UK to scrap EU subsidy cap but MPs will not recommend 'slash and burn' of regulations

Thu 18 Feb 2021
Posted by: William Barns-Graham
Trade News

global law

The government is considering scrapping EU limits on state-aid to allow it to provide more support to businesses impacted by the Covid-19 pandemic, despite commitments to mirror EU subsidy rules.

Currently, the EU cap of £3.5m in government aid per business means that some firms are not able to access the full support they could be entitled to under the government’s £4.6bn recovery package, the Times reports.

However, the Department for Business, Energy and Industrial Strategy (BEIS) is looking to increase this limit so that firms can benefit from more financial support.

Trade deal concerns

There have been concerns that exceeding the EU limits could breach the principles of the trade deal struck with the EU last years, which set parameters for how much the UK can diverge from EU subsidy laws.

However, the EU itself eased state-aid restrictions last month, allowing up to €10m of support per business on the continent.

Nimble rule-making

Former Conservative leader Iain Duncan Smith, who leads a group of MPs advising the prime minister on post-Brexit regulations, said he will not recommend a ‘slash and burn’ of existing laws, the FT reports.  

Although government hopes to become more agile in making its own rules, there is no appetite for wholesale bonfires of red tape from the business community.

One former Tory cabinet minister involved in previous attempts to root out red tape said: “You cast around and find virtually nothing anyone wants to repeal. Then you find there was a reason it was put there in the first place.”

Fast and sensible

Duncan Smith – who chairs an innovation, growth and regulatory reform task force – said his group would be proposing “fast and sensible” changes.

The prime minister himself has identified areas such as driverless cars, artificial intelligence, fintech and bioscience as those which could benefit from faster regulatory action by the UK.