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

Examination of Witnesses (Questions 160-179)



  160. Would it not be easier to notify the entire scheme and get the whole lot approved?
  (Mr Branton) Yes, it would. If there were significant recurrent risks arising in relation to projects, we would always advise to notify the whole scheme. That has not happened yet in the Lottery except for the Heritage Lottery Fund. But that is an on-going situation which we are in discussions with DCMS about.

  161. There still is a problem potentially for Lottery schemes because very often they require not merely Lottery funding but other public money as well, maybe through SRB, which could then cause them to fall foul of the state aid rules?
  (Mr Branton) That is true.


  162. And the aggregation of the two together, that is the problem in Stoke.
  (Mr Savill) Yes.

  163. How dynamic would you say your colleages at DTLR and the regional development agencies are in trying to push this whole question forward?
  (Mr Savill) Well—

  164. That is not a ringing endorsement, is it?
  (Mr Branton) At the moment I think a huge amount of energy is being put into this and has been for the last few months. That is the time that we have been involved. It is difficult to comment on previous periods. At the moment I would say that certainly DTLR is very dynamic in pushing forward new regeneration framework ideas vis-a"-vis the Commission and in every way.

  165. So you think there is really good co-ordination between yourselves and all the other people involved in this?
  (Mr Savill) It is getting better.

  166. You mean it was poor before?
  (Mr Savill) No I did not say that.

  167. One of the big advantages of the PIP schemes did appear to be that they encouraged all sorts of initiatives—rent guarantees, equity partnerships, these sorts of things. Do you think any of the new schemes are going to be as imaginative as that?
  (Mr Savill) I see no reason why not.

  168. Can you give us an example of some of the imaginative approaches that are coming on stream?
  (Mr Savill) The principle they are working on is looking at the whole question of market failure in regeneration and that allows you to look at not just the gap funding issue but also other ways of incentivising the private sector to deliver the kind of benefits you are after. For instance, it would be possible to identify narrower market failures or wider ones.

  169. Why should you pick on small or medium developers rather than large ones? Is it not the case that the large ones have got the experience and in the case of Liverpool and Manchester have done some good work which suggests that they have got a track record to let them get on to other schemes?
  (Mr Savill) This is again an unintended side-effect of the way the Commission has approached this which is to look at whether the market is distorted or not. The regional aid rules allow more payments to small and medium sized enterprises than they do to large ones. There is no regeneration argument at all in that area, I am afraid.

Ms King

  170. If I were a developer (and you have mentioned it but I would like to know clearly) how could I find out about the types of grant available for a particular project and whether or not they would be in contravention of state aid rules?
  (Mr Savill) I cannot tell you the first bit.

  171. Are you not meant to be able to tell us?
  (Mr Savill) I cannot tell you how to find out about types of grants. I would hope that you would get initial advice on whether something is a contravention of the state aids rules from the people who give that grant. Beyond that—


  172. Just a minute, you get the advice from the people who give the grants but you do not know who is giving the grants, so how do you find out?
  (Mr Savill) This is one of my problems. We have done 11 seminars in the regions over the past year to staff from RDAs, local authorities, government offices, to explain the complications of the state aid rules and we have had many reactions like the gentleman from Stoke gave earlier, but we are clearly not doing enough of it.

  173. Who is meant to be doing it? I get the impression from your answer that you do not think you are even meant to be doing it.
  (Mr Savill) Oh, we do.

  174. Why can you not tell me?
  (Mr Branton) There are two different things here. The first thing is advice on what grants are available and the second thing is advice on where state aid problems arise in those grants. We provide the latter in the State Aids Unit of the DTI. We do not provide the former. That is a question which goes much broader. It goes to all departments, plus RDAs, plus government offices, plus local authorities, Business Links, and all the ways there are of advising people on grants they might be entitled to. Our emphasis in state aids is to try to get at those intermediaries, mainly the RDAs and government offices, as a first effort to try to educate them as to how state aid rules work.

  175. Just in case a developer is reading this transcript and they are thinking, "I really want to know where I find out about these grants", where would be their first stab?
  (Mr Branton) I think the RDAs is the most obvious place or the local council. It depends on the type of development.

  176. So the responsibility really is with local organisations to provide that? Is that what you are saying? It is not central government's responsibility?
  (Mr Savill) For the grants, yes, but it is our responsibility to make sure that everybody knows about the state aids rules and help people pick their way through—


  177. It is their job to raise people's expectations and it is yours to dash them. Is that right?
  (Mr Savill) That is often the way it ends up. What we are trying to do is to help people through this rather complex area and our ambition is not to dash their expectations but to find a way through.
  (Mr Branton) Often we think we can add value to RDAs and government offices and local councils who come to us because we can sometimes suggest ways of organising projects such that state aids rules are not a problem. Where that is the case everybody is happy.

Dr Pugh

  178. As a follow on from that, do you find that the RDAs need much education? There is a worrying scenario of people seeking advice from RDAs which are simultaneously being educated by you about the rules. Are RDAs fully aware of all the rules?
  (Mr Savill) They are relatively new organisations; no; there is more that could be done.

  179. Going to the core of the thing, the former PIPs are regarded as unfair competition. Do you actually agree with that? Was it unfair competition?
  (Mr Savill) It does not really help if I agree or not. The Commssion took that view, they are competent for it.

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