Regional and State aid
Conference
Shane Rankin
June 2014
What does State aid affect?
What’s in?
– Organisations
– Economic advantage
– Liberalised markets
What’s not?
– Individuals
– Market terms
– State functions
What’s new?
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New approach
New opportunities
New procedures
New funding models
State Aid Modernisation
R&D
Low carbon
Human capital
Growth
Publication
Tougher
Investigations
Evaluations
More exemptions
Faster
Higher thresholds
Fit with our priorities
Wealthier
and Fairer
Key sectors
Healthier
Increasing
housebuilding
Employability
Renewables
sector
Sustainable
transport
Reducing
inequalities
Home
insulation
scheme
Safer and
Stronger
Strengthening
communities
funding
Regeneration
Capital Grant
Fund
Town Centre
Housing Fund
Smarter
Greener
Supporting
employers
Rural
development
National
training
programmes
Climate change
Zero waste
Energy
efficiency
What now?
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Attend workshops
Speak to State Aid Unit
Read relevant rules
Consider alternatives
Regional aid and State aid
Conference
Ana Richardson
June 2014
Outline
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What’s changed?
Why do I need to know this?
Can I continue current activities?
Can I do new things?
What’s changed?
Adopted:
In draft:
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Regional Aid
de minimis
R&D&I
Environmental and Energy
Risk Finance
Broadband
Aviation
General Block Exemption
Complaint-handling
Transparency
Notion of aid
Rescue and restructuring aid
Agriculture and forestry
Fisheries
Why?
R&D&I
Aid objective
Fundamental research:
Large
Medium
Small
100%
100%
100%
50-65%
60-70%
60-75%
70-80%
70-80%
80-90%
25-40%
60-70%
35-50%
70-80%
45-60%
80-90%
50%
60%
50%
60%
50%
60%
Industrial research:
Exempt
Notifiable
Experimental development:
Exempt
Notifiable
Research infrastructure:
Exempt
Notifiable
Environment and Energy
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Market based mechanisms
Promoting competitiveness
Supporting cross-border infrastructure
Security of electricity generation
Exempted categories
Broadband
• Digital agenda
• Technological neutrality
• Ultra-fast broadband networks
• Step change to connectivity
• Reinforcement of open access
Exempted aid
Aid amount
Higher thresholds
Exempted
aid
Type of aid
New
categories
What’s new?
New categories
Higher aid intensities
65%
55%
2007 - 2013
Higher thresholds
Fundamental research:
Industrial research:
€20m → €40m
€10m → €20m
2014 - 2020
What’s next?
• Ask us about your existing activities
• Ask us about planned activities
• Don’t be shy – we’re here to help you
Regional Aid: Potted summary
• Regional aid = state aid permissible due to the
circumstances in certain regions
• Aid aimed at cohesion between regions, so targets
regions which are relatively poorer than the EU
average
• 2 stage process: rules for the EU; then mapping for the
member state
• Aid is self-funded by member states
• Regional Aid in Scotland distributed via SE, HIE and
SDI; LAs to SMEs; and occasionally BPRA grants for
business premises
Basic designation
• Step 1: GDP per capita <75% of EU average
(3a status) (Commission decision)
• Step 2: not ‘a status’, but difficult conditions
(former ‘a’, low density population) (Commission
decision)
• Step 3: disadvantaged areas in developed
member states (3c status) (Member State
choice)
– Based on lower GDP per capita and higher unemployment
– Population allocation to member states, who then determine final
coverage
Assisted Areas – 80 Years of Tradition?
-
20
New map for Scotland
• Need AND opportunity – meets EU
criteria, but area has to have a realistic
prospect of using this particular form of aid
for economic development and job
creation
• Reassess every area of Scotland – but
accept that those designated previously
are some of the most deprived and have
on-going need for support
2014 map
• Full H&I coverage – mix
of sparsely populated and
‘c’ coverage
• New areas in Angus,
Borders, D&G, East and
Midlothian
• Reframed areas around
best opportunities in
West, Ayrshires, Fife,
Stirling and Falkirk
• Targeting SME
investment sites more
than large companies
Main changes for 2014
• Stronger link to GBER – aid possible
both under GBER and RAG
• Aid to large enterprises restricted to new
investments and new products/processes
• Lower intervention rates than 2007 –
down by 5%
• More detailed checks for incentive
effects
GBER scope
• Regional or SME aid up to EUR 7.5m
• But not where a company has closed down same activity
elsewhere in EEA in last 2 year, or plans to do so within
next 2 years – no ‘aid-hopping’
• Usual restrictions apply!
– Schemes with annual expenditure > EUR 150m
– Aid to export related activities (which includes to another
Member State)
– Aid contingent on use of domestic over imported goods
– Aid to facilitate the closure of uncompetitive coal mines
– Regional aid in steel, coal, shipbuilding, synthetic fibres,
transport and energy sectors, fisheries and agriculture
– Schemes targeted at limited number of specific sectors
– Undertakings in difficulty
– Undertakings subject to an outstanding recovery order
– Aid measures which violate Union law
RAG scope
• Steel and synthetic fibres sectors can’t get regional aid
• Fishery and aquaculture and transport sector subject to specific
rules, not the RAG.
• RAG does not apply to aid to airports or the energy sector
(energy generation, distribution and infrastructure)
• Does not apply to firms in difficulty
• Can apply where outstanding recovery order - but will be a factor
in Commission’s decision
• General rule – notify regional aid under the RAG – unless you
can give the aid under the New GBER
• Common assessment principles – Commission uses these to
decide if aid will lead to increased R&D without adversely
affecting trading conditions contrary to common interest
Eligible costs
(a)investment in tangible and intangible assets;
(b)(b) estimated wage costs over 2 years OR
(c)combination of (a) and (b) subject to cap of total (a) or
(b)
• Wage costs – net increase in employees compared with average
over previous 12 months, jobs lost to be deducted from those
created
• Posts filled within 3 years of completion of works
• Any investment by same beneficiary (group level) in same NUTS 3
area within 3 years of start of works part of single investment project
• Aid beneficiary to contribute at least 25% of eligible costs
GBER: Investment aid to SMEs
(new Article 17)
• Investment in tangible or intangible assets or
estimated wage costs for 2 years
• Setting up a new establishment, extension of
existing establishment, diversification of output
into new products or a fundamental change to
production process of existing establishment
• Acquisition of assets belonging to an
establishment where it would otherwise have
closed under market conditions
• 20% for small companies – 10% for medium
Different rules
SME
Large enterprise
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• initial investment in favour of
“new economic activity” in the
area concerned
• Maintain jobs for 5 years
• Assets must be new
• Lease must continue for 5
years
• costs of intangible assets only
up to 50% of total investment
costs
any form of initial investment
Maintain jobs for 3 years
Assets do not need to be new
Lease must continue for 3
years
• GBER options – article 14
regional aid in assisted areas;
or article 17 investment aid
For example…
SME
• SME sets up, invests, creates jobs and maintains
them for three years and generally behaves…
• Eligible anywhere in Scotland under GBER up to
EUR 7.5 m
• 10% for SME’s in non-assisted areas
• Option to use Article 17 SME investment aid
– 20% for SME’s, 10% for medium
• Higher intervention rates in assisted areas
– 30/20/10% (small, medium, large) in ‘c’ areas
– 35/25/15% in sparsely populated areas
…and also…
Large enterprise
Large Enterprise
• Launches new product
category in existing location –
eligible under GBER as ‘new
economic activity’ up to EUR
7.5 m
• Sets up in new NUTS 3 area
without closing anything similar
down in EEA – eligible under
GBER up to EUR 7.5 m
• Establishes new and
innovative process – not clear
• Applies for aid exceeding
€7.5m – notified under RAG
• Even if it’s for new product or
process? Yes, notify under
RAG
Q&A