Clearer, Fairer, Better: The case for UK subsidy transparency

Clearer, Fairer, Better: The case for UK subsidy transparency

  • The UK spends upwards of £8bn on subsidies a year, but only half of this spending is recorded publicly and new proposals will limit transparency further
  • The Subsidy Control Bill attempts to increase the flexibility of our subsidy regime post-Brexit but in its current form will enable wasteful spending and harmful government intervention
  • A joint paper by the Centre for Policy Studies and Centre for Public Data, backed by the Government’s Anti-Corruption Champion, John Penrose MP, argues that the Government should slash the new threshold for declaring subsidies from £500,000 to £500
  • This would utilise the powers regained from the EU to make our subsidy regime more transparent, nimble, and effective
  • Having Government publish the data would also reduce the burden on business to keep their own subsidy records, and enable firms to more easily identify and challenge unfair subsidies granted to their competitors

You can read a short summary of the briefing note here.

Following the UK’s exit from the EU, the Government has laid out a new approach to subsidies in the Subsidy Control Bill. This new regime aims to be quicker, more flexible and less bureaucratic than the EU system by policing subsidies via active challenges after they are granted, rather than requiring pre-approval.

At the same time however, the bill increases the threshold at which data on subsidies is collected and publicised from €500,000 to £500,000 – effectively raising it by 20%. In practice, this means that the data on fewer subsidies will be available for scrutiny – and companies will be unable to challenge subsidies to their rivals that they have no way of knowing exist.

In 2018 the UK government spent £8bn on subsidies, but only half of those were declared under the existing regime. In its current form, the Subsidy Control Bill makes scrutiny more difficult by raising the threshold for declaration.

In a new briefing note published by the Centre for Policy Studies, former minister John Penrose MP and Anna Powell-Smith, Director of the Centre for Public Data, recommend that the Government lower the threshold for public data on subsidies of £500,000 to £500.

They also argue that the Government should declare all of this spending itself, rather than requiring businesses to register subsidies received themselves. The Government’s own estimates put the cost of this at just £20,000. This measure would drastically increase transparency while reducing the burden on business, at almost no cost to government.

John Penrose MP, who wrote the introduction to the Briefing, said:

“Subsidies are a headily-addictive political drug. Controlling them is vital to stop political meddling, cronyism and tilting the playing field so Britain becomes less competitive, less fair and less attractive for international investors too.

“The antidote to the drug is transparency. If we publish every grant or subsidy over £500 for everyone to see, lobbyists and cronies will know they can’t push for subsidies that aren’t fair, because there’ll have nowhere to hide.”

Anna Powell-Smith, Director of the Centre for Public Data and author of the Briefing, said:

“The Government says it wants to put data and evidence at the heart of policymaking. The
Subsidy Control Bill creates an excellent opportunity to do that – but the new UK subsidy database will not include around half of all subsidies. Instead, the Government should include all subsidies over £500 in published data. This is easy and cheap to implement, and will ensure future subsidy spending is transparent and evidence-based.”

Robert Colvile, Director of the Centre for Policy Studies, said:
“The Government should seek to make good on its promise to become a thriving economy outside of the EU by holding itself to a higher standard. Publishing data on all subsidies above £500 will pour cold water on cronyism, and ensure any subsidies are fair, efficient, and effective.”

CPS - Tuesday, 18th January, 2022