Enterprise and Culture Committee, 21 Jun 2005

Meeting date: Tuesday, June 21, 2005

Official Report 242KB pdf

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European Union State Aid Reform Inquiry

Agenda item 2 is our inquiry into the reform of European Union state aid. Members may remember that Christine May, Mike Watson and I visited Brussels along with Seán Wixted and Colin Imrie, who unfortunately could not join us today. The paper that is before members is a result of that visit. The paper is self-explanatory, but Christine May or Mike Watson may want to add to it. On page 3, we make a series of recommendations. First, the committee is invited to agree to

"the preparation of a response to the Commission's consultation paper on an Action Plan for state aid reform as outlined in the draft response attached at Annex A, and agree a finalised response in early September".

Given the state of flux in the EU and that the issue will clearly be a major part of the discussions about the budget reform, the proposal seems sensible at this stage.

We have talked about the changes to regional aid, particularly in relation to grants to large firms, but there is nothing about that or the way in which the changes will mean that, in Scotland, assistance will be available to all forms of business only in the Highlands. I, for example, have an interest in the Wigtown book town project, which was sponsored by regional aid under a programme that would not be possible under the procedures that are suggested from 2007.

Two issues are being confused. One is regional aid policy, which comes under regional state aid; the second is structural funds, which is what the member is talking about.

This item is not about structural funds.

Okay.

Basically, we are talking about the percentage of Scotland that is covered by the ability to help industry through grants, rather than the grant funding that comes from Europe.

The objective is to ensure as much coverage as possible, because if an area is not eligible under the state aid criteria, it will not be eligible for structural funds, no matter what happens. In the paper, we make the point that reduction of the population that is to be covered or drawing of lines on maps would prevent good assistance from being given. However, we support the horizontal themes, which include innovation, research, environment and sustainability, and we suggest that those should be the overriding criteria, while the coverage should be as wide as possible.

I support that.

Do members agree to the first recommendation?

Members indicated agreement.

The second recommendation is that we

"seek the opinion of the Scottish Executive and other interested parties in Scotland on the draft response by mid August so they can be reflected in the Committee's final response".

Is that agreed?

Members indicated agreement.

The third recommendation is that

"the Convenor should write to the Scottish Executive on the important issues for Scotland in relation to regional aid once the Commission's revised proposal is published".

Is that agreed?

Members indicated agreement.

The fourth recommendation is that we

"invite the Executive to take into account the Committee's views on state aid in preparing for the EU conference on state aid to be hosted by the UK Government in London in July as part of its presidency of the EU, and to report back to the Committee on the outcomes of the conference".

Is that agreed?

Members indicated agreement.

I must point out that we received briefings from the Scottish Executive before we went to Brussels and I had a meeting with Jim Wallace. On state aid—although not on structural funds—the Scottish Executive, the committee and the UK Government are broadly pursuing the same agenda.

The fifth recommendation is that we

"inform Scottish MEPs and the European Parliament's Committee of Regional Development of the issues in this paper and invite them to liaise with the Committee as they prepare their own report."

Is that agreed?

Members indicated agreement.

The final recommendation is that we

"agree that further advice should be prepared on the Commission's communication on state aid and innovation when it is published."

Is that agreed?

Members indicated agreement.

I do not want to open up a debate, but I have a couple of points to make. In a sense, they are just textual changes. Paragraph 6 on page 6 mentions the "intermediate technology institutes", but it should say "intermediary technology institutes". There is an important difference.

Secondly, in paragraph 7 there is a sentence that begins:

"The Scottish Executive has told the Committee that it believes that the existing rules are in general"

and so on. It goes on to say:

"Nevertheless it would like more generous levels of support for SMEs".

We need to clarify that. The committee would like more generous levels, but the sentence is ambiguous. It could mean that the Executive would like more generous levels.

Are those changes agreed?

Members indicated agreement.