12 STATE AID
(27121)
15818/05
COM(05) 624
| State Aid Scoreboard: autumn update 2005
|
| Legal base | —
|
| Document originated | 9 December 2005
|
| Deposited in Parliament |
20 December 2005 |
| Department | Trade and Industry
|
| Basis of consideration |
EM of 12 January 2006 |
| Previous Committee Report |
None |
| To be discussed in Council
| None planned |
| Committee's assessment | Politically important
|
| Committee's decision | Cleared
|
Background
12.1 The Commission reports twice-yearly on state aid and state
aid issues. The main aim of the last report ("scoreboard")
was to consider to what extent Member States had responded to
the Lisbon Strategy. It provided an overview of the amounts and
types of distortive or potentially distortive state aid granted
by the Member States in 2003 (the latest year for which records
were available) and considered underlying trends. It looked particularly
at the Commission's handling of a series of cases on state aid
for public service broadcasters. The second section described
state aid control procedures, including the recovery of unlawful
state aid. Finally, the third section summarised ongoing work
to modernise the control of state aid, noting the Commission's
intention to issue a consultation paper on the future of state
aid policy in 2005.[39]
The document
12.2 This scoreboard is the Autumn update. Again the main aim
is to assess Member States progress towards meeting the Lisbon
Strategy objectives, particularly the specific commitments agreed
at the Stockholm European Council in 2001 to show a downward trend
in the level of state aid relative to Gross Domestic Product (GDP)
while redirecting aid from specific sectors to horizontal objectives.[40]
The report first looks at the extent to which Member States have
responded to the Lisbon Strategy by first providing an overview
of the amount and type of (potentially) distortive state aid awarded
by Member States in 2004 (the latest year for which records are
available) and then examining the underlying trends.
12.3 The scoreboard notes that although there are
indications that state aid is "better targeted", the
overall volume remains the same. After the considerable fall at
the end of the nineties, the underlying trend over the last five
years has been stable rather than downward. However, most Member
States seem to be shifting the emphasis from supporting individual
companies or sectors towards tackling horizontal objectives. The
total level of aid granted by the 25 Member states was estimated
at €62 billion in 2004. About €40 billion was given
to the manufacturing and service sectors, €15 billion to
agriculture and fisheries, €5.5 billion to coal and a little
over €1 billion to transport (excluding railways). In absolute
terms Germany granted the most aid (€17 billion), followed
by France (€9 billion) and Italy (€7 billion). In relative
terms, state aid amounted to 0.6% of Community GDP in 2004. This
average masks significant disparities between Member States: the
share of aid to GDP ranged from 0.4% or less in Belgium, the Czech
Republic, Estonia, Greece, Latvia, Luxembourg, the Netherlands
and the United Kingdom to 1.5% or more in Cyprus, Malta, Poland
and Finland. The high proportion in some of the new Member States
is due largely to pre-accession measures that are either being
phased out under transitional arrangements or time-limited.
12.4 The report indicates that Member States have
continued to redirect aid towards horizontal objectives. By 2004,
the share of horizontal aid had risen to 76% of the total amount
(excluding agriculture, fisheries and transport). The four main
horizontal objectives were environment and energy saving (25%
of total aid), regional economic development (18%), research and
development (12%) and small and medium-sized enterprises (12%).
The remaining 24% of state aid was directed at specific sectors
(mainly coal), and included aid to rescue and restructure ailing
firms.
12.5 The second part of the scoreboard looks specifically
at state aid for environmental and energy saving objectives. It
shows that expenditure on such aid increased from an annual average
of €6.5 billion in the period 2000-02 to €9.3 billion
during 2002-04. It notes that clearly such aid is directed at
a commonly accepted horizontal objective, but that only a relatively
small proportion is aid:
- to make investments that give
higher environmental standards than community standards;
- to undertake further investment to reduce pollution;
or
- for the development of renewable energy sources.
12.6 The third section of the report gives a summary
of Member States' responses to a Commission questionnaire on ways
of reducing state aid by assessing whether state aid is the most
appropriate intervention and of using alternatives such as regulatory
measures. The fourth section reports on the initiatives launched
by the Commission as part of a comprehensive five-year reform
of state aid policy. It also presents an update on the recovery
of unlawful aid noting that at the end of June 2005 about €3.4
billion remained outstanding.
The Government's view
12.7 The Parliamentary Under Secretary of State for
Employment Relations and Consumer Affairs, Department of Trade
and Industry (Mr Gerry Sutcliffe) says, in exactly the same words
as used previously that:
- there are no direct policy
implications from the scoreboard;
- it is intended to increase transparency and to
emphasise the need for Member States to continue the reduction
of the overall level of state aid, to redirect aid towards horizontal
objectives and to target it to identified market failures; and
- the Commission is continuing to review its state
aid guidelines and to develop and modernise procedures in order
to evaluate and monitor the effectiveness of state aid schemes.
Conclusion
12.8 We report this document, like previous scoreboards,
because it is a useful summary of the situation as regards state
aid in the Community. We clear the document.
39 See (26530) 8483/05: HC 34-i (2005-06), para 43
(4 July 2005). Back
40
That is aid - such as for research and development, employment
creation or small and medium enterprises - not directed to specific
sectors. Back
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