Examination of Witnesses (Questions 160-179)|
TUESDAY 26 FEBRUARY 2002
160. Would it not be easier to notify the entire
scheme and get the whole lot approved?
(Mr Branton) Yes, it would. If there were significant
recurrent risks arising in relation to projects, we would always
advise to notify the whole scheme. That has not happened yet in
the Lottery except for the Heritage Lottery Fund. But that is
an on-going situation which we are in discussions with DCMS about.
161. There still is a problem potentially for
Lottery schemes because very often they require not merely Lottery
funding but other public money as well, maybe through SRB, which
could then cause them to fall foul of the state aid rules?
(Mr Branton) That is true.
162. And the aggregation of the two together,
that is the problem in Stoke.
(Mr Savill) Yes.
163. How dynamic would you say your colleages
at DTLR and the regional development agencies are in trying to
push this whole question forward?
(Mr Savill) Well
164. That is not a ringing endorsement, is it?
(Mr Branton) At the moment I think a huge amount of
energy is being put into this and has been for the last few months.
That is the time that we have been involved. It is difficult to
comment on previous periods. At the moment I would say that certainly
DTLR is very dynamic in pushing forward new regeneration framework
ideas vis-a"-vis the Commission and in every way.
165. So you think there is really good co-ordination
between yourselves and all the other people involved in this?
(Mr Savill) It is getting better.
166. You mean it was poor before?
(Mr Savill) No I did not say that.
167. One of the big advantages of the PIP schemes
did appear to be that they encouraged all sorts of initiativesrent
guarantees, equity partnerships, these sorts of things. Do you
think any of the new schemes are going to be as imaginative as
(Mr Savill) I see no reason why not.
168. Can you give us an example of some of the
imaginative approaches that are coming on stream?
(Mr Savill) The principle they are working on is looking
at the whole question of market failure in regeneration and that
allows you to look at not just the gap funding issue but also
other ways of incentivising the private sector to deliver the
kind of benefits you are after. For instance, it would be possible
to identify narrower market failures or wider ones.
169. Why should you pick on small or medium
developers rather than large ones? Is it not the case that the
large ones have got the experience and in the case of Liverpool
and Manchester have done some good work which suggests that they
have got a track record to let them get on to other schemes?
(Mr Savill) This is again an unintended side-effect
of the way the Commission has approached this which is to look
at whether the market is distorted or not. The regional aid rules
allow more payments to small and medium sized enterprises than
they do to large ones. There is no regeneration argument at all
in that area, I am afraid.
170. If I were a developer (and you have mentioned
it but I would like to know clearly) how could I find out about
the types of grant available for a particular project and whether
or not they would be in contravention of state aid rules?
(Mr Savill) I cannot tell you the first bit.
171. Are you not meant to be able to tell us?
(Mr Savill) I cannot tell you how to find out about
types of grants. I would hope that you would get initial advice
on whether something is a contravention of the state aids rules
from the people who give that grant. Beyond that
172. Just a minute, you get the advice from
the people who give the grants but you do not know who is giving
the grants, so how do you find out?
(Mr Savill) This is one of my problems. We have done
11 seminars in the regions over the past year to staff from RDAs,
local authorities, government offices, to explain the complications
of the state aid rules and we have had many reactions like the
gentleman from Stoke gave earlier, but we are clearly not doing
enough of it.
173. Who is meant to be doing it? I get the
impression from your answer that you do not think you are even
meant to be doing it.
(Mr Savill) Oh, we do.
174. Why can you not tell me?
(Mr Branton) There are two different things here.
The first thing is advice on what grants are available and the
second thing is advice on where state aid problems arise in those
grants. We provide the latter in the State Aids Unit of the DTI.
We do not provide the former. That is a question which goes much
broader. It goes to all departments, plus RDAs, plus government
offices, plus local authorities, Business Links, and all the ways
there are of advising people on grants they might be entitled
to. Our emphasis in state aids is to try to get at those intermediaries,
mainly the RDAs and government offices, as a first effort to try
to educate them as to how state aid rules work.
175. Just in case a developer is reading this
transcript and they are thinking, "I really want to know
where I find out about these grants", where would be their
(Mr Branton) I think the RDAs is the most obvious
place or the local council. It depends on the type of development.
176. So the responsibility really is with local
organisations to provide that? Is that what you are saying? It
is not central government's responsibility?
(Mr Savill) For the grants, yes, but it is our responsibility
to make sure that everybody knows about the state aids rules and
help people pick their way through
177. It is their job to raise people's expectations
and it is yours to dash them. Is that right?
(Mr Savill) That is often the way it ends up. What
we are trying to do is to help people through this rather complex
area and our ambition is not to dash their expectations but to
find a way through.
(Mr Branton) Often we think we can add value to RDAs
and government offices and local councils who come to us because
we can sometimes suggest ways of organising projects such that
state aids rules are not a problem. Where that is the case everybody
178. As a follow on from that, do you find that
the RDAs need much education? There is a worrying scenario of
people seeking advice from RDAs which are simultaneously being
educated by you about the rules. Are RDAs fully aware of all the
(Mr Savill) They are relatively new organisations;
no; there is more that could be done.
179. Going to the core of the thing, the former
PIPs are regarded as unfair competition. Do you actually agree
with that? Was it unfair competition?
(Mr Savill) It does not really help if I agree or
not. The Commssion took that view, they are competent for it.