Regional Selective
Assistance
September 2014
Purpose Of The Grant
 Aims to improve job opportunities provided in the Assisted
Areas of Scotland
• Supporting investment projects which create/safeguard jobs
• Open to limited companies, sole traders or partnerships
• Discretionary grant dependent on a number of factors……..
Key Features
 Based on specific projects based on:
• Expansion
• Reinvestment
 Can be used more than once for different projects as long as
separate assets and jobs, and this separation is verifiable
 Grant calculated with reference to either:
• Capital expenditure (fixed assets); or
• Creation of new jobs (2 years’ wages for new jobs)
The project must:
Directly create/
safeguard
employment
Capital
expenditure
Require RSA
to proceed
Serve more
than just local
market
Funded mainly
from private
sector
Criteria
Jobs
 Ideally projects should create new jobs.
 Increase in jobs not to be offset by job losses elsewhere (job
displacement)
 Can assist if a real threat of jobs being lost in the near future if a project
does not proceed – safeguarding
 Only jobs directly created by the applicant are eligible
 We look for at least 2-3 new jobs in the first year of the project
Criteria
Capital Expenditure
 Expenditure on ‘capital’ items – those that the business will own
for a long time:
• Land & buildings
• Plant and machinery
• Computer equipment
 Does not include general running costs of the business:
• Marketing costs
Criteria
Need for assistance (1)
Demonstrate RSA is necessary to:-
 Fill a funding gap
 Satisfy parent company investment criteria (e.g. payback,
ROC, IRR)
 Reduce gearing and risks to an acceptable level
 Make the project happen in an Assisted Area
Criteria
Need for assistance (2)
 Prior Commitment - companies seeking grant assistance should
not proceed with projects or enter into expenditure commitments
until the appraisal process has been completed
Criteria
Viability
 Proposals must make sound commercial sense
 Applicant and the project must be financially viable
 We will share risks but the venture must have a good chance of
success
Sectors We Cannot Support
EC Legislation
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Fisheries and aquaculture
Growing agricultural products
Coal industry
Steel industry
Shipbuilding
Synthetic fibres
Purchase of transport equipment in the transport sector
Sectors We Are Unlikely To Support
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Mining and construction
Tourism
Charitable organisations
Public sector e.g. health service, colleges/schools, defence etc
Energy generation
Tobacco
Types Of Businesses We Do Not Support (1)
 Businesses operating in a ‘local market’ – where customers
come from the nearby area and have a wide choice of where to
buy the product/service:
• Retail
• Restaurants, hotels, cafes, bars
• Nurseries, soft play, crèche
• Joiners, plumbers, electricians, double glazing, garages
• Hairdressers, newsagents, bakers
Types Of Businesses We Do Not Support (2)
• We consider the following to be well served markets:
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Printing sector
Basic metal fabrication
Double glazing
Leisure and tourism
Retail
Professions (lawyer, accountant, doctor, dentist)
 These markets are highly competitive and it is hard to differentiate between
businesses. The project would likely lead to significant job
displacement – no point in supporting one project if it just moves
businesses/jobs from another company.
Types of businesses we don’t support (3)
Charitable Organisations
 The grant scheme is not really designed for charities/social
businesses
 We can only support a commercial activity i.e. the part that aims to
make a profit and does not rely on donations. This may only be a small
part of the charity’s activities.
 In general, it is difficult to show that the commercial activity aims to
make a profit and is a viable business in its own right.
 Often, the commercial activity operates on a local basis (e.g. shop)
or is in a well-served market (e.g. training) and would therefore be
ineligible.
Assisted Areas - 2014 to 2020
Company
Size
Tier 2
Tier 3
Small
30%
20%
Medium
20%
10%
Large
10%
0%
Tier 2 (sparsely populated areas may be eligible for
an additional 5% funding)
Tier 2
Tier 3
Large Companies
Summary
• Large companies can only receive regional aid for “initial
investment in favour of new economic activity” in the area
concerned. This means large companies are only eligible
where they are:
 Setting up a new establishment in a different NUTS 3 region
from any existing operations of the firm; or
 Diversifying the activity of an establishment to one that is not
the same or similar to that previously performed
Large Companies (2)
“Initial Investment in new economic activity”
Initial investment relates to:
 Setting up of a new establishment, or
 Diversification of the activity of an establishment under the
condition that the new activity is not the same or similar to the
activity previously performed in the establishment
 ‘the same or similar activity’ : activity falling under the same class
(4digit code) of the NACE Rev 2 statistical classification of
economic activities.
 If the project is “the same or similar activity” in the same NUTS 3
area then it cannot be supported.
 NUT 3 areas generally follow local authority boundaries, with a few
exceptions.
Large Companies (3)
New establishment
 If the project is by a business not already in Scotland then it is
“new establishment” and “new economic activity in the area
concerned”.
 If a project is proposed by a business already in Scotland but
in a different NUTS 3 area then it can also be regarded as new
economic activity in the area concerned if is it related to setting up
a new establishment. There is no requirement to show that this is
not “the same or similar activity”.
 The exception to this is relocation
Large Companies (4)
Relocation
 What about a relocation from one NUTS 3 to another – is that
eligible?
• No - If the project is an outcome of a closure of the same or
similar activity anywhere in the EEA in the previous 2 years it
cannot be supported. Also, if, at the time of the application for
aid, there are concrete plans to close down such an activity within
2 years following the initial investment, this would also mean a
project is ineligible for support. This will mean most relocations
will be ineligible for support.
Company Size
And
Enterprise
Category
Or
Headcount
Annual
Turnover
Net Assets
Medium
< 250
< €50 million
< €43 million
Small
< 50
< €10 million
< €10 million
Example - Aid for Investment (“traditional method”)
£’000
Capital expenditure
500
Aid limit (small co in Tier 2)
30%
Maximum RSA grant available
150
Aid For Job Creation
Example
£’000
Gross salaries over 2 years
(35k salaries x 20 jobs x 2 years)
Aid limit (small co in Tier 2)
1,400
Maximum RSA grant available
420
30%
Level Of Support
Factors Considered
 Need for assistance
 Quality of jobs (qualifications, pay, etc)
 Quality of Project (R&D, headquarters, etc)
 Timing of jobs, capex, draw down of grant
RSA Project Appraisal Process
 Initial enquiry
• High level review of project against scheme criteria
 Appraisal of application
• Size and impact of project
• Market assessment
• Financial viability
• Need for assistance
 Decision (Approval group for grants >£500k)
 Turnaround 10-40 working days depending on size of grant
Appraisal Teams
 RSA team handles
• Scottish companies
• UK companies already established in Scotland
 SDI team handles
• New inward investment cases
• Overseas owned companies
• UK companies setting up in Scotland initially
Payment Of Grant
 Paid in instalments, in arrears, over the life of the project
 Need to meet conditions to trigger instalment:
• Capex
• Jobs
• Gross wages (AfJC only)
 Standard conditions include provisions that assets and jobs are
maintained for a period of time after final payment (3 to 5 years there are specific EU rules)
RSA Annual Results 2013-2014
 117 offers of RSA in Scotland were accepted, totalling over £52.5
million.
 These offers relate to projects with planned capital expenditure of over
£267 million and the expected creation or safeguarding of 6,161 jobs.
 12 offers accepted of £1 million or more were accepted.
 SMEs accounted for 85 (73%) of the accepted RSA offers, totalling
almost £18 million.
• These projects involve planned investment of over £66.6
million with the aim of creating or safeguarding 2,368 jobs.
• 32 of these offers, totalling over £6.2 million and aiming to
create and safeguard over 1,070 jobs, were for our ‘Tier 3’ RSA
grant aimed solely at SMEs