The UK subsidy control regime came into force in January 2023, enabling public authorities to give subsidies that are tailored to their local needs and drive economic growth, while minimising distortion to UK competition and protecting international obligations.

Since its introduction, the system has developed with the addition of new Streamlined Routes, where an express pathway is available for authorities that can meet certain criteria. Last month, we also saw a significant judgment from the Competition Appeal Tribunal in relation to the Bristol Airport v Welsh Ministers case which offers further insight on how the Subsidy Control Act is referred to in practice.

A Sixth Streamlined Route – Housing

The sixth Streamlined Route – the Housing Streamlined Route – was presented to Parliament on 14th April 2026.

The Scheme is now subject to a period of 40 days during which either the House of Commons or the House of Lords may resolve that the Scheme is not approved.

What are Streamlined Routes?

The six Streamlined Routes are a key part of the regime and show Government’s attempt to simplify subsidy delivery in priority sectors. They are designed to reduce the administrative burden and provide greater certainty for public authorities which can use the Routes (if conditions are met) to award subsidies without the need to assess these against the subsidy control principles.

The Streamlined Routes offer a pre-assessed option, meaning Government has assessed them as being compliant with the requirements of the subsidy control regime. Subsidies given under Streamlined Routes do not need to be referred to the Subsidy Advice Unit.

The first three Streamlined Routes (1) Research, Development and Innovation, (2) Energy Usage and (3) Local Growth were introduced in January 2023, with the (4) Arts and Culture and Communities and (5) Regeneration routes being introduced in January 2026.

Each route is designed to support specific Government objectives. The simplification of the compliance process enables faster project delivery, which is critical for some sectors – particularly housing and regeneration.

The Streamlined Routes are only available where all conditions are strictly met. Even minor non-compliance disapplies the route entirely. If authorities incorrectly assume eligibility, this would lead to an unlawful subsidy. Where a subsidy falls outside the parameters of a scheme, authorities must revert to the full principles assessment, a much lengthier and more burdensome process.

What is the Housing Streamlined Route?

The Housing Streamlined Route is also known as the Housing Streamlined Subsidy Scheme. It provides for the giving of subsidies by public authorities that fall within the following strands set out in the Schedule. These include:

• Strand 1 – Gap funding for social housing and affordable housing
• Strand 2 – Gap funding for sites of any tenure mix

The Scheme provides that an enterprise can receive subsidies under both Strand 1 and Strand 2 for housing projects.

What are the criteria for the Housing Streamlined Route?

The maximum amount that can be awarded under the Housing Streamlined Subsidy Scheme for a single enterprise project is £75m (subject to the cumulation rules set out in Section 6.2 of the Scheme). Subsidies under the scheme may take the form of grants, loans, equity, guarantees and exemptions from specified levies or a combination of these.

A public authority must not give any subsidy that would prohibit or be in contravention of the requirements set out in Sections 15-29 of the Subsidy Control Act 2022 (the Act) – and if any of the social or affordable housing subsidies comprise Services of Public Economic Interest (SPEI) subsidies, this may be done provided there is full compliance with SPEI requirements set out in Section 29 of the Act.

Public authorities are strongly encouraged to use objective and transparent selective criteria that are available to potential recipients in advance of giving the subsidy, and the subsidy must only be used to fund an identified viability gap (which may include a reasonable profit element).

A viability gap assessment must be carried out by the public authority or the beneficiary or both. Public authorities must consider the cumulative amount of subsidies received by the enterprise for each particular housing project when carrying out the viability gap assessment.

Strand 1: eligible categories and costs

When calculating the subsidy under Strand 1 (Gap funding for social housing and affordable housing), the maximum subsidy ratio is up to 80% of overall project costs. There are four categories of eligible costs, outlined below.

Category 1 – Acquisition

These include:

1. Purchase price
2. Purchase of shares and associated transaction costs (e.g. joint ventures, subsidiaries or other housing delivery vehicles)
3. Purchase of a business as a going concern and associated transaction costs
4. Stamp Duty Land Tax (SDLT), Land Transaction Tax (LTT), Land and Buildings Transaction Tax (LBTT), and legal and professional fees associated to the purchase

Category 2 – Works costs for new social and affordable housing

The following will be eligible works costs for new social and affordable housing:

1. Main works contracts
2. Major site development works (soil stabilisation or demolition costs)
3. Land remediation and abnormal costs
4. Retaining buildings (e.g. listed buildings)
5. Statutory agreements, asset protection agreements, associated bonds, party walls, rights of way and other arrangements
6. Additional costs associated with complying with requirements set out in archaeological, conservation, environmental/ ecological requirements including any insurance, fees or other charges
7. On-site and off-site infrastructure, which could include infrastructures required by Section 106 Agreements
8. Placemaking improvements and community facilities
9. Irrecoverable VAT in respect of the above

Category 3 – Works costs for existing buildings

Subsidy can be awarded to eligible enterprises to support essential work costs for existing buildings (e.g. to convert into social and affordable housing or to mitigate the risk of that housing falling out of use due to deterioration).

Category 4 – On costs

Finally, a subsidy can be awarded to eligible enterprises to support on costs for social and affordable housing (e.g. legal fees and disbursements, lender, valuation and administration fees).

Strand 2: eligible categories and costs

When calculating the subsidy under Strand 2, the maximum subsidy ratio is up to 50% of overall project costs. Categories of costs for Strand 2 (Gap funding for sites of any tenure mix) are also detailed in the Schedule of the Housing Streamlined Subsidy Scheme.

Category 1 – Acquisitions

Costs which look very similar to the category of costs for Strand 1 save that the purchase must be strictly necessary and directly attributable to the delivery of the housing or infrastructure (Section 12.7).

Category 2 – Works costs for new sites for new housing stocks

Category 3 – On costs.

Note that the eligible categories of costs in Strand 1 include works costs for existing buildings, however the eligible categories of costs in Strand 2 only include funding for work costs for new housing stocks of any tenure mix.

Ruling in the Bristol Airport v Welsh Ministers Case

On 7th April, the Competition Appeal Tribunal (CAT) handed down its judgment in the Bristol Airport v Welsh Ministers case. It ruled that Welsh Government’s £205.2m subsidy to state-owned Cardiff Airport as part of a 10-year funding package intended for infrastructure upgrades and route development is lawful.

The funding package was first announced by Welsh Government in July 2024. Given the level of the subsidy, it was referred to the Subsidy Advice Unit (SAU) as a Subsidy of Particular Interest in accordance with the subsidy control requirements. Following the publication of the SAU’s report in October 2024, the Welsh Government acted on the recommendations and approved the subsidy package in April 2025.

Bristol Airport filed an appeal with the CAT under section 70 of the Subsidy Control Act 2022. This was based on four grounds:

1. The Welsh Government failed to undertake sufficient inquiry to determine whether Cardiff Airport was an “ailing or insolvent” enterprise under section 24 of the 2022 Act which would have required additional steps to be undertaken before the grant of the subsidy.
2. The Welsh Government irrationally concluded that Cardiff Airport was not “ailing or insolvent”.
3. The Welsh Government failed to properly assess the subsidy against the subsidy control principles.
4. The Welsh Government failed to lawfully apply the provisions relating to subsidies for air carriers in section 28 of the 2022 Act.

The CAT unanimously rejected all four grounds of the appeal and found that the subsidy complied with the Subsidy Control Act 2022.

In relation to the first two grounds, the CAT confirmed that in order for the prohibitions in sections 19 and 20 of the 2022 Act to apply, the purpose of the subsidy has to be to rescue or restructure an enterprise and the enterprise is ailing or insolvent. Here the purpose of the subsidy was not to rescue or restructure Cardiff Airport – it was for infrastructure upgrades and route development. The first condition was therefore not met and so there was no need to consider whether it was ailing or insolvent.

With regard to the third ground and whether the subsidy had been properly assessed against the subsidy principles, the CAT found that the Welsh Government had not acted irrationally in carrying out the principles assessment.

The fourth and final ground was rejected because the CAT found that the additional provisions for subsidies for air carriers in section 28 of the 2022 Act did not apply here. These provisions are intended to apply specifically to air carriers, however the subsidy was to be given to Cardiff Airport directly and not to an air carrier. In this case, the Welsh Government was not required to comply with section 28.

Conclusion

Government has made it clear that where streamlined subsidy schemes exist, they should be the first port of call where available. They will provide greater predictability in funding structures in sectors such as housing.

However, due to the strict conditions and limited flexibility of Streamlined Routes, the principles-based approach still remains essential for more complex cases.

How Capsticks can help

To discuss anything relating to the contents of this insight or the impact on your organisation, including eligibility for the sixth and newest Streamlined Route, contact our Head of Local Government Tiffany Cloynes, Partner Lucy Woods or Legal Director Rebecca Gilbert to find out more about how Capsticks can help.