Examination of Witnesses (Questions 84-99)|
TUESDAY 26 FEBRUARY 2002
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
(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.
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 itThis
comes from the Commission's decision on the PIP scheme, is that
87. That is correct, yes.
(Mr Savill) The Commission's argument, as I understand
itand I am not here to defend it, this is what the Commission
arguedis 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
(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 upand I think this is a more hopeful approachis
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
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
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
(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
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.