Select Committee on Transport, Local Government and the Regions Twelfth Report



ANNEX

GLOSSARY

AID INTENSITY CEILINGS The maximum levels of aid from all sources that can be paid to a business as percentage of the total project cost in the Assisted Areas. They vary with the size of the enterprise.
 Tier 1 Tier 2 Non-Assisted Area
Large 35% 10-20% 0
Medium 50% 20-30% 7.5%
Small 50% 20-30% 15%[124]
ASSISTED AREAS"Assisted Areas are the areas in which the UK Government can provide regional assistance to business. EU rules do, however, permit other types of State aid (eg aid for small and medium sized enterprises) to be given to businesses outside Assisted
Areas."[125]
More information is provided in the House of Commons Library Standard Note on Assisted Areas, last updated on 17 August 2001
DE MINIMISAid not exceeding EUR 100,000 (approximately £60,000) over a three year period is exempted from the State aid regulations (excluding certain sectors).[126]
DIRECT DEVELOPMENTDevelopment carried out by the public sector or procured by it on competitive terms and which therefore does not involve State
aid.
EUROPEAN REGIONAL DEVELOPMENT FUND (ERDF) ERDF "aims to improve economic prosperity and social inclusion by investing in projects to promote development and encourage the diversification of industry into other sectors in areas lagging behind. This fund is available in Objective 1 and 2 areas."[127]
EUROPEAN STRUCTURAL FUNDS"Structural Funds are the European Union's main instruments for supporting social and economic restructuring across the Union. They account for over a third of the European Union budget. The UK's allocation from the Structural Funds for the period 2000 - 2006 is over £10 billion."[128]
FRAMEWORKThe Commission allows aid to certain sectors or for certain purposes. A Framework sets out the principles for such aid, in particular the type or level of aid that is likely to be considered acceptable and the type of schemes or projects that should be notified to the Commission.[129]
GAPThe difference (gap) between the cost of the development and its value on completion.
HORIZONTAL FRAMEWORKHorizontal frameworks are not intended to apply to particular industrial sectors, rather to achieve particular purposes, for example research and development or environmental protection.[130]
LARGE ENTERPRISE
  • employees or more;
  • annual turnover of over EUR 40 million or an annual balance sheet of over EUR27 million; or
  • more than 25% of the capital or voting rights owned by an enterprise which is not itself small or medium.[131]
MEDIUM ENTERPRISE
  • 249 employees;
  • turnover of EUR 7 - 40 mllion or an annual balance sheet of EUR 5 - 27 million; and
  • not than 25% of the capital or voting rights owned by an enterprise which is not itself small or medium.[132]
OBJECTIVE 1"Eligible areas are those that have less than 75% of EU average GDP. In the UK areas that qualify are Merseyside, South Yorkshire, Cornwall and the Scilly Isles, and West Wales and the Valleys."[133]
OBJECTIVE 2"Areas qualify for Objective 2, under four strands - industrial, rural, urban and fisheries. This objective covers nearly fourteen million people in the UK."[134]
REGIONAL AIDHorizontal aid Framework which permits aid, subject to the Aid Intensity Ceilings in the Assisted Areas.[135]
SMALL ENTERPRISE
  • Less than 50 employees;
  • annual turnover not exceeding EUR 7 million or annual balance sheet not exceeding EUR 5 million; and
  • not than 25% of the capital or voting rights owned by an enterprise which is not itself small or medium.[136]
SMESmall and medium sized enterprises. Subject to an exemption which allows aid to be paid outside Assisted Areas and to higher levels within Assisted Areas, subject to the Aid Intensity Ceilings.
STATE AID"Article 87(1) of the Treaty of Rome can be broken down into four tests to establish if a measure constitutes State aid. A State aid will only be present if all four tests are met.
Is the measure granted by the State or through State resources?
Does the measure favour certain undertakings or the production of certain goods?
Does the measure distort or have the potential to distort competition?
Is the activity tradable between Member States?"[137]
TIER 1 ASSISTED AREASAssisted Areas with the highest Aid Intensity ceilings. Identical to the Objective 1 areas.[138] Also known as Article 87(3)(a)
areas.[139]
TIER 2 ASSISTED AREASAssisted Areas with lower Aid Intensity ceilings Not identical to the Objective 2 areas.[140] A list of wards with Tier 2 Assisted Area status is set out in the House of Commons library Standard Note on Assisted Areas, last updated on 17 August 2001. Also known as Article 87(3)(c) areas.[141]





124   European Community State aids, Guidance for all Departments and Agencies, DTI, June 2001 Back

125   Assisted Areas, Standard Note, House of Commons Library, 17 August 2001 Back

126   European Community State aids, Guidance for all Departments and Agencies, DTI, June 2001 Back

127   www.dti.gov.uk/europe/structural.html#section1 Back

128   www.dti.gov.uk/europe/structural.html#section1 Back

129   European Community State aids, Guidance for all Departments and Agencies, DTI, June 2001 Back

130   European Community State aids, Guidance for all Departments and Agencies, DTI, June 2001 Back

131   European Community State aids, Guidance for all Departments and Agencies, DTI, June 2001 Back

132   European Community State aids, Guidance for all Departments and Agencies, DTI, June 2001 Back

133   www.dti.gov.uk/europe/structural.html#section1 Back

134   www.dti.gov.uk/europe/structural.html#section1 Back

135   European Community State aids, Guidance for all Departments and Agencies, DTI, June 2001 Back

136   European Community State aids, Guidance for all Departments and Agencies, DTI, June 2001 Back

137   www.dti.gov.uk/europe/stateaid/01.htm Back

138   Assisted Areas, Standard Note, House of Commons Library, 17 August 2001 Back

139   European Community State aids, Guidance for all Departments and Agencies, DTI, June 2001 Back

140   Assisted Areas, Standard Note, House of Commons Library, 17 August 2001 Back

141   European Community State aids, Guidance for all Departments and Agencies, DTI, June 2001 Back


 
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