UK lifts industry aid cap; export limit set in sterling

Here’s a quiet rule change with big classroom value: Parliament has updated the legal ceilings that let government back specific firms and export deals. The Industry and Exports (Financial Assistance) Act 2026 received Royal Assent on 18 March 2026. Think of this as more legal headroom and a clearer unit of account, not a blank cheque. (en.wikipedia.org)

First, what you need to teach about “selective financial assistance” (SFA). Under section 8 of the Industrial Development Act 1982, ministers can, with Treasury consent, give targeted loans or grants when they are likely to benefit the UK economy, are judged in the national interest, and cannot be provided appropriately by anyone else. In plain terms, SFA is a tool used sparingly for big or strategic cases. (researchbriefings.files.parliament.uk)

What changes now for SFA is simple and testable in class: the overall cap rises from £12 billion to £20 billion, and the size of any single increase by secondary legislation goes from £1 billion to £1.5 billion. These figures live in the new Act’s text, so students can check them against the primary source. (bills.parliament.uk)

Exports next. The law sets UK Export Finance’s (UKEF) statutory commitment limit at £160 billion, and-crucially-states that limit in pounds sterling rather than a foreign‑currency unit. It also allows future rises by order in £15 billion steps and removes the previous cap on how many times those rises can be made. (bills.parliament.uk)

If “SDR” crops up in older documents, here’s the explainer you can use. Special Drawing Rights are the International Monetary Fund’s reserve asset and unit of account, built from a basket of five currencies (US dollar, euro, Chinese yuan, Japanese yen and pound sterling). Switching to sterling means Parliament sets the limit in pounds, avoiding exchange‑rate arithmetic when reading the law. (imf.org)

Why do limits matter in practice? Government papers show UKEF issued around £14.5 billion of support in 2024/25, directly supporting 667 businesses. Bigger legal headroom lowers the risk of projects stalling because the statutory ceiling is in sight. That’s the “why now” you can share with students. (publications.parliament.uk)

Scrutiny also featured. The House of Lords Library records that opposition parties tried to add conditions on modern slavery, Russia‑related sanctions and annual reporting on impacts (including steel), but ministers kept the Bill narrow and it passed without amendment. That invites us-as readers and learners-to keep watching how the powers are used. (lordslibrary.parliament.uk)

What doesn’t change is as important as what does. Raising a cap doesn’t spend money by itself. SFA decisions must still clear the statutory tests about public benefit and necessity, and Treasury sign‑off still applies. MPs also noted that, under the Windsor Framework, EU state‑aid rules can still apply in Northern Ireland where support affects trade in goods with the EU-useful context when you discuss place‑based impacts. (researchbriefings.files.parliament.uk)

Dates and scope for your lesson plan: the Act applies across England, Wales, Scotland and Northern Ireland, and it comes into force at the end of the period of two months beginning with Royal Assent on 18 March 2026-that is, from 18 May 2026. If students ask why it’s not 18 March plus two exact months to the minute, point them to official drafting guidance on how “months beginning with” are calculated. (bills.parliament.uk)

How to use this in class. Start with a realistic scenario-a factory upgrade, a battery plant, or a services exporter needing a guarantee-and ask when targeted public support might pass the tests, what risks taxpayers take on, and how the £20bn and £160bn ceilings shape choices. By the end, your group will have translated dense law into plain decisions about who gets help, when, and why.