The UK government’s public spending amounts to whopping 40.8% of the GDP.
From access platforms operating in the construction industry to higher education; a range of sectors receive some form of government support provided through public funds. Even the oil and gas companies received £13.6bn in subsidies in 2021 despite its denial.
The rampant spending that led the government borrowing to jump to £ 20bn in September has been the subject of widespread debate and public uproar.
However, the introduction of the Subsidy control system in the latter part of October, could have a far-reaching impact on multiple regions, for instance; North West, depending on the level of subsidies they benefit from. It’s being seen as a mechanism to re-target subsidies to those who need them the most.
But, will the system achieve the intended consequences?
What is the subsidy control system?
The UK’s subsidy control system comprises a set of rules and regulations designed to prevent the government from overspending on subsidies or wasting funds on infeasible projects.
The subsidy control system is made up of several different measures, including the setting of an overall limit on subsidies to ensure that the money is spent in a way that is most beneficial to the economy and the UK citizens.
Will the subsidy control system succeed?
Gareth Smythe – the CEO of Hilton Smythe – a firm specialising in business sales; has put forth his two cents on the matter and expressed reservations:
“Whilst this looks like a fantastic scheme that will allow devolved administrations and local authorities to deliver subsidies to local businesses, the devil is always in the detail. If the scheme operates anything like some of the COVID assistance that was left to local authorities to manage, the scheme could be little more than a news headline. Some local authorities were poor at making businesses aware of grant entitlement during COVID; from our experience, some authorities even made it difficult for businesses to obtain. Hopefully, the government will ensure the regime gets to businesses that benefit through a proactive effort rather than a silent benefit that only a few hear of.”
In a Nutshell
From the “no fault divorce” legislation geared toward families aiming to separate to the subsidy control system; the UK government has continued to introduce new laws and regulations geared towards betterment in 2022. However, when it comes to UK policymaking; success in the long run isn’t always guaranteed.
The impact of this new system is yet to be fully seen, but if successful, it could help to save the government millions of pounds every year, which could be used to fund other essential services. It could also help to level the playing field between large and smaller businesses, as the latter are often at a disadvantage when claiming subsidies. Only time will tell whether the new subsidy control system will be successful, but it is undoubtedly a step in the right direction.
