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11 Apr 2023

Time to reap the benefits? The UK's new subsidy control regime comes into effect

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On 4 January 2023, the UK's new post-Brexit subsidy control regime officially came into force, in the form of the Subsidy Control Act 2022 ("SCA"). The SCA is a significant overhaul of the UK's subsidy rules and is designed to create a substantially more permissive subsidy regime than existed under previous EU rules. Moreover, it will permit more bespoke and targeted subsidy awards designed to produce greater benefits for individual businesses and economic sectors. Taken together, it is hoped that the SCA will form a principal component of the UK Government's wider 'Levelling Up' agenda and produce more readily available subsidies that will benefit key industry sectors and regions of the UK.

The introduction of the SCA is an important development for the life sciences sector. The cooperation between public bodies and private entities is essential for life sciences businesses, as grants and subsidies further enable businesses to advance crucial R&D projects. Nevertheless, to date, public funding has sometimes not been particularly readily available for life sciences businesses. Larger companies especially are sometimes unable to access the full extent of funding projects, such as Innovate UK, that are largely designed to primarily support SMEs. Whilst supporting SMEs is, of course, appropriate and vital for the success of the UK economy and the life sciences sector, the SCA will greatly expand opportunities for receipt of subsidies for all life sciences businesses (subject to businesses' compliance with the subsidy control rules that the SCA also introduces).

The SCA is therefore one of the latest examples of the Government's keen focus on boosting funding available to the life sciences sector, to help cement the UK's place globally as a leading player in the industry. Indeed, as recently as 28 Match 2023, the Government announced the first tranche of Life Sciences Innovative Manufacturing Fund grants. These grants amount to £277 million and will be divided amongst four life sciences companies to fund projects ranging from manufacturing medicines that will treat neurological conditions to critical gene therapy.

Similarly, on 6 March 2023, the Government announced an extension of its support for UK-based Horizon Europe applicants until 30 June 2023. Horizon Europe is an EU research and innovation funding programme with a budget of €95.5 billion that will run until 2027. The EU is still deciding whether, and how, the UK will participate in the programme. However, the extension means that any successful UK-based Horizon Europe applicant for Horizon Europe competitions, with a final deadline on or before 30 June 2023, will receive Government grants in the event that the UK's participation is denied by the EU. This reflects the Government's focus on strengthening the UK's R&D output, as demonstrated by the Government's target to increase R&D investment to 2.4% of GDP by 2027.

The SCA also aims to assist R&D-focussed projects, as alongside the broader permissive approach towards subsidy funding, the Government will soon introduce an additional 'Streamlined Route' under the SCA to further facilitate the granting of subsidies to businesses concerned with R&D and innovation. This will again create further opportunities for life sciences businesses.

It is clear that the SCA will provide substantial opportunities for individuals and businesses in the life sciences sector. Stephenson Harwood therefore invites you to read our briefing note on the SCA, and to speak with us about how the SCA could benefit your business.

Click here to see our briefing note on the SCA.

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