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State aid and regional policy

State aid and regional policy. Paul Hadley Department for Trade and Industry United Kingdom. Introduction . 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

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State aid and regional policy

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  1. State aid and regional policy Paul Hadley Department for Trade and IndustryUnited Kingdom

  2. Introduction • Present arrangements • Context for reform • State aid and regional policy • Developing UK thinking on state aid reform

  3. Principal UK approvals Regional Aid map N 265/2000 Regional Selective Assistance N 731/2000

  4. Context for reform • A Modern Regional Policy for the UK, March 2003: • UK approach to regional policy • Consultation on future of Structural Funds • Joint DTI, HMT, ODPM target : to improve long term economic performance of every region

  5. UK approach to regional policy • UK productivity objectives – similar to those set outat 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

  6. State aid reform • 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

  7. An efficient state aid system • 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

  8. Tackling market failures with horizontal guidelines • 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

  9. Role of investment aid • 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

  10. UK proposals for revised guidelines • Limit aid to cases where it addresses the problems which drive regional under-performance • 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

  11. Where do we go from here? Three main areas for discussion: • Horizontal guidelines to address market failure • Simplification and modernisation • Spatial issues

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