6 State aid
| (28166)
16720/06
COM(06) 761
| State aid scoreboard: Autumn 2006 update
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| Legal base | — |
| Document originated | 11 December 2006
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| Deposited in Parliament | 15 December 2006
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| Department | Trade and Industry
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| Basis of consideration | EM of 9 January 2007
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| Previous Committee Report | None, but see para 6.1
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| To be discussed in Council | No date set
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| Committee's assessment | Politically important
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| Committee's decision | Cleared
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Background
6.1 The Commission report twice yearly on state aid and state
aid issues, the main aim of recent reports ("scoreboards")
having been to consider to what extent Member States have responded
to the Lisbon Strategy, 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.
The current document
6.2 This document provides an autumn 2006 update of the
scoreboard, focussing on the State aid situation in the 25 Member
States for the year 2005, and it is divided into the following
four parts:
Progress
towards the Lisbon Agenda
6.3 The scoreboard reports that there is a clear
move towards "better targeted aid", and notes that,
after the considerable fall in state aid at the end of the 1990's,
the underlying trend over the last six years has been stable rather
than downward, but with moderately lower overall aid levels in
the past two to three years. However, it says that most Member
States seem to be shifting the emphasis from supporting individual
companies or sectors towards tackling horizontal objectives.
6.4 The total level of state aid granted by the 25
Member states was estimated at €64 billion in 2005. In absolute
terms, Germany was granted the most aid (€20 billion), followed
by France (€9.7 billion), Italy (€6.4 billion) and the
United Kingdom (€4.5 billion). In sectoral terms; around
€41 billion of aid was earmarked for the manufacturing and
service sectors, €17 billion for agriculture and fisheries,
€4.1 billion for coal and €1.5 billion for transport
(excluding railways).
6.5 In relative terms, state aid amounted to 0.6%
of Community's GDP in 2005, though this average masked significant
disparities between Member States, with the proportion of total
aid to GDP ranging from 0.4% or less in Belgium, Greece, Luxembourg,
the Netherlands and the United Kingdom, to 1.4% or more in Cyprus,
Hungary, Malta and Finland. The report adds that the high proportion
in some of the new Member States is due largely to pre-accession
measures, which are either being phased out under transitional
arrangements or limited in time.
6.6 The scoreboard reports that Member States have
continued to redirect aid towards horizontal objectives, and that
more than half of them are now awarding more than 90% of their
aid to such objectives (excluding agriculture, fisheries and transport).
The four main horizontal objectives were environment and energy
saving (28% of total aid), regional economic development
(19%), research and development (12%) and small and medium sized
enterprises (10%). The remaining 16% was directed at specific
sectors (mainly coal, services and manufacturing), including aid
to rescue and restructure ailing firms.
State Aid on Rescue and Restructuring
6.7 The report notes that rescue and restructuring
is potentially one of the most distorting forms of aid, but may
in exceptional circumstances be justified by the countervailing
benefits. It notes that that Member States granted the vast majority
(almost 93%) of aid for rescue and restructuring aid on an individual
(ad hoc) basis to ailing firms. For the period 2000-2005, rescue
and restructuring aid amounted to €24
billion for the 25 Member States, of which €15.5
billion was given in the EU-15.
6.8 It also focuses on the latter, as data for the
10 new Members States are not fully comparable prior to accession
in May 2004, and it points out that the majority of rescue and
restructuring aid tends to be driven by a limited number of companies
(such as British Energy in the UK), and by a limited number of
Member States. Thus, more than 95% of the total rescue and restructuring
aid is accounted for by five Member States (Germany 56%, France
21%, Spain 8%, UK 7% and Italy 5%). Moreover, during the period
2000-2005, more than half of the ad hoc rescue and restructuring
decisions concerned unlawful aid (put into effect before approval
by the Commission), with such aid being more prevalent in instances
of restructuring than of rescue (and in larger cases and the larger
Member States).
Recovery of Unlawful Aid
6.9 The scoreboard reports that there were 80 pending
recovery decisions as of 30 June 2006, compared with 84 at the
end of 2005, and that Germany accounts for the largest number
of such cases (30%). It notes that recovery of incompatible State
aid is a lengthy process, pointing out that, between 2000 and
the first half of 2006, 114 recovery decisions have been adopted,
but only 51 recovery cases closed. It also notes that the Commission
announced under the State Aid Action Plan (SAAP) that it will
seek to achieve a more effective and immediate execution of the
recovery decisions, which will ensure equality of treatment of
all beneficiaries.
Modernised State Aid Policy through Legislative
and Policy Developments
6.10 Finally, the scoreboard reports on the progress
made to modernize state aid control following an extensive consultation
process. It notes that the Commission has begun to implement various
aspects of the SAAP which set out in June 2005 the guiding principles
for a comprehensive reform of state aid rules and procedures over
the next five years, and that, since the last scoreboard was published
in the spring, it has taken a number of steps. These include the
adoption of Community guidelines on state aid to promote risk
capital investments in small and medium-sized enterprises; a new
block exemption regulation for regional investment aid; a new
State Aid Framework for Research, Development and Innovation;
a revised draft regulation
reviewing de minimis aid, and the publication of a draft Regulation
to extend at least by one year the block exemptions for aid relating
to training, SMEs and employment, pending the preparation of a
single block exemption regulation. The document also deals specifically
with the transport sector, where it notes that, in its revision
of the guidelines for state aid for environmental protection,
the Commission will need to pay particular attention to the promotion
of clean and energy-efficient transport.
The Government's view
6.11 In his Explanatory Memorandum of 9 January 2007,
the Minister for Trade, Investment and Foreign Affairs at the
Department of Trade and Industry (Mr Ian McCartney) says that
this document has no direct policy implications, adding that it
is intended to increase transparency and to emphasize the need
for Member States to continue their efforts to reduce the overall
level of state aid and to redirect aid towards horizontal objectives
of common interest. He also points out that 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
6.12 In clearing this document, we are —
like previous scoreboards — drawing it to the attention
of the House as a useful summary regarding state aid policy.
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