Scottish Research and Development Scheme
State aid N 510/2007 - United Kingdom
EXPLANATORY NOTES
Revised December 2007
FOREWORD
These notes have been produced to provide information and guidance to Scottish Government (SG), Scottish Enterprise (SEn) and Highlands and Islands Enterprise (HIE) staff on the Scottish Research and Development Scheme. They should be consulted when planning, devising and delivering any R&D aid or Programme under the scheme. The notes are jointly owned by SG, SEn and HIE.
Any R&D Programme introduced by SG, SEn or HIE should have its own guidelines, eligibility criteria and operating procedures. The responsibility for producing these documents, and ensuring that the Programme is fully compliant with the Scottish Research and Development Scheme, lies with SG, SEn and HIE for their respective Programmes.
Amendments to the Scheme must be notified to, and approved by, the European Commission before they can be introduced. The procedure set out in section 1.5 must be followed.
For further information about the scheme, enquiries should be forwarded in the first instance to the relevant contact in your organisation. Contact details are:
Elaine Morrison
Innovation & ICT
Scottish Enterprise
150 Broomielaw
Atlantic Quay
Glasgow
G2 8LU
Tel: 0141 28 2339
Fax: 0141 221 3217
E-mail: elaine.morrison@scotent.co.uk
Melvyn Waumsley
International Affairs Officer
Highlands & Islands Enterprise
Cowan House
Inverness Retail & Business Park
Inverness
IV2 7GF
Tel: 01463 244474
Fax: 01463 244351
E-mail: m.waumsley@hient.co.uk
Morag Watt
Innovation and Investment Grants Division
Enterprise, Energy and Tourism Directorate
Scottish Government
Meridian Court
5 Cadogan Street
Glasgow G2 6AT
Tel: 0141 242 5828
Fax: 0141 242 5691
E-mail: morag.watt@scotland.gsi.gov.uk
For general State Aid enquiries, please contact the Scottish Government State Aid Unit on 0141 242 5816.
CHAPTER 1 – INTRODUCTION
1.1 Background
The Scottish Research and Development Scheme is a scheme submitted under the Community Framework for State aid for Research and Development (OJ Ref 96/C 56/06, 17.2.96) and originally approved by the European Commission (EC) on 20 December 2002.
The scheme originally only covered the SG and SEn but, at HIE’s request, the EC’s approval to extend it to include HIE was obtained on 29 September 2003.
Since then, the Scheme has been extended, under State aid N66/2006, for the period 1 April 2006 to 31 March 2008, and now under State aid N510/2007 for the period until 31 December 2008 in line with the EC’s current Framework for State Aid for Research & Development & Innovation which came into force on 1 January 2007.
Although it is referred to as a 'scheme', it is important to note that this term is used solely for the EC’s notification procedure. In actuality, it is not a scheme, it is a framework under which SG, SEn and HIE have the legal authority to provide R&D assistance as detailed in these notes. Should this framework be used by SG, SEn and HIE to provide R&D aid or to introduce a new R&D aid Programme, then the guidance contained in these notes should be followed.
NOTE - Breaching the European Commission's rules governing permissible State aid for R&D&I is considered a serious offence by the EC and may result in compliance action by the Commission, including the possibility of retrospective recovery of illegal aid, with interest, from the recipient firm. It is therefore crucial that this guidance is followed and clarification should be sought from the Scottish Government if there is uncertainty about any aspect of the scheme.
1.2 Purpose
The scheme provides the SG, SEn and HIE with the authority to assist all sizes of firms (in isolation or in collaboration with other industrial partners and/or public or private research base organisations) to carry out research and development and innovation (R&D&I) projects falling under the categories of technical feasibility studies, industrial research and experimental development.
1.3 Duration
The scheme, under State aid N510/2007, will operate until 31 December 2008 and relates to commitments entered into during this period.
1.4 Geographical Area of Delivery
SEn and HIE have the authority to deliver assistance under the scheme across their respective operational areas ONLY (as defined by the Enterprise and New Towns (Scotland) Act 1990, as amended by Scottish Statutory Instrument 2001 No 126, which transferred the Moray part of Scottish Enterprise’s area to the HIE area).
1.5 Changes to the Scheme
Any changes to the scheme would need to be notified to and approved by the EC. Moreover, as the basis for the scheme is a joint notification for the SG, SEn and HIE, any changes to the scheme would also have to be agreed by all three parties. In the first instance, any proposed amendments should be discussed with the Scottish Government’s Business Growth & Innovation (BGI) and Innovation & Investment Grants (IIG) Divisions who will consult with SEn and HIE and then arrange for agreed amendments to be submitted to the EC for approval through the Scottish Government State Aid Unit.
CHAPTER 2: AIM OF THE SCHEME
2.1 Principal Objective
The principal objective of the scheme is to encourage enterprises in Scotland to undertake innovative research and technological development with commercial potential in order to stimulate growth, strengthen competitiveness and boost employment in Scotland. It aims to provide an incentive for firms to undertake R&D activities in addition to their existing R&D activities and to encourage firms who are not currently doing so, to carry out R&D. It is not intended to subsidise a firm's existing R&D activity.
2.2 Background
It is generally recognised that science, engineering and technology will continue to underpin our national competitiveness. Knowledge and skills in science, engineering and technology are becoming increasingly vital to Scotland, the UK and the EU as a whole as our enterprises become even more dependent on high value added and knowledge based products, processes and services.
R&D is an inherently high-risk activity, especially when the results are several years from the marketplace. They often require considerable financial investment and enterprises typically experience difficulties raising finance to research and develop new ideas. Traditional bank finances and other private sources are often inappropriate as the risk associated with the R&D activity is difficult to appraise, the assets intangible and the business' track record may be limited (especially in the case of high-tech start-ups).
In 2004, Scottish BERD was £494 million, equivalent to 0.52% of GDP, placing Scotland near the bottom of the 3rd quartile of OECD countries. Sweden leads the rankings with BERD at almost 3% of GDP, followed by Finland and Japan at approximately 2.4% each. To reach the top quartile BERD would have to be £1,100 million higher
2.3 Widespread Objectives
The scheme is therefore designed to address this weakness by allowing the SG to support firms in any part of Scotland, and SEn and HIE in their respective operational areas, to carry out early stage, research and development projects with commercial potential. It is aimed at strengthening the scientific and technological bases of industry and encouraging collaboration/co-operation between enterprises and the research base in order to become more competitive internationally.
The overall aims of the scheme are to:
• Assist enterprises to research and develop new
innovative products, processes or services with
commercial potential (including feasibility studies,
industrial research up to and including
pre-competitive development);
• Stimulate innovation and encourage best practice
throughout business;
• Foster the creation and development of new high-tech
start-ups;
• Strengthen the scientific and technological bases of
industry;
• Encourage co-operation between enterprises and the
research base and help to effect wealth creation from
the science base.
CHAPTER 3: INTRODUCING A NEW PROGRAMME
3.1 Planning and Devising a New Programme
Although this scheme provides SG, SEn and HIE with the legal authority to deliver R&D assistance within the geographical areas defined at section 1.4, the development of any new R&D aid or new R&D Programme must be carried out with appropriate consultation with the relevant Scottish Government policy Division i.e. Business Growth and Innovation (BGI).
The SEn and HIE Management Statements require SEn and HIE to consult with BGI when developing new Programmes where the Scottish Government itself delivers complementary forms of support. BGI should be consulted at an early stage in order to ensure the intended new aid or Programme does not cut across UK Government or SG policy and that it adds value to existing R&D Programmes rather than displacing existing activity elsewhere (paragraphs 3.4.2 and 5.2.1 of the respective Management Statements refer).
Should the scheme be used by the SG, SEn and HIE as the legal basis for R&D aid or an R&D Programme, then the practices outlined in these notes should be followed to ensure that the intended aid complies with European Commission State Aid legislation.
NOTE - this requirement is in addition to normal SG, SEn and HIE internal approval processes.
3.2 Forms of Financial Assistance
The scheme ONLY allows financial assistance to be paid in the form of grants. Grants are discretionary, payable in stages, normally in arrears, on production of evidence that the required amount of money has been properly spent on the project. Offers of grant assistance are subject to terms and conditions specified by the SG, SEn and HIE. (Guidance on monitoring and control procedures is set out in Chapter 5).
Assistance CANNOT be provided in the form of repayable loans, etc.
3.3 Programmes Involving Collaborative/Co-operative
Research
Most aid or Programmes delivered under this scheme will support single enterprises to carry out R&D projects. However, there may be circumstances, where a Programme involving an element of collaborative or co-operative research is considered desirable.
As the terms and conditions for projects involving collaborative or co-operative research are less straightforward than support for single enterprises, it is recommended that, before devising any new Programme involving collaborative or co-operative research, full advice is sought from the Scottish Government State Aid Unit and BGI. Some factors that should be taken into account when developing a collaborative or co-operative research Programme are set out in the following paragraphs.
Some Programmes may involve collaboration or co-operation between a number of enterprises or between enterprises and public research bodies, such as Universities, Research Institutes and NHS Trusts. Under this scheme, a private research body (unless non-profit making) is treated as an enterprise and therefore subject to the same qualifying criteria as any other enterprise.
If a research project involves collaboration between public research bodies and enterprises, the combined direct grant assistance for a research project and, where they constitute aid, contributions from public research bodies to that project, MUST NOT exceed the maximum aid intensities detailed under sections 4.3 and 4.4.
The amount and intensity of grant assistance to the public research body is included within the relevant overall grant assistance for the project as a whole. Grant assistance is directed first towards the public research body with an allowable grant rate of up to 100%. Any remaining grant assistance should be awarded to the additional partners, provided that the overall grant rate for the R&D project and the rate payable to each enterprise is within the maximum permitted levels detailed under sections 4.3 and 4.4.
There are certain circumstances where grant assistance to public research bodies to carry out R&D on behalf of, or in collaboration with, industry is not considered a State aid and is therefore not constrained by the maximum aid intensities set out in the scheme. These are:
a) where the public research body contributes to a research
project as a commercial firm would, e.g. in return for
payment at the market rate for the services they provide; or
b) where the industrial participants in the research bear the
full cost of the project; or
c) where the results which do not give rise to intellectual
property rights may be widely disseminated and any
intellectual property rights to the R&D results are fully
allocated to the public research body; or
d) where the public research body receives from the industrial
participants compensation equivalent to the market price for
the intellectual property rights which result from the research
project and which are held by those industrial participants,
and where the results which do not give rise to intellectual
property rights may be widely disseminated to interested
third parties.
CHAPTER 4: PROGRAMME FEATURES
4.1 Eligible Recipients
Projects must either be carried out individually by one enterprise or in collaboration with another or number of enterprises and/or public research bodies, such as Universities, Research Institutes and National Health Service (NHS) Trusts. A private research body is treated as an enterprise (unless non-profit making) and the aid intensity must therefore be within the maximum levels detailed in sections 4.3 and 4.4.
Applications for grant assistance must be made by either an enterprise (including private research bodies) or a public research body partnering one or more enterprises.
Assistance may be provided to all sizes of enterprises in the form of discretionary grants paid directly to the recipient. Different grant rates are applicable for SMEs and non-SMEs as detailed under section 4.3.
The definition of small and medium-sized enterprises to be applied to all applications from January 2007 is: less than 250 full time equivalent employees and has an annual turnover not exceeding €50 million and/or an annual balance sheet total not exceeding €43 million. These criteria must be applied to the company as a whole, including subsidiaries. Specific definitions apply. The full definition can be seen at in the EU Official Journal L 124, 20.5.2003, p. 36–41 at:
http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=CELEX:32003H0361:EN:HTML
4.2 Technology Sectors
The scheme is open to all sectors governed by the EC Treaty, including those subject to specific Community rules on State aid – unless those specific rules impose constraints. The Scottish Government State Aid Unit should be consulted in the first instance should a proposed project involve the transport by rail, road or inland waterway sectors, or should there be concerns about other, potentially ‘sensitive’ sectors. Special rules may apply to R&D&I aid for projects in agricultural and fisheries (listed in Annex I to the EC Treaty) . Again, the State Aid Unit should be consulted in the first instance where a proposed project concerns either of these sectors.
Defence projects will not be supported.
4.3 Grant Rate
The aid intensity will depend on the type of R&D activity being supported, but the maximum intensity must NOT exceed the maximum aid intensities set out below. These figures include the bonuses described in 4.4.
It should be noted that SG, SEn or HIE may set lower aid intensities for specific programmes of support to reflect the strategic rationale and market failure being addressed through aid.
Technical Feasibility Study Preparatory to Industrial Research -
Small 75%
Medium 75%
Non-SME 65%
Industrial Research -
Small 70%
Medium 60%
Non-SME 50%
Industrial Research (subject to meeting rules around collaboration or dissemination of results) -
Small 80%
Medium 75%
Non-SME 65%
Technical Feasibility Study Preparatory to Experimental Development -
Small 50%
Medium 50%
Non-SME 40%
Experimental Development -
Small 45%
Medium 35%
Non-SME 25%
Experimental Development
(subject to meeting rules around collaboration) -
Small 60%
Medium 50%
Non-SME 40%
4.4 Bonuses
The maximum aid intensities for industrial research and experimental development set out in the table in 4.3 include the following bonus increases :
(a) Where the aid is to be given to SMEs, the aid intensity may
be increased by 10 percentage points for medium-sized
enterprises and by 20 percentage points for small
enterprises;
(b) Up to a maximum aid intensity of 80%, a bonus of 15
percentage points may be added if at least one of the
following conditions is fulfilled:
(i) The project involves effective collaboration between at least
two undertakings which are independent of each other.
Such effective collaboration shall be considered to be
present when:
- no single undertaking must bear more than 70% of the
eligible costs of the collaboration project;
- and for large undertakings, the increase only applies if
they collaborate with at least one SME or if the
collaboration is cross-border, that is to say, the research
and development activities are carried out in at least
two different Member States;
- Subcontracting is not considered to be effective
collaboration;
(ii) Or the project involves effective collaboration between an
undertaking and a research organisation, particularly in the
context of co-ordination of national R&D policies. Such
effective collaboration shall be considered to be present
when:
- the research organisation bears at least 10% of the
eligible project costs, and
- it has the right to publish the results of the research
projects insofar as they stem from research
implemented by that organisation;
- subcontracting is not considered to be effective
collaboration. In case of collaboration between an
undertaking and a research organisation, the maximum
aid intensities and bonuses specified in this Framework
do not apply to the research organisation.
(iii) Or only in the case of industrial research, if the results of
the project are widely disseminated through technical and
scientific conferences or published in scientific or technical
journals or in open access repositories (databases where
raw research data can be accessed by anyone), or through
free or open source software.
Where bonuses are applied, reports MUST be submitted to SEET (in the case of SEn and HIE staff through Elaine Morrison at SEn or Melvyn Waumsley at HIE) for subsequent transmission to the European Commission by the Scottish Government State Aid Unit. The reports must contain detailed descriptions of the particular conditions under which the top-ups were granted. See Chapter 6 for more detail on reporting procedures.
4.5 Grant Level
The total amount of grant provided to any individual project under this scheme is STRICTLY restricted to €7.5 million (approx. £5 million). If it is proposed to offer a grant of more than €7.5 million then this project must be notified separately to the European Commission seeking approval prior to the grant being offered. Further guidance on the procedures for notifying individual projects can be obtained from the Scottish Government State Aid Unit. ALL grants exceeding €3m (approx £2m) must also be notified to the European Commission within 20 working days of the granting of the aid - via the Scottish Government State Aid Unit (approval is not required, but standard summary information, as per the Annex of the EC’s R&D&I Framework must be submitted).
4.6 Eligible R&D Activity
The following R&D activities are eligible for grant assistance:
• Technical feasibility studies - investigation and
assessment of the technological and commercial
viability of transforming innovative technology into
new products, processes or services. The results of a
feasibility study can lead into industrial research activity
or pre-competitive development activities.
• Industrial research - planned research or critical
investigation aimed at the acquisition of new knowledge
and skills for developing new products, processes or
services or for bringing about a significant improvement
in existing products, processes or services. It comprises
the creation of components of complex systems, which is
necessary for the individual research, notably for generic
technology validation, to the exclusion of prototypes.
• Experimental development - acquiring, combining,
shaping and using existing scientific, technological,
business and other relevant knowledge and skills for the
purpose of producing plans and arrangements or designs
for new, altered or improved products, processes or
services. These may also include e.g. other activities
aiming at the conceptual definition, planning and
documentation of new product, processes and services.
The activities may comprise producing drafts, drawings, plans and other documentation, provided that they are not intended for commercial use.
The development of commercially usable prototypes and pilot projects is also included where the prototype is necessarily the final commercial product and where it is too expensive to produce for it to be used only for demonstration and validation purposes. In case of a subsequent commercial use of demonstration or pilot projects, any revenue generated from such use must be deducted from the eligible costs.
The experimental production and testing of products, processes and services is also eligible, provided that these cannot be used or transformed to be used in industrial applications or commercially.
Experimental development does not include the routine or periodic changes made to products, production lines, manufacturing processes, existing services and other operations in progress, even if such changes may represent improvements.
NOTE - Awarding a higher level of grant assistance to a project than that for which it qualifies constitutes a breach of State aid. This could result in the European Commission removing the powers from SG, SEn and HIE to provide grant assistance to support R&D activity. Each project must therefore be strictly assessed to determine under which of the above stages of R&D activity it qualifies.
4.7 Eligible Project Costs
Eligible costs must be directly attributable to the specific project supported and can include:
• personnel costs - researchers, technicians and other
supporting staff employed solely on the R&D project;
costs are currently capped at £40k per person per
annum excluding National Insurance and Pensions.
• costs of instruments, equipment, and land and premises
used solely and on a continual basis (except where
transferred commercially) on the R&D project;
• cost of consultancy and equivalent services used
exclusively for the R&D project, including the research,
technical knowledge and patents, etc. bought from
outside sources;
• for SMEs only, the cost of protecting intellectual property
arising from the project;
• additional overheads incurred directly as a result of the
R&D project;
• other operating expenses incurred directly as a result of
the R&D project - e.g. costs of materials and supplies.
4.8 Other forms of public assistance
Other forms of public funding should not normally be involved in a project that is being supported under this scheme. If any additional public e.g. LEC, NESTA, government or European Community funding is involved, the assistance will be cumulated and the total public funding for an individual project CANNOT exceed the maximum State aid intensities described in sections 4.3 and 4.4. Similarly, de minimis funding cannot be provided, in addition to support under this scheme, for the same eligible costs such that the maximum State aid intensities laid down in sections 4.3 and 4.4 are exceeded. De minimis funding that is provided for entirely separate costs from support under this scheme, however, does not have to be cumulated with that support. Public funding provided on a fully commercial basis may not constitute State aid; the State Aid Unit can provide further advice as required.
4.9 R&D Tax Credits
Beneficiaries under this scheme may also claim the large company R&D tax credit even if they are SMEs.
A condition of approval for the UK’s SME R&D tax credit, under EC State aid rules, is that individual projects that have been in receipt of a notified state aid, such as grants authorised under the Scottish R&D Scheme, cannot be included in a company’s R&D expenditure for the purposes of the SME R&D tax credit. However, the Chancellor announced in his Budget of 2003 that the scope of the large company R&D tax credit ( which is not a notified state aid) was to be widened to allow SMEs to claim, where they are not entitled to the SME credit because they receive state aid or another subsidy. This more closely aligned the position of SMEs to that of large companies and took effect from 9 April 2003.
Guidance on the SME and large company R&D tax credits can
be found on SG IIT’s website www.scottishbusinessgrants.gov.uk .
CHAPTER 5: PROGRAMME DELIVERY AND MONITORING
5.1 Responsibility
When devising a new Programme under this scheme, SG, SEn and HIE staff must consult with the relevant policy Division at the Scottish Government (as indicated in section 3.1). When a new Programme has been approved and introduced, SG, SEn or HIE has the responsibility for delivering and monitoring the Programme to ensure that it complies with these guidelines and the Community Framework for State aid for Research and Development. It is anticipated that SG, SEn and HIE will follow their usual procedures for appraisal, grant offer and monitoring but the procedures set out in this section are required by the EU and must be adhered to.
5.2 Incentive Effect of R&D Grant Assistance
SG, SEn and HIE must monitor the delivery of their respective Programmes effectively to verify that the R&D grant assistance has an incentive effect.
In order to obtain grant assistance for R&D, enterprises must be able to demonstrate additionality, i.e. that the project would not have gone ahead without the aid being sought, or would only have gone ahead on a significantly longer timescale, on a smaller scale, or have been of a significantly lower quality.
In addition, large enterprises who obtain support must provide an annual report to the SG, SEn or HIE, justifying the incentive effect of the R&D support.
5.3 Applications for Funding
To ensure that the Community rules on the cumulation of aid - both in the case of aid awarded for different purposes and in the case of aid awarded for the same purpose under schemes approved by a single entity or various entities - are being complied with, applicants for funding must detail any other forms of public support they have received, or are likely to receive, in their application for funding.
5.4 Project Appraisal
The appraisal of individual projects will be carried out by project officers within the SG, SEn and HIE and the underlying principles must include:
(i) Commercial confidentiality during the appraisal process
being strictly maintained in a manner acceptable to any
reasonable applicant;
(ii) Applicants preparing an exploitation plan appropriate to
their stage of business development and demonstrating
how the results of the project will be further developed
into commercial products, processes or services; and
(iii) The potential market and the potential contribution to
wealth creation being considered when choosing between
applications.
5.5 Offers of Grant Assistance
Offers of grant assistance must be made via a formal undertaking between SG, SEn or HIE and the recipients concerning the terms and conditions of the scheme and the decision to offer aid.
Under normal circumstances, aid will not be re-payable. However, if a recipient fails to carry out the R&D project as agreed in the offer, SG, SEn or HIE must retain the right to seek full recovery of grant. A condition to this effect should be included in the offer letter.
Agreements should also require grant recipients to provide progress reports at different stages in the project to enable the project officer within the SG, SEn or HIE to monitor progress and activity.
5.6 Project Monitoring
Grant can only be paid out by authorised staff within SG, SEn or HIE after expenditure and satisfactory progress has been verified against the timetable, benchmarks and milestones prepared and agreed with grant recipients. Expenditure on each project must be certified by an appropriately qualified accountant who is independent of the grant recipient.
5.7 Project Exploitation
All grant applicants must include an exploitation plan in their grant application describing how the results of the assisted project will be commercialised.
Exploitation of the results of an assisted project by manufacturing articles outside the European Union Member States during the first 5 years after the date on which final payment of grant is made requires the prior consent of the Programme administrators.
5.8 Intellectual Property
If a project is undertaken by a single firm, ownership of the R&D results will reside with that firm.
In the case of collaborative projects, ownership of the R&D and the granting of licenses for the results of the projects will reside with the various partners and will be subject to an agreement negotiated by the various partners at the outset of the project. SG, SEn or HIE must ensure that a satisfactory agreement setting this out is in place before a project commences, however, SG, SEn or HIE CANNOT impose any special terms on the various partners relating to the agreement. For example, the agreement will detail how the IP is to be shared amongst the partners but the SG, SEn or HIE cannot stipulate how that IP is to be shared.
5.9 Publicity/Dissemination of Results
Details of projects supported under the scheme will be published by the SG, SEn and HIE and a condition to this effect inserted in offer letters.
Partners in collaborative research projects are required to put forward a publication/dissemination plan. The details of the plan will depend on the circumstances of each case, but participants will be expected to disseminate the results widely, subject to commercial confidentiality of information belonging to the industrial partners. Generally, the generic results of collaborative projects will be disseminated to a wider industrial and academic audience (e.g. through publication of research papers), while industrial participants will normally carry forward the R&D themselves or in partnership with other enterprises, with a view to developing commercial products, processes or services.
CHAPTER 6: REPORTING PROCEDURES
6.1 Reporting Requirement
It is a requirement of the European Commission that annual reports are submitted to the EC. As this is a joint scheme, the information contained in reports from SEn and HIE will be collated with those from the Scottish Government and forwarded on to the Commission.
6.2 Report Format
Quarterly reports MUST therefore be supplied to the
Scottish Government including the following information for
each aid or Programme:
(i) Name of the beneficiary;
(ii) The aid amount per beneficiary;
(iii) The aid intensity;
(iv) The sectors of activity where the aided projects are
undertaken; and
(v) The incentive effect of aid.
State aid for R&D&I must lead to the recipient of aid changing its behaviour so that it increases its level of R&D&I activity and R&D&I projects or activities take place which would not otherwise be carried out, or which would be carried out in a more restricted manner. The Commission considers that as a result of aid, R&D&I activity should be increased in size, scope, amount spent or speed. Incentive effect is identified by counterfactual analysis, comparing the levels of intended activity with aid and without aid.
In order to verify that the planned aid will induce the aid recipient to change its behaviour so that it increases its level of R&D&I activity, the Member States shall provide an ex-ante evaluation of the increased R&D&I activity for all individual measures assessed by the Commission, on the basis of an analysis comparing a situation without aid and a situation with aid being granted.
The following criteria may be used, together with other relevant quantitative and/or qualitative factors submitted by the Member State that made the notification:
Increase in project size: increase in the total project costs (without decreased spending by the aid beneficiary by comparison with a situation without aid); increase in the number of people assigned to R&D&I activities;
Increase in scope: increase in the number of the expected deliverables from the project; more ambitious project illustrated by a higher probability of a scientific or technological break-through or a higher risk of failure (notably linked to the higher risk involved in the research project, to the long-term nature of the project and uncertainty about its results)
Increase in speed: shorter time before completion of the project as compared to the same project being carried out without aid;
Increase in total amount spent on R&D&I: increase in total R&D&I spending by the aid beneficiary; changes in the committed budget for the project (without corresponding decrease in the budget of other projects); increase in R&D&I spending by the aid beneficiary as a proportion of total turnover;
In case a significant effect on at least one of these elements can be demonstrated, taking account of the normal behaviour of an undertaking in the respective sector, the Commission will normally conclude that the aid proposal has an incentive effect.
6.3 Additional Requirements
Under certain circumstances, the following additional information should also be included:
(i) Where grant assistance is provided to large enterprises, an annual report from the grant recipient, within 12 months of the relevant project start date and each subsequent 12 month period, including the 12 month period during which the project is completed, justifying the incentive effect of the R&D support.
(ii) Where top-ups are applied as described under section 4.4, further details are required viz.
a) Number of projects;
b) Brief description of each project;
c) Reason and justification for applying top-up; and
d) Grant rate, amount offered and expenditure for each
project.
6.4 Submission of Reports
Completed reports from the SEn network should be directed in the first instance to Elaine Morrison at SEn . Those from HIE should be sent to Melvyn Waumsley. Elaine and Melvyn will collate the reports from the various parts of their organisations and forward them to Morag Watt at SG IIG. Similarly, the nominated contacts in each Division within the SG supporting industrial R&D will forward their Divisional reports to Morag Watt.