Reports are described as clear, concise and actionable, and the distinction between what must be improved and what could be improved is highlighted as particularly useful. That said, the CMA finds room to improve. For example, the reports could be more explicit about compliance risk and more directive about next steps. Recurring deficiencies across referrals suggest public authorities are not always translating SAU feedback into genuine learning, and there is limited visibility of how authorities respond after a report is published.
Some stakeholders questioned whether the SAU's role is wide enough, suggesting options ranging from making its advice binding above certain thresholds to giving it investigative powers. The CMA does not recommend legislative change at this stage.
Where the evidence thins out is on the question the CMA was most specifically required to answer “whether the Act is having a measurable impact on competition and investment in the UK”.
The CMA tried two approaches. First, it looked for statistical correlations between sector-level subsidy spend and indicators of competition (price-cost markups, market concentration) and investment. It found no robust significant correlations. Second, it conducted qualitative case studies. Most public authorities told the CMA it was too early to assess competitive impacts, or that they hadn't monitored outcomes at all. A small number pointed to early positive effects, projects that would not have proceeded without the subsidy, new entrants into regional markets, and improved competitiveness for beneficiaries.
The problem is structural. Public authorities are not routinely required to monitor or report on what happens after a subsidy is awarded. Without that data, measuring effectiveness will remain difficult not just at this review but at the next one. The CMA notes the gap but stops short of recommending mandatory outcome reporting.
None of the CMA's findings or recommendations will require public authorities to do anything differently as a matter of law. But they point to where the practical risk sits, and where a change in approach now will pay off as the regime matures and case law develops.
Integrate subsidy control compliance into the business case and scheme design from the outset. Assessments conducted early, when design choices are still open, are more likely to drive genuine improvements to how the subsidy is structured, targeted and justified. Done late, that opportunity is gone. This requires a cultural shift.
Principles F and G require genuine analysis of market structure, competitive effects and the counterfactual. For routine subsidies, a proportionate approach is appropriate, and public authorities may want to consider using streamlined routes to reduce burden. For complex, novel or high-value subsidies, particularly in concentrated markets or sensitive sectors, that bar is higher and rising as CAT case law develops.
Define what success looks like before the money goes out the door, identify the data needed to track it, and set out how and when outcomes will be reviewed. Without a feedback loop, there is no way to know whether a subsidy worked, whether it distorted competition, or whether the same approach should be used again. The SAU could usefully provide guidance on what good outcome monitoring looks like in practice, in the meantime, public authorities should not wait to be told.
The CMA's recommendations are directed at DBT and the SAU and none require legislative change. But based on those recommendations, public authorities should expect to see the following changes to how the regime operates in practice.
Beyond the CMA's recommendations, the regime is also moving in other respects. Two new streamlined routes came into force in January 2026 and a housing route was announced in April 2026, with DBT continuing to evaluate where further routes are needed.
On enforcement, two recent cases are worth noting. First, the Court of Appeal has dismissed the appeal in Weis v Greater Manchester Combined Authority, confirming that £120 million in property development loans did not constitute a subsidy. The Court confirmed that what matters is that the transaction was on market terms, not whether the authority followed the right internal decision-making process to award the financial assistance. For public authorities, the judgment provides comfort where transactions are genuinely commercially robust, but it also means that commercial substance is what will be scrutinised if a challenge is brought. Second, the Court of Appeal is expected to rule on Bristol Airport v Welsh Ministers, the first Court of Appeal decision on the Schedule 1 principles. The outcome will clarify how those principles should be assessed and the role of expert economic evidence.
If you would like to discuss the changes to The Act, or any other areas relating to this, please get in contact with Tom Middleton.
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