Please note the guidance around subsidy control has changed following a UK Government review. The new subsidy control regime commenced on 4 January 2023. The newly published statutory guidance, can be accessed here: UK subsidy control statutory guidance.
As CARES was registered and designed prior to the new regime commencing it is classed as a ‘legacy scheme’ and the guidance detailed below is still valid for CARES applicants. If you wish to learn more about legacy guidance refer to paragraphs 9.3 and 9.4 of the subsidy control guidance.
The Scottish Government’s Community and Renewable Energy Scheme (CARES) has been registered with BEIS, allowing grant and loan funding to be provided under the subsidy control scheme.
On this page you will find out about:
- How to determine whether the funding is a subsidy
- Minimal Financial Assistance (MFA)
- Exemptions
- Non compliance
1. Determining whether a subsidy is present
To determine whether the funding is considered a subsidy there are several tests to apply. It is important that you read these carefully and provide accurate information to us as we use this to determine whether the aid is a subsidy. If the aid is considered a subsidy this will be stated in the CARES funding offer correspondence.
The first two tests are about the organisation applying for funding:
| Part 1: There are two initial assumptions – please answer ‘Yes’ or ‘No’ | |
| 1. Is the beneficiary an ‘economic actor’?
Taken from Article 3.1 of the Subsidy Control chapter[1]of the Trade and Cooperation Agreement (TCA), the term “economic actor” means an entity or a group of entities constituting a single economic entity, regardless of its legal status, that is engaged in an economic activity by offering goods or services on a market. |
Yes/ No |
| 2. Is the beneficiary engaged in economic activity?
This is defined as essentially meaning offering goods and/or services on a given market and which could, at least in principle, be carried out by a private operator for remuneration in order to make profits. Usually, the question of whether or not an intended recipient engages in economic activity is straightforward – but not always. If you are in any doubt, you should seek advice before concluding that your proposed measure is not a subsidy. |
Yes/ No |
| If you answer ‘Yes’ to questions 1 and 2, complete Part 2.
|
|
Part Two, Heading One, Title XI (Chapter 3)
If the answer is yes to questions 1 and 2 above, you then need to apply following four tests to your project. All four tests must be met for a subsidy to be present.
| Part 2:The Four Subsidy Control Tests – answer ‘Yes’ or ‘No’ and provide a comment to explain your answer. | ||
| Test 1 | Will the measure arise from State resources (which can take a variety of forms, e.g. grants, interest and tax reliefs, loans, guarantees, government holdings of all or part of a company, or providing goods and services on preferential terms, etc)? | Yes |
| Provide an explanation to back up your answer to this test:
Funding available through CARES comes directly from Scottish Government resources so this test is met. |
||
| Test 2 | Will the measure confer an economic advantage on one or more economic actors? | Yes |
| Provide an explanation to back up your answer to this test:
This test is met because the funding we award is selective in nature and alleviates the beneficiary of costs it would have to bear from its own resources. This provides the beneficiary with an economic advantage as a result of those costs being met by public funds. |
||
| Test 3 | Is the measure specific insofar as it benefits, as a matter of law or fact, certain economic actors over others in relation to the production of certain goods or services? | Yes/ No |
| Provide an explanation to back up your answer to this test:
We do offer measures which benefits certain economic actors so this test is often met. With subsidy support from CARES, eligible applicants are able to generate their own power. This allows them to produce power and sell it to a market. In this case we expect that this test is met so at a scheme level the test is met. Whilst the overall scheme meets this test there may be specific cases where this it could be shown that the test is not met. This would be looked at and assessed on a case by case basis. |
||
| Test 4 | Will the intervention have, or could it have, an effect on trade or investment between the UK and other countries? | Yes/ No |
| Provide an explanation to back up your answer to this test:
In some cases CARES funding could have an effect on trade or investment. Whilst CARES is relatively small scale there is a theoretical risk that providing a subsidy for installing renewable technologies and local energy systems will mean that it may make it more difficult for operators in the EU to enter the market by maintaining or increasing the local energy supply. Whilst the overall scheme might meet this test there may be other cases where the intervention will not have an effect on trade or investment, this would be looked at and assessed on a case by case basis.
If your answer is ‘No’ to any of the 4 tests, it is likely that subsidy control does not apply to your project and the CARES funding is not considered a subsidy. Please ensure that in your application you describe why you didn’t meet one of the tests. If you met all four tests the CARES funding will be considered a subsidy. Please refer to sections 2 and 3 below to classify the aid. |
||
2. Minimal Financial Assistance (MFA)
If your CARES funding considered a subsidy it is likely we will offer it as Minimal Financial Assistance (MFA).
MFA allows public authorities to award low value subsidies without needing to comply with the majority of the subsidy control requirements. MFA has a financial threshold so no recipient can receive more than £315,000 over the applicable period. The applicable period is:
- The elapsed part of the current financial year (i.e., from 1 April), and
- the two financial years immediately preceding the current financial year
When you are awarded CARES funding under MFA you will be asked to complete a subsidy declaration form from us. The declaration you will be sent will contain the amount of funding being given in £ sterling. You will also be required to account for any MFA aid received previously within the rolling 3 year fiscal period and to sign the declaration confirming this.
3. Exemptions
For larger CARES funding awards that aren’t offered as MFA CARES can provide funding under specific categories and intervention levels. We would need to discuss the rational for classification and intervention levels directly with you if the aid is to be offered using an exemption.
4. Non-compliance
If, in the Scottish Ministers’ opinion, the CARES Grant or loan funding offer (or any part or condition thereof) does not comply with applicable Subsidy Control obligations and they consider that they are required to recover the Grant or loan (or a part thereof) in order to ensure compliance with their legal obligations, Scottish Ministers may require immediate repayment of the Grant or loan (or any part of it) together with interest at such rate and on such basis as may be determined from time to time in accordance with law. Subsidy control: designing a new approach for the UK.