Select Committee on Northern Ireland Affairs Third Report


5 European State Aid approval

10. In order for the new scheme to be implemented, State Aid approval is required from the European Commission. After receipt of the UK Government's State Aid application, the Commission have three months in which to consider the application. If further information is sought by the Commission then the 3 month time period is extended. Other interested parties (including other Member States) may submit comments; this procedure can delay the application by 12 months or more.

11. The Government's State Aid application was submitted to the European Commission on 5 January 2004.[6]

12. In evidence to us on 25 February 2004, the Economic Secretary to the Treasury was unsure whether or not the introduction date of 1 April 2004 could be met but stressed that every effort was being made to assist the Commission in meeting this target.

13. We are concerned about the effect any delay in introducing the new scheme might cause. If the new scheme is not in place by 1 April 2004 then under the present levy relief scheme the relief is set to reduce by a further 20 per cent on this date to 60 per cent. Subsequent introduction of the new scheme later in the year may necessitate the refunding of this additional 20 per cent—assuming that the new scheme can be applied retrospectively—back to 1 April 2004.

14. Under either scenario many businesses in Northern Ireland would be subjected unnecessarily to increased costs in the coming months. The Treasury told us that planning for late introduction of the new scheme, and development of a procedure for returning overpayments to those businesses, was not currently its priority.[7]

15. It was also apparent that, should the new scheme be rejected by the Commission, the Treasury was unsure of the future of the aggregates levy in its current form either in relation to Northern Ireland or the UK as a whole.


6   Ev 58 Back

7   Qq 96-101 Back


 
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Prepared 17 March 2004