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

Examination of Witnesses (Questions 100-119)



  100. We are talking about housing. Is there nobody anticipating a problem?
  (Mr Branton) Our role is bound to be reactive.

  101. Is there nobody anticipating problems and influencing the Commission and its interpretation of the rules, or is it purely reactive?
  (Mr Branton) Our role is reactive vis-a"-vis other departments who have the policy responsibility for the subject-matter in question. It is up to those departments to perceive whether, through their contacts with industry and through their general policy development work, there is a state aid problem in relation to that work. If they perceive such a problem to exist, they come to us, we discuss how we can get round it, how we can move the agenda forward, how we can persuade the Commission to take an enlightened approach. We do that in a large number of areas. Housing is one which we are addressing at the current time.

Ms King

  102. So did that work with PIP?
  (Mr Savill) Sorry, can you repeat the question?

  103. Did that strategy that you have outlined, for identifying problems coming up in advance, work with PIP?
  (Mr Savill) It was a bit before my time. I have read the files, but it is difficult to tell. What is clear is that for a long time—the Commission's investigation into PIP went on for years—it was perfectly clear that there was a problem. There are many, many exchanges between my Department and what was then the DETR on the files, so there was clearly a partnership approach to how we were going to approach the Commission's investigation, how we were going to respond to their arguments. Yes, I would say it worked. It was perfectly clear there was a problem.

Mrs Ellman

  104. In Scotland a scheme for gap funding or the equivalent of gap funding has actually been approved, has it not?
  (Mr Savill) Yes.

  105. They have now set that precedent. Is this now going to be applied to England?
  (Mr Branton) We hope so.

  106. Are you arguing that case in Europe?
  (Mr Branton) As I said, it has to be agreed with the department responsible for the policy, so it is not up to us to determine the policy, it is up to us to advise on the state aid rules.

  107. Have you been asked to advise on that?
  (Mr Branton) Yes, we have, and we are discussing that with the department responsible as to how we can use the Scottish precedent to develop a housing scheme in England.


  108. What it really amounts to is that the devolved administration in Edinburgh can get its act together and get cracking and get something out of the Commission, whereas between you and all the other English departments you have not got your act together, is that right?
  (Mr Branton) Actually we advised the Scottish Executive on that scheme and helped them to get approval for it, so we act as their interlocutor in Brussels on state aids issues just as we do with DTLR and so on.

  109. So you can actually manage to co-operate with them in Edinburgh, but you cannot manage to co-operate with the department here?
  (Mr Branton) No, as I said, we are co-operating with the department here.

  Chairman: But slowly.

Chris Grayling

  110. The implication would be that the Scottish Executive was moving faster on this, but the department here with responsibility for it was not?
  (Mr Branton) I do not think it is up to us to comment on what has happened inside other departments.

Mr Betts

  111. But what you are saying to us is that for England there is no agreed scheme within Government to replace gap funding, which has been put to the Commission for housing?
  (Mr Branton) In relation to housing, no.

  112. After two years there is no scheme?
  (Mr Branton) No, one is being worked on at the moment, and we have been advising on it, but there is not anything at the moment.


  113. Can you explain to me what they have in Scotland, that they have not got here, which makes them get a move on?
  (Mr Branton) That makes them get a move on?

  114. They have got it there. You say you helped them.
  (Mr Branton) Yes, we did. They came to us. This is the normal way. They came to us with a scheme that they had drawn up. It is up to them how they draw it up, what the priorities are, what the ministerial impetus is behind them; that is up to the Scottish Executive. They came to us with a scheme, they asked for advice on how they could get it cleared through Brussels. We looked at the principle that had emerged out of the Regional Venture Capital Fund approval scheme which was a completely different type of state aid problem, but one which we negotiated through the Commission. Some of the principles arising out of the RVCF approval decision we thought could perhaps be used in a housing context, so we used the Scottish notification to put forward some rather innovative arguments in relation to getting approval for the Scottish scheme, and that proved successful. The Commission agreed with our approach, even though it was innovative, and they approved the Scottish scheme in a relatively short space of time. So we were delighted. We considered it a major success.

Mrs Ellman

  115. So the Scottish Executive asked you to resolve this issue, but UK Government Ministers did not ask you to resolve the issue for the rest of the UK? Is that in practice what has happened?
  (Mr Savill) No. The Scottish Executive came to us earlier.

  116. Did Government Ministers come to you and ask for you to develop the scheme?
  (Mr Savill) It was all at officials level, in that Scottish Executive officials came to us.

  117. All right. Which officials would it be representing the UK Government if it is not you, whom they would have asked to look at this for the rest of the UK?
  (Mr Savill) They have now done.

  118. They have now, but they did not before.
  (Mr Branton) They did it later, yes.

Chris Grayling

  119. Can I ask on this point, do you ever get a situation where the Commission comes to you and says you may not do something, and you just turn round and say, "This is not an area where you have competence. Go away."? You could make a strong argument for saying that housing is not an area where the Commission has competence. It may have invented competence, but really whether the Commission should properly be interfering in urban regeneration schemes in the UK, under the pretext of the Single Market, I would say is highly questionable.
  (Mr Branton) I think we have taken legal advice on the Commission's interpretation of the impact on intra-Community trade and the need for intra-Community trade on many occasions, and there are a number of European Court judgments on that point. We do not consider that it is possible to challenge the Commission's interpretation that when aid is given to a developer, that has the potential to influence intra-Community trade. As long as it has the capacity to influence intra-Community trading and it falls under the competition provisions of the EC Treaty then the Commission does have jurisdiction to implement those.

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