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Some initial comments on this. https://www.gov.uk/government/news/government-sets-out-plans-for-new-approach-to-subsidy-control
1. The Conservatives promised during the election campaign “to take *immediate* steps to ensure that a new state aid regime is designed and *ready to be in place by 1 January 2021*.” See https://uksala.org/conservative-plans-to-replace-the-uk-state-aid-regime/.
There is no explanation of why that commitment to voters has not been honoured.
2. In June, the Minister claimed to be “working at pace” on developing the policy “in tandem with the EU negotiations” https://committees.parliament.uk/publications/1381/documents/12714/default/, page 4. The current Government seems to have fallen off the tandem. And the “working at pace” seems to have been a Red Queen effort.
3. This is all the more extraordinary as it has been clear for months that the way out of the subsidy stand-off between the EU and UK was for the UK to set out its new subsidy regime as promised to voters and Parliament.
That approach was advocated by a spectrum of voices across the Brexit spectrum including eg @ShankerASingham. And a paper by @jamesrwebber was published by @PoliteiaUK (strongly pro-Brexit): I discussed it here. https://uksala.org/paper-by-james-webber-on-the-uk-anti-subsidy-regime-after-brexit/.
There were some differences of view (eg should the basic concept of “subsidy” be taken from EU law or from WTO law) but these were (on the scale of things) minor (there isn’t much difference there).
The government would have needed to decide what the threshold for the regime was (effect on international trade/anti-competitive effect in the UK) and details of structure (regulator, powers, consequences of not getting clearance). But there were and are the outlines of a plan.
Indeed, in March 2020 @michaelgove signalled that that might well be what the government planned to do. He said to @CommonsFREU “The subsidy regime that the UK proposes to put in place after we have left the EU will be one that the EU will recognise as a robust system.”
4. The press release carefully does not rule out agreeing a new regime with the EU. A scheme produced like a rabbit from a hat can’t be ruled out.
A straw in favour of that possibility is that the Internal Market Bill, clause 49, lays the foundation for UK legislation on this by making subsidy control a reserved (Westminster-only) matter. Why lay down foundations now unless you think you may need to build on them soon?
But if the government plans to produce a rabbit in a hat, it is very odd that it is going out of its way to give the impression that it has no such rabbit and won’t for some time. Silence would have been the more obvious approach.
5. The “interim position” is going to be a mess. It looks as if all there will be will be “guidance”. What legal force or status will that guidance have?
And the current government’s claim that the Internal Market Bill can’t wait because of immediate threats to the UK internal market on 1/1/21 is hard to square with its insouciance about the possibility of subsidies threatening the internal market on that date.
6. The further legislation referred to is indeed needed before the end of the year. That is because otherwise Article 108(3) of the Treaty on the Functioning of the EU - which has direct effect - remains part of our law as retained EU law. See https://eurelationslaw.com/blog/can-the-government-abolish-the-state-aid-regime-by-secondary-legislation-should-it-do-so
7. An astonishing feature of all this - incl. the extraordinary steps taken to wriggle out of the government’s state aid commitments in the Protocol - is the absence of any example of something that the government might want to do but which isn’t permitted by State aid rules.
That gaping absence inevitably leads to the suspicion that the government’s real problem is with any system that effectively scrutinises its decisions as to who is to receive public money.
