State aid and regional policy
Paul Hadley
Department for Trade and Industry
United Kingdom
Introduction
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Present arrangements
Context for reform
State aid and regional policy
Developing UK thinking on state aid reform
Principal UK approvals
Regional Aid map
N 265/2000
Regional Selective Assistance
N 731/2000
Context for reform
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A Modern Regional Policy for the UK,
March 2003:
– UK approach to regional policy
– Consultation on future of Structural Funds
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Joint DTI, HMT, ODPM target : to improve long
term economic performance of every region
UK approach to regional policy
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UK productivity objectives – similar to those set
out at Lisbon:
 Each region needs to perform better if we are
to achieve these objectives
 Strengthen market forces – building on the
indigenous strength of each region
 Ensure that differentials in growth rates are
reduced by focusing resources where they are
needed most
State aid reform
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UK approach to regional state aid reform fits Lisbon
agenda “Less and better state aid”:
– Ensure efficient operation of the state aid regime
– Ensure horizontal guidelines in place to address
market failures which hold back growth
– Simplification and modernisation of the rules –
allowing Commission to focus on the most
distortive aids
– Consider limiting investment aid to cases where
the most difficult problems are being tackled
An efficient state aid system
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Need for simpler and quicker identification of cases
that do not distort competition or trade significantly
Commission to focus resources on cases with high
impact
Consider introducing a significant impact test to filter
out low competitive impact cases which pursue
Community objectives
Tackling market failures with
horizontal guidelines
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Appropriate tools need to be available. UK
priorities include:
– Revising R&D guidelines
– Better tools to help start-ups and expanding
SMEs
– Addressing cases involving intermediaries
– Regeneration
Role of investment aid
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Likely to be a role for investment aid beyond
2006
Needs to be appropriately targeted
UK currently restricts such aid on the basis of:
– cost per job
– project type
– limit to the minimum necessary
– consider job displacement impact
UK proposals for revised guidelines
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Limit aid to cases where it addresses the
problems which drive regional underperformance
Ensure aid is proportionate
Enable more focused targeting. If a map based
approach is maintained then the areas may need
to be of a smaller size than currently possible
Where do we go from here?
Three main areas for discussion:
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Horizontal guidelines to address market failure
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Simplification and modernisation
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Spatial issues