STATE AID TO THE COAL INDUSTRY
Commission Report on the application of the Community rules for state aid to the coal industry in 1998 and 1999.
||Trade and Industry|
|Basis of consideration:
||Minister's letter of 8 February 2001
|Previous Committee Report:
||HC 23-xxvii (1999-2000), paragraph 8 (25 October 2000) and HC 28-ii (2000-01), paragraph 6 (10 January 2001)
|To be discussed in Council:
||No date known|
||Cleared (decision reported on 10 January)
18.1 On 10 January 2001, we reported on
the application of state aid to the coal industry. In clearing
the document, we asked the then Minister of State for Energy and
Competitiveness in Europe (Rt. Hon. Mrs Helen Liddell MP) to report
on the outcome of discussions that were taking place between the
Commission and the German Government on the proper application
of state aid rules to German coal undertakings.
18.2 Mr Hain, who replaces Mrs Liddell,
replies on her behalf in his letter of 8 February 2001. He reports
"On 21 December 2000,
the Commission announced that it had authorised German State aid
to the coal mining industry for the years 2000 and 2001 as follows:
" operating aid of DM 3.847 billion
and DM 3.433 billion respectively
" aid for reduction of activity of
DM 3.138 billion and 1.889 billion respectively
" aid linked to measures intended
to secure the jobs of the underground workforce in the mines of
DM 71 million and 67 million respectively
" aid to cover exceptional costs
of DM 2.124 billion and DM 2.740 billion respectively."
18.3 The Minister says that following protracted
negotiations with the Commission, the German government proposed
that operating aid be reduced by DM 1.2 billion and aid for reduction
be increased by the same amount. The Minister adds that the agreed
package represents a 25% reduction in operating aid compared with
the amount (DM 5.1 billion) provided in 1999 and a significant
reduction compared with the grant of DM 5 billion that Germany
had originally proposed for 2000 when it notified its intentions
to the Commission.
18.4 As regards aid for reduction of activity,
the Minister says that there is already considerable unemployment
in the regions affected by the decline in coal production. The
Commission agreed that the new reductions in activity which will
result from the redistribution of the DM 1.2 billion will not
take effect until after 2002.
18.5 As regards timing of closures, the
Minister adds that no decision on the precise timing has been
taken but it is intended that such decisions will be made in 2003.
These decisions will be taken under whatever regime is in place
after 2002 when the European Coal and Steel Community (ECSC) Treaty
expires and with it the Coal State Aids Decision.
18.6 The Minister comments that the amounts
of aid agreed are still high, but UK producers should not be affected
directly. Finally, the Minister welcomes the general thrust of
these developments, in particular the shift away from operating
aid for mines without a viable future and towards providing support
for reducing the level of activity.
18.7 We are grateful for the Minister's
41 Aid for the "reduction of activity " is
funding that is intended for undertakings that have no prospect
of economic viability, but face a progressive and continuous reduction
in the level of activity. Back