Select Committee on European Scrutiny Thirty-Sixth Report



12. STATE AID

 

(23538)

9351/02

COM (02) 242

Commission Report: State Aid Scoreboard - Spring 2002 update.

Legal base:

   

Document originated:

22 May 2002

Deposited in Parliament:

10 June 2002

Department:

Trade and Industry

Basis of consideration:

EM of 18 June 2002

Previous Committee Report:

None

Discussed in Council:

6 June 2002

Committee's assessment:

Politically important

Committee's decision:

Cleared, but relevant to any debate on State aid or related matters

 

Background

    1. This document presents the Commission's second scoreboard examining state aid in the European Union. The Commission intends publishing such a scoreboard twice a year.
    2. The document

    3. The document consists of four parts: an overview of state aid in the European Union; efforts by Member States to reform their state aid policies; indicators showing the extent to which Member States comply with aspects of state aid rules; and state aid for small and medium-sized enterprises (SMEs).
    4. Part one shows a downward trend in the level of state aid. In cash terms, state aid fell from _105 billion in 1996 to _82 billion in 2000. Germany and Italy contributed most to the fall. Expressed as a percentage of GDP, state aid fell in the majority of Member States. For the period 1998-2000 EU-wide aid amounted to 1.08% as a percentage of GDP on average, a decrease of 0.25% compared with 1996-1998. In 2000, state aid amounted to 0.99% of EU GDP but ranged from 0.46% in the UK to 1.44% in Finland.
    5. Part two assesses the success of Member States in redirecting state aid from specific sectors and geographical areas to horizontal objectives (e.g. training), reflecting the view that the latter are usually considered a more effective way of dealing with market failures, with fewer distortions. The scoreboard shows that the share of EU aid granted for horizontal objectives increased from 26% in 1996-1998 to 39% in 1998-2000.
    6. Part three contains data on state aid control procedures and outlines the Commission's long-term reform exercise for simplifying state aid procedures. The document notes that although Member States should notify the Commission of all state aid, in 15% of investigated cases it was the Commission that initiated the control procedure after finding out about the aid following a complaint. As regards the Commission's long-term reform exercise to simplify procedures, the document notes that the Commission aims to concentrate on the state aid cases that are clear-cut and involve the most serious distortions of competition. Group exemptions, such as for aid to small and medium-sized enterprises for training which have been exempt from the notification requirements, should reduce the administrative burden of policing state aid.
    7. Part four suggests that other policies, such as the creation of a business-friendly environment and the improvement of access to finance, might be more effective than state aid in addressing the market failures that limit the development of SMEs.
    8. The Government's view

    9. The Parliamentary Under-Secretary of State, Competition, Consumers and Markets, Department of Trade and Industry (Miss Melanie Johnson) told us that the UK is a low provider of state aid and has been in the forefront in pressing for increased transparency and a reduction in overall EU levels of aid. The Government agrees with the Commission that the scoreboard will be a key tool in helping to meet the targets agreed at the Stockholm and Barcelona Councils to reduce state aid in relation to GDP by 2003.
    10. Conclusion

    11. This is a useful document summarising the situation on state aid in the European Union. We regard it as relevant to any debate on state aid or related matters. Meanwhile, we clear the document.

 


 
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Prepared 25 July 2002