State aid distributed by Home Office (5)
I believe the answer is:
idaho
'state' is the definition.
(Idaho is an example)
'aid distributed by home office' is the wordplay.
'distributed' indicates an anagram.
'by' is a charade indicator (letters next to each other).
'home office' becomes 'ho' (UK government acronym).
'aid' is an anagram of 'ida'.
'ida'+'ho'='IDAHO'
(Other definitions for idaho that I've seen before include "My Own Private -- (1991 film)" , "found in America" , "American state, capital Boise (5)" , "43rd US state" , "State of north-west USA" .)