Part 2: Subsidy control requirements Chapter 1: Principles Schedule 1: The subsidy control principles
Schedule 1 describes the seven main subsidy control principles. Six of these are derived from the TCA. The UK competition and investment principle (Principle F) is an additional domestic principle that was proposed in the consultation document.
	The effect of each principle is:
Principle A: Public authorities will need to consider, explain and assess the policy objective behind the subsidy to ensure there is a benefit to wider society in providing the subsidy. To illustrate what addressing an equity rationale means in practice, three examples are provided.
Principle B:  Subsidies should be both proportionate and limited to what is necessary to achieve the policy objective.
Principle C: Subsidies must incentivise and lead to a change in the behaviour of the beneficiary. They must help to address the public policy objective being pursued.
Principle D: Subsidies should be targeted to bring about an effect that is additional to any that would occur in the absence of the subsidy. They should not normally cover everyday business expenses.
Principle E: Alternative policy levers, that are likely to cause less distortion to competition and investment in the UK, or trade and investment internationally, should be considered before turning to subsidies.
Principle F: Public authorities should design the subsidy in a way that minimises the impact on competition and investment within the UK’s internal market. This will require them to assess the effects which are likely to arise from providing the subsidy. This is a domestic test to ensure that a subsidy does not unduly favour one firm to the detriment of a competitor or new entrants to the UK market, or unduly reduce competition within the UK market.
Principle G: Public authorities should assess the material effects on competition and investment in the UK, and international trade and investment, and decide whether the benefits of the subsidy are greater than the harmful impacts of providing the subsidy.