Subsidy Control: Government Makes it Easier for Public Bodies to Fund Arts and Culture and Community and Regeneration

Last week, the Government introduced two new ‘streamlined routes’ to the subsidy control regime:

• the Arts and Culture Streamlined Route; and
• the Community and Regeneration Streamlined Route.

This followed a consultation last year on the introduction of the two new routes which Bates Wells responded to, wholeheartedly welcoming the proposals.

What is the subsidy control regime?

The subsidy control regime is the UK’s framework for regulating how the Government and other public bodies award grants and other financial support – it is intended to ensure that subsidies do not distort competition or harm trade. It requires public bodies to assess subsidies against a set of principles designed to promote transparency, fairness and efficient use of public funds.

What are streamlined routes?

Under the Subsidy Control Act 2022 (the “Act”), the Government has developed streamlined routes (referred to as a streamlined subsidy schemes in the Act) which allow public authorities to award specific types of subsidies without conducting their own assessment against the subsidy principles. Previously introduced streamlined routes cover subsidies relating to energy usage, research, development and innovation and local growth.

What are the benefits of streamlined routes?

Provided a subsidy is awarded in accordance with the terms of the streamlined route, they will be deemed compliant with the subsidy control regime and cannot be challenged on subsidy control grounds. This has the benefit both of reducing the administrative burden otherwise involved in granting a subsidy and providing legal certainty to public authorities and subsidy recipients, including charities and other third sector organisations.

It is still possible to challenge a subsidy given under a streamlined route in the Competition Appeal Tribunal (the “CAT”) if it is not compliant with the terms of the route. A judicial review could also be brought for other breaches of public law even if the subsidy was correctly given under the streamlined route (for example, if the decision to award the subsidy was irrational or procedurally unfair).

The Arts and Culture Streamlined Route

The newly-introduced Arts and Culture Streamlined Route covers subsidies supporting the following three categories:

• Arts, Creativity and Culture (Category 1): This covers traditional and contemporary disciplines including visual arts, music, theatre, dance, literature, linguistic culture and combined arts.
• Screen (Category 2): This covers film, TV, digital media and video sharing, extended reality (XR) and video games.
• Cultural heritage (Category 3): This covers museums, archives, historic sites (which may include buildings, gardens, landscapes, monuments and archaeological sites), libraries, collections and artefacts and intangible heritage (including living, traditional and folkloric heritage and linguistic culture).

Subsidies in each of the categories can cover revenue costs (for example, subsidising tickets to increase access), capital expenditure costs (such as refurbishment of existing sites) and project costs (including touring new work and research and development). Each of the categories have their own maximum amounts that can be awarded, maximum subsidy ratios (meaning the proportion of eligible costs that can be funded), eligibility criteria and limitation conditions.

The Arts and Culture Streamline Route has been created to help public authorities achieve specific strategic policy objectives (such as making events, activities and spaces affordable and accessible to more people) and to address known market failures in the arts sector where social benefits often exceed private benefits.

For arts, culture and heritage organisations operating in an increasingly difficult financial and operational climate, the new route will be welcomed as offering clarity and administrative ease to smooth the receipt of public funds.

The Community and Regeneration Streamlined Route

The Community and Regeneration Streamlined Route is divided into two strands:

1. Community (Strand 1) – This can be used by public authorities to give subsidies to non-profit organisations to preserve and create community infrastructure. Investments under this strand could include, for example, the creation of a new community arts centre or the purchase and renovation of a community asset such as a local pub to preserve an existing service or provide new services. 

This is aimed at helping public authorities promote stronger, sustainable, cohesive and attractive communities where residents have access to the facilities and services they need to thrive.

2. Regeneration (Strand 2) – This can be used by public authorities to give subsidies to any enterprise delivering a regeneration project that involves the development of brownfield land or repurposing underused buildings in a new productive use.

This strand is aimed at helping public authorities drive economic growth through investment in brownfield land and underused buildings.

Again, both strands have different requirements that must be complied with, including maximum amounts that can be awarded, maximum subsidy ratios, eligibility criteria and limitation conditions.

What next?

Both streamlined routes may be used to give subsidies from 12 January 2026 until 11 January 2032.

Both of the new routes were laid before Parliament on 12 January 2026 for a 40-day period during which either House may resolve that either Scheme is not approved. This would mean that no further awards could be made under that scheme (though it would not affect any subsidies already made under the scheme). Once the streamlined route is uploaded to the subsidy database, there is then generally a one-month limitation period for interested parties to apply to the CAT for a review. After this, the streamlined routes and all subsidies correctly given under them will be safe from challenge under subsidy control grounds.

As we have previously written about, the subsidy control regime leaves significant room for uncertainty for public authorities and recipients of public funds which often results in delays in public spending, significant resources spent on navigating and meeting requirements and overly cautious risk-based clauses built into contract terms. The introduction of these two new streamlined routes is an important development to simplify the subsidy control regime in important areas for public spending. This makes life easier for both public authorities and subsidy recipients by reducing administrative workload and reducing legal risk and uncertainty. This is especially important in respect of these two new streamlined routes given those receiving subsidies under these routes may often be carrying out important work for the public benefit. As suggested in our initial consultation response, we would welcome further streamlined routes in similar areas, such as sports, leisure and recreational projects.

If your organisation needs help with navigating any element of the subsidy control regime, Bates Wells can help. Get in touch with Suhan Rajkumar or Natasha Davies to discuss.

The material in this article is provided for guidance and general information only and is not intended to constitute legal or other professional advice upon which you should rely. In particular, the information should not be used as a substitute for a full and proper consultation with a suitably qualified professional. Please do contact the Bates Wells team if you require further information.