The government has today (18 December 2013) published the draft map proposing areas of the UK eligible to receive regional aid.
Regional aid is typically offered as capital investment for businesses in less prosperous local economies, given assisted area status. Programmes that offer regional aid include the Regional Growth Fund (RGF) and the Advanced Manufacturing Supply Chain Initiative (AMSCI).
Assisted area status is not a guarantee of any regional aid funding. Businesses in other parts of the country can still receive support, including from RGF and AMSCI, for a wide range of projects through other forms of state aid.
Business Minister Michael Fallon said:
We are seeking views to ensure that the map is fair, and support is particularly targeted where it can drive growth. Key factories and sites ripe for development in areas where investment is most needed have been prioritised, reflecting advice from Local Enterprise Partnerships and Local Authorities.
Much of the support the government offers to business does not rely on regional aid, but we have identified areas where it can potentially be enormously beneficial to businesses looking to invest in new premises or machinery.
The draft map is now subject to consultation. This follows a previous consultation in the summer, which revealed broad support for the government’s approach. The earlier consultation specifically asked Local Enterprise Partnerships (LEPs) and Local Authorities (LAs) for local intelligence to inform the development of the draft map. LEPs, LAs and others now have the opportunity to suggest specific changes to the proposed map.
A final Assisted Areas Map will be submitted to the European Commission for approval in March 2014.
Notes to Editors
1.Under the European Commission’s new Regional Aid Guidelines, issued in June 2013, the UK’s overall assisted area population coverage will rise to 27.05% from 23.9% from 1 July 2014.
Assisted areas are selected based on European Commission guidelines, the potential to benefit from regional aid, and an assessment of economic need.
The draft map identifies areas proposed for ‘a’ and ‘c’ areas. Cornwall and the Isles of Scilly and West Wales and the Valleys are predefined as ‘a’ areas by the Commission, based on GDP per capita relative to the EU average. The UK government cannot define other parts of the UK as ‘a’ areas.
The draft 2014-2020 Assisted Area Map consultation seeks views on areas proposed as ‘c’ areas. Parts of the Scottish Highlands are predefined by the Commission as a ‘c’ area due to sparse population. Other ‘c’ areas have been proposed by the UK government including the 100% coverage already awarded to Northern Ireland in the medium term.
2.‘A’ areas and ‘c’ areas are named after the relevant sections of the Treaty on the Functioning of the European Union, Article 107 (3) (a) and (c). These sections of the Treaty enable Member States to grant State Aid to promote economic development.
3.Assisted areas are those areas where regional aid can be offered to undertakings, typically businesses, under European Commission state aid rules. In the UK, the main examples of schemes offering regional aid are:
- Regional Growth Fund - operates in England and supports projects and programmes that are using private sector investment to create economic growth and sustainable employment
- Regional Selective Assistance - primary Scottish scheme under the RAG and is administered by Highlands and Islands Enterprise and Scottish Enterprise. Grants may be given in conjunction with support under other aid frameworks, for example R&D or skills and training
- Welsh Government Business Finance - offers discretionary financial support to eligible businesses in key business sectors and certain strategically important projects outside these. It helps fund capital investment, job creation, research, development and innovation and certain eligible revenue projects throughout Wales
- Business Premises Renovation Allowance (BPRA), which is predicated on assisted area status. This gives an incentive to bring derelict or unused properties back into use, by giving an initial allowance of 100% for expenditure on converting or renovating unused business premises in a disadvantaged area
- the Enhanced Capital Allowances permitted at some Enterprise Zones are reliant on assisted area status
4.The government’s economic policy objective is to achieve ‘strong, sustainable and balanced growth that is more evenly shared across the country and between industries’. It set 4 ambitions in the ‘Plan for Growth’, published at Budget 2011:
- to create the most competitive tax system in the G20
- to make the UK the best place in Europe to start, finance and grow a business
- to encourage investment and exports as a route to a more balanced economy
- to create a more educated workforce that is the most flexible in Europe
Work is underway across government to achieve these ambitions, including progress on more than 250 measures as part of the Growth Review. Developing an Industrial Strategy gives new impetus to this work by providing businesses, investors and the public with more clarity about the long-term direction in which the government wants the economy to travel.