Select Committee on Transport, Local Government and the Regions Minutes of Evidence

Examination of Witnesses (Questions 84-99)




  84. Gentlemen, can I welcome you to the third session this morning. Can I ask you to introduce yourselves for the record, please?
  (Mr Savill) Certainly. My name is Hugh Savill. I work in the European Policy Directorate of the Department of Trade and Industry.
  (Mr Branton) I am Graham Branton. I also work in the European Policy Directorate of the Department of Trade and Industry.

  85. Do you want to say anything by way of introduction, or are you happy for us to go straight to questions?
  (Mr Savill) No, we put in a memorandum and we are quite happy to answer your questions.

  Chairman: Thank you very much. Louise Ellman.

Mrs Ellman

  86. How can giving assistance to residential and mixed developments, where there is a funding gap, possibly affect trade between Member States?
  (Mr Savill) The argument, as I understand it—This comes from the Commission's decision on the PIP scheme, is that correct?

  87. That is correct, yes.
  (Mr Savill) The Commission's argument, as I understand it—and I am not here to defend it, this is what the Commission argued—is that the activity of a developer was itself one that could naturally move between Member States, and that therefore any support to a developer was, in a sense, a support which could affect trade between Member States. Graham may want to add to that.
  (Mr Branton) The Commission takes trade in the broadest sense to include trade and services across frontiers, which can occur by companies locating in other countries, companies investing in cross-borders. That counts as trade in the Commission's mind, because such companies then offer services to residents of Member States other than those to whom they would normally offer them. So if you take trade in that sense, then clearly a developer being granted money in one country offers the potential for trade to be affected, because that developer could then work on projects in other countries. That is the logic.

  88. What counter-arguments are you putting to the Commission at the moment?
  (Mr Savill) There has been quite a long time since the Commission made their decision on the PIP scheme, and there have been quite a lot of things that have been put to the Commission since then. The first thing, as I understand it, which happened was that we put forward the various PIP replacement schemes individually to the Commission for approval, and that was the first priority for our approaches to the Commission. What we are also currently working up—and I think this is a more hopeful approach—is a general approach to the Commission to persuade them to look at the state aid rules from the point of view of regeneration, because it is clear to me, from the way the Commission argue, that they do not approach these state aids issues from a regeneration point of view. It is completely chalk and cheese. All the Commission's arguments are about preventing distortion of trade. We think that the climate is now considerably better than it has been for putting arguments to the Commission for what they call a state aids framework based entirely round regeneration, which would actually address the problems and issues of regeneration directly, rather than having to come at it sideways through small and medium-sized enterprises, or regional aid or any of the other frameworks that the Commission currently run.

  89. Are you looking at housing issues specifically? Are you putting an argument to permit the equivalent of gap funding on housing development? Are you putting that case? Are you being proactive in arguing that case with the Commission?
  (Mr Branton) The way it normally works for getting—

  90. No, what are you doing? Are you arguing that case with the Commission, or are you simply reacting to what someone tells you?
  (Mr Savill) On individual cases, yes, we put the case to the Commission.

  91. Are you doing it on the housing issues?
  (Mr Branton) We are about to.
  (Mr Savill) This is the 21 March event which was mentioned earlier in the evidence today. That is the first, I think, public event in which we will be marshalling the arguments for a regeneration framework and seeing what support there is for that kind of approach among Member States, with a view to putting those arguments to the Commission.

  92. But in your submission and presumably in your responsibility, I would assume that you are engaging on a day-to-day basis or a regular basis with Commission officials in arguing the case. Are you doing that? What you have told me now is that you are about to do it, and that that is going to take the form of a conference. In addition to that, are you not arguing the case on a regular basis in face-to-face meetings with officials, or is that not your role?
  (Mr Branton) No, we most certainly do argue the case in regular meetings with officials, but you have to understand the way in which we co-operate with other departments. It is not our policy responsibility to drive forward the regeneration agenda. That does not mean we do not do it at every opportunity we can.

  93. Whose responsibility is it?
  (Mr Branton) We are in the Department of Trade and Industry. There is the Department of Transport, Local Government and the Regions. Responsibilities are shared. We are responsible for state aids policy, but we deal with a huge variety of different aspects of state aids which cut across a large number of other departments and their areas of policy responsibility.

  94. But you are the department that the regional development agencies are linked to, and housing regeneration is an important part of their work. Are you not connected with that at all?
  (Mr Savill) If an individual case comes up, if a regional development agency puts to us a regeneration case involving housing, yes, we will be involved.

  95. But are you involved in discussions with Commission officials? If you are not, who is involved and what is the link between you and the Commission officials?
  (Mr Savill) Would it be helpful if I explained what we do?

  96. Yes, it would in relation to this, in relation to housing and regeneration.
  (Mr Savill) I can say first that there are very few of us, and from the evidence I have heard this morning I am perfectly clear that we are not doing enough to explain the state aids rules.

  97. No, I am not asking you to explain the rules. What I am asking you to try to identify is whether you see in your role a proactive role in arguing the case to make things happen in this country, not to be reactive in explaining the rules. How far are you involved in pursuing the interests of people in this country, in influencing the formation and interpretation of those rules? That is what I am trying to identify, and I am not getting much of a response.
  (Mr Branton) We most certainly do do that, but what you have to understand is that there are at any one time a huge number of people who are interested in state aids.

  98. Who brings the people together? Who is it, if anybody, who is looking at the issue of regeneration generally (but we are talking about housing at the moment)? Who is it who is responsible for looking at state aid rules in relation to housing, in a proactive way, not in explaining what someone else has decided, in arguing the case in the interests of the people?
  (Mr Branton) It is a joint responsibility between those responsible for housing policy domestically and ourselves who are responsible for state aid policy externally.

  99. How often do you discuss this between you?
  (Mr Branton) We have actually had in the last few weeks an exchange of e-mails and a meeting to discuss specifically new frameworks for housing. The housing agenda is driven by the Ministers responsible for the Department of Transport, Local Government and the Regions. When they perceive a state aid problem to arise in relation to their agenda, they come to us, they discuss how that can be taken forward in Brussels, we advise them and we go to Brussels and talk to the Commission officials about it, but we are not masters of every area of policy in the UK which is touched by state aid to drive forward the domestic agenda.

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