Welcome Temporary Framework General Block Exemption Regulation Social Enterprises Forthcoming Events Did You Know... Movers and Shakers

‘Competition policy is ready to deliver and develop ways out of the recession’
 
 Neelie Kroes,
 EC Commissioner for Competition
 February 2009

Since November 2008 the EC has taken steps to drive Europe’s recovery from the current economic and financial crisis.  It recognises that while State aid is no cure, well targeted public support could be a helpful component to help unblock lending to companies and encourage continued investment.

Towards this end, the Commission has introduced a temporary framework for State aid.  Its purpose is to address the specific difficulties faced by companies accessing finance as a result of the current economic crisis.  It sets out 5 measures which the EC consider justified for a limited period.  To apply these measures, schemes must be notified to and approved by the EC. 

The UK has 3 schemes which have been approved by the Commission under the temporary framework and which enable aid to be provided at country, regional and local level by relevant aid administrators.  Aid schemes operating under the framework are valid until 31 December 2010.  Brief details of these schemes are set out below.

Small Amounts of Compatible Aid (N 43/2009) enables aid of up to €500,000 to be given to a single company.  This maximum limit applies to aid under this element of the framework from any source, and also any aid granted as de minimis aid during the current fiscal year. 

Aid in the form of Loan Guarantees (N 71/2009) helps offer easier access to finance through subsidising premiums for loan guarantees.  A reduction in the guarantee premium can be given for a maximum of 2 years, with the maximum level of reduction dependent on the size of company.

   Aid for the production of Green Products (N 72/2009) - enables subsidised loans for  
   the production of green products.  The products must significantly improve the
   environment, and involve early adaptation or going beyond future community standards. 
   A reduction of up to 50% can be given on the premium for SMEs (25% for large
   companies).

A number of conditions set out in the Framework apply to the use of these schemes.  In particular, aid can only be given to firms which were not in difficulty on 1 July 2008, detailed records must be maintained; and regular reports will be required.  More detail can be found on the State aid website.  Scottish public bodies thinking of providing aid under any of these schemes are asked to contact the State aid Unit for more information.

In our last newsletter we spoke about the need to register funding schemes under the new General Block Exemption Regulation (GBER). This was due to the existing Block Exemptions expiring at the end of 2008 and therefore administrators had to ensure that continual cover was provided for any schemes.

There are now 10 Scottish schemes approved under the GBER and these are :-

Investment Support for SMEs
(X 72/2008)

Scottish Investment Fund
(X 133/2008) 

Scottish Property Support Scheme
(X 155/2008)

Scottish Local Authority Support for Regional Investment, SME Investment & Employment Aid
(X 159/2008)

Scottish Local Authority Support for Training & the Employment of Disabled & Disadvantaged Workers
(X 160/2008)

Scottish Local Authority Support to SMEs for consultancy & for Research & Development
(X 161/2008)

Scottish Enterprise Business Support Scheme
(X 43/2008)

Scottish Enterprise Training Scheme 2009-13
(X 47/2009)

Western Isles Business Support Scheme 2009-13
(X 151/2009)

Highlands & Islands General Block Exemption Scheme
(scheme number still to be allocated)

Social Enterprises are not exempt from State aid rules !

Social enterprises are, first and foremost, businesses.  Like other businesses, they aim to make a fair profit from trading. What distinguishes them is the clear focus on their social mission and the way they use their profit to deliver that mission.  What matters for State aid is what they do.  Any support which confers an advantage would be deemed to be State aid.

   There is no official definition from the EC for an undertaking but the general rule is 
   any organisation involved in economic activity.  An undertaking can include social
   enterprises where the enterprise is engaged in economic activity.

Where public monies or support constitute State aid to a social enterprise, then they must comply with the EC’s State aid rules and be provided as compatible aid.  That is, it 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 the new General Block Exemption Regulation e.g. allowing aid for training, employment, to SMEs, R&D&I projects etc. 

Scottish Government State aid Unit are presenting at an event being organised by Third Sector colleagues on behalf of BIG, Social Investment Scotland, HIE, CEIS and lottery distributers.  This is being run as part of the Unit’s ongoing awareness raising campaign to inform public funding bodies of the European State aid rules which govern how we use public funding to support worthwhile projects while adhering to State aid rules and regulations.

The date and venue of the event has still to be confirmed.  Watch this space !

   From 1 April 2009, the UK base rate for the calculation of reference and discount rates reduced
   to 2.84%. While rates in previous years have remained relatively stable, this is the third change
   since 1 January 2009. The current, and previous rates, can be found here.

The EC has updated its Handbook on State aid rules for SMEs . This document provides an overview of the aid possibilities for the SMEs as allowed by the Community State aid rules, and has been updated to include measures covered by the Temporary Framework.  You can access the document on the EC website. 

   Hot off the press, a special edition of the State Aid Scoreboard has been published focusing on

   measures adopted by Member States and approved by the Commission in the current financial

   and economic crisis. Read more about it here.

..and news just in - the European Commission has adopted a simplification package for State aid which, with a Best Practice Code and Simplified Procedure Notice, aims to help accelerate the decision making process and increase transparency.    Read here for more information.

Despite having had a very settled period, with little staff movement in SAU over the last three years, we are now having to say goodbye to Myra Mundt, one of our most experienced State aid policy advisors. Our congratulations to Myra, who has been successful in her application
to work in Enterprise Policy and Delivery Division, where we know she will continue to raise awareness of State aid rules!

   However, we are delighted to welcome back Niall Davidson to the SAU. Niall was on
   secondment to SCDI, before returning to SG to work in a temporary post in Renewable
   Energy Division and latterly as project manager for the RSA move to Scottish Enterprise.
   Niall has a wealth of experience in State aid and is looking forward to the challenge of
   catching up with the constantly evolving State aid regime.