Supplementary memorandum by Department
for Transport, Local Government and the Regions (ERF 17(a))
1. The Department for Transport Local Government
and the Regions would like to provide the following supplementary
information in the light of developments subsequent to submitting
its memorandum to the Committee on 30 January 2002.
HOUSING SCHEMES
NOTIFICATION
2. On 18 March the Department notified to
the European Commission under Article 87(3) a scheme under which
grants would be available for housing projects in England. Based
upon, but not identical to, a recent Scottish scheme approved
last November, it would allow gap funding for housing schemes
anywhere in the country up to a maximum of 60 per cent of eligible
costs. As with the Scottish scheme it argues that any aid to the
developer of housing should be approvable by reference to the
principle enunciated in the Risk Capital Guidelines that:
"where a transfer made by the State would
be compatible with the State aid rules, the Commission believes
that a measure which provides a minimum incentive to other economic
operators to make the same transfer should also be authorised,
even if technically an aid to those operators is involved."
3. Approval of this scheme would be a major
step forward because it would enable Government to provide gap
funding support for housing schemes even if a project was located
outside an Assisted Area or the beneficiary of the aid was not
a small- or medium-sized enterprise.
OTHER NOTIFICATIONS
4. In consultation with the RDAs and EP
the Department has been developing two further notifications.
They will allow grant to be payable by RDAs and EP for:
— the remediation of derelict land
up to 100 per cent of eligible costs. This will also be based
on arguing for extending the approach used for contaminated land
in the Guidelines on Environmental Protection; and
— projects to support the preservation
of heritage sites and conservation areas. This will refer to article
38(3)(d) of the Treaty; which states that in certain circumstances
aid to promote culture and heritage conservation may be compatible
with the common market.
MEMBER STATES
MEETING
5. As agreed at the October 2001 Informal
Ministerial Meeting, the Department hosted a meeting of European
Member States, UK devolved administrations and the European Commission
on 21 March. The objective of the meeting was to share experiences
of State aids difficulties in relation to regeneration, in order
to move eventually towards new European guidelines. The meeting
was a private event, in order to encourage representatives to
speak freely.
6. In addition to a number of UK interests
(including Scotland, Wales and the Permanent Representative to
the European Union), the following attended:
European Commission—Directorate General
of Regional Affairs;
European Commission—Directorate General
of Competition; and
European Commission—London office.
7. Germany and Belgium gave presentations.
The Department presented a paper on market failure, outlining
some of the concepts on which a future regeneration framework
might be built, as well as a note on PPPs. Other representatives
provided a lot of useful information, including personal views,
which will be used to support development of policy. In one case,
the information provided is being followed up through a consultancy
exercise. DG Competition gave a substantial and helpful indication
of its position.
8. Support was expressed for the UK's ambition
to have new regeneration guidelines. This support was largely
drawn from Northern European states. Some opposition was also
expressed.
9. There was a frank and open exchange of
views on a range of issues, in particular the need for a holistic
approach to regeneration, the nature of market failure that leads
to deprivation and the need for regeneration and Public Private
Partnerships. The meeting noted the interesting differences in
approach to regeneration, some involving State aid and others
not. The Commission base any new guidelines or framework on case
law and the position would be no different in the case of a new
regeneration framework. Our new notifications will help expand
the existing case law. The Commission has sole competence in approving
State aid frameworks but recognise that in an ever-changing environment
new guidelines, such as those on risk capital, may be necessary.
SUBMISSION TO
THE COMMISSION
10. Following the meeting on 21 March the
Department will be writing to the Commission, with an agenda for
future action. This letter will emphasise the importance which
the UK attaches to this issue and will set out our strategy of
a twin track approach whereby:
— we propose to continue to make notifications,
eg the Housing Aid scheme, the Dereliction Aid Scheme and the
Heritage Aid scheme; and
— we formally submit a paper which
will be based on the paper tabled at the meeting, but going further
towards ideas for new guidelines, drawing on ideas which emerged
at the meeting. The paper sets out the economic rationale for
paying regeneration aid and will be the subject of further meetings
with the Commission and other Member States both in the Urban
Development Group and in other fora.
| 
