Under the Structural Funds Programmes, monies paid out by public authorities – including the Structural Funds (SFs) themselves – may constitute State aid. Where this is the case, these monies must comply with the EC’s State aid rules - with the Managing Authority having ultimate responsibility for ensuring that this is the case.
First, the status - whether State aid or not- of all public monies involved in SFs projects needs to be considered. To do this the 5 key questions need to be applied to both the public match funding and SFs (or, should a project for any reason not contain a public match funding element, then the SFs alone).
Second, where public monies do constitute State aid, then they, i.e. both the public match funding and the SFs element, must comply with the EC’s State aid rules and be provided as compatible aid. That is, they both must conform to the specific scope to award State aid and permissible aid intensity levels set out by the EC in its various guidelines, frameworks and general block exemption regulation e.g. allowing aid for training, employment, R&D&I. However it is not sufficient for funding to merely adhere to the terms of the EC’s State aid scope.
So, third, public match funders and those paying out Structural Funds should satisfy themselves that, when an individual project funding award constitutes State aid, it is paid to the end beneficiary under an EC approved State aid scheme or in accordance with the EC's General Block Exemption Regulation, whichever is appropriate - and that full records of all individual awards are kept, which will be included in the annual reports that the State Aid Unit submits to the EC. In practice, a Member State or region of a Member State may have in place a number of EC approved State aid schemes under which named public authorities may pay out certain types of aid. Scotland operates various EC approved aid schemes including, for example, R&D schemes under which the Scottish Government, Scottish Enterprise and Highlands and Islands Enterprise may award State aid to undertakings for R&D projects without having to notify the EC on each occasion. Further details are available here.
Note that when paying out public monies as State aid, the public match funding and SFs element must be cumulated and respect the State aid intensity limits of the relevant State aid scheme or block exemption regulation. It is important to note that these State aid limits may be less than the Structural Funds maximum intervention limit and that eligible costs, etc, under an appropriate State aid instrument may also differ from any generic, SFs eligibility criteria.
The State Aid Unit has produced fuller guidance to assist those dealing with SFs projects and responsible for undertaking State aid assessments on those projects, which can be viewed here.
EC Approvals to award Structural Funds in Scotland
Some funding awarded by or on behalf of Managing Authorities under current European Structural Funds programmes constitutes State aid. That is, certain European Structural Funds monies will meet the five State aid criteria under Article 87(1) of the EC Treaty. In Scotland the following EC approvals for European Structural Funds monies which constitute State aid are currently in place:
EC State aid approval X654/2009:
ERDF Priorities 1&2 Support Scheme Scotland
This permits the Scottish Government, as the Managing Authority of European Structural Funds in Scotland, to award - directly or via ESEP or HIPP - discretionary funding under ERDF Priorities 1&2 for the benefit of undertakings for a variety of R&D&I activities, in line with certain scope provided by the EC’s General Block Exemption Regulation, No 800/2008. Specifically aid to SMEs for non routine consultancy services; aid for R&D&I projects and technical feasibility studies; aid to young, innovative enterprises, and aid for innovation advisory and innovation support services.
EC State aid approval X664/2009:
European Social Fund Scotland 2009-2013 Programme -
Priority 2
This permits the Scottish Government, as the Managing Authority of European Structural Funds in Scotland, to award - directly or via ESEP or HIPP - discretionary funding under ESF Priority 2 for the benefit of undertakings in respect of certain training costs or costs of recruiting and employing disabled or disadvantaged workers, in line with the scope provided within the EC’s General Block Exemption Regulation, No 800/2008.
In line with the requirements of the EC’s General Block Exemption, the Managing Authority shall maintain records regarding aid awarded, for 10 years from the granting of the last aid under the respective approvals. The Managing Authority shall also compile an annual report regarding aid awarded which will be submitted electronically to the EC.
Note: Public match funding to accompany European Structural Funds must comply with the EC’s State aid rules where it constitutes State aid. The above approvals are for European Structural Funds monies only and separate approvals (where funding is not awarded as de minimis) must be in place for match funding monies.