WORLD TRADE  
ORGANIZATION  G/SCM/N/95/EEC/Add.15 
15 December 2003 
 (03-6598) 
Committee on Subsidies 
and Countervailing Measures Original:   English 
 
 
 
SUBSIDIES 
 
New and Full Notification Pursuant to Article XVI:1 of the GATT 1994  
and Article 25 of the Agreement on Subsidies and  
Countervailing Measures  
 
EUROPEAN COMMUNITIES 
 
Addendum  
 
 
 The following addendum to the notification of  the European Community relates to subsidy 
programmes of the United Kingdom . 
 
_______________ 
 G/SCM/N/95/EEC/Add.15 
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 UNITED KINGDOM 
 
TABLE OF CONTENTS 
Page  
 
1. Aeronautics Resea rch Programme .........................................................................................4 
2. Bio-Wise ................................................................................................................... .................5 
3. Business Links ............................................................................................................. .............5 
4. Cleaner Coal R & D Programme ...........................................................................................6 
5. Climate Change Levy – Exemption for Certain Secondary Recycling Processes ..............7 
6. Coalfields Enterprise Fund ................................................................................................. ....9 
7. Company Developm ent Programme ......................................................................................9 
8. Compete Programme .......................................................................................................... ...11 
9. Competitiveness in the Oil and Gas Supplies Sector (COGSS) Aid scheme .....................12 
10. Emissions Trading ......................................................................................................... ........14 
11. Energy Efficiency Best Practise Programme .......................................................................15 12. English Cities Fund ....................................................................................................... .........17 
13. Enterprise Grant Scheme ................................................................................................... ...18 
14. Enterprise Zones .......................................................................................................... ..........18 
15. Eureka Initiative ......................................................................................................... ...........19 
16. Export Vo ucher sch eme ..................................................................................................... ...20 
17. First Year Capital Allowances for Small and Medium Sized Businesses in 
Northern Ireland .............................................................................................................. ......20 
18. High Technology Fund ...................................................................................................... ....22 
19. Highland Opportunity ...................................................................................................... .....22 
20. Highland Prospect Ltd ..................................................................................................... .....23 
21. Highlands & Islands: Enterprises R & D Innovation Scheme for SMEs .........................24 
22. Highlands and Islands Enterprise scheme for Initial Investment and Job 
Creation ...................................................................................................................... ............25 
23. Home Shipbuilding Credit Guarantee Scheme ...................................................................26 24. Industry Forum Adaptation ................................................................................................. .27 
25. Invest NI – Property Development Agreement ...................................................................29 
26. Invest NI – Property Development scheme ..........................................................................30 27. Invest NI – Sites and Factories ........................................................................................... ..31 
28. Launch Investment for Ci vil Aerospace Projects ...............................................................31 
29. LINK Collaborative Research scheme .................................................................................32 
30. Local authorities – Assistance for SMEs ..............................................................................33  G/SCM/N/95/EEC/Add.15 
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 31. Merseyside – Special Area & Key Side Investment Grant Scheme ...................................34 
32. MG rover training aid ..................................................................................................... ......35 
33. NETS (New Entrants’ Training Scheme) ............................................................................36 34. New Deal .................................................................................................................. ...............37 
35. NI – Aid in favour of Northern Ireland Events Company .................................................39 
36. NI – Buying Time Assistance Scheme ..................................................................................40 
37. NI – CCL Exemption for Northern Ireland Natural Gas ..................................................41 38. NI Selective Financial Assistance ......................................................................................... 42 
39. NI Technology Fund (NITECH) ...........................................................................................43 40. NI Tourism Challenge Fund ................................................................................................. 44 
41. NI Tourist Deve lopment Scheme ..........................................................................................45 
42. NI – Urban Developmen t Grant (UDG) Scheme .................................................................46 
43. NI – Viridian Growth Fund ................................................................................................. .47 
44. Non-Fossil Fuel Obligation (NFFOs) ....................................................................................49 45. Open Courses .............................................................................................................. ...........50 
46. Partnership support  for regeneration ..................................................................................51 
47. R and D for Renewable and Sustainable Energy ................................................................52 48. R&D Tax Credit ............................................................................................................ .........53 
49. Regional Selective Assistance ............................................................................................. ...55 
50. Regional Venture Capital Funds ..........................................................................................56  
51. Renewables Obligation and Capital Grants for Renewable Technologies .......................57 
52. Rover Hams Hall Training support .....................................................................................58 
53. Scotland - Grants for Owner Occupation (GRO) ...............................................................59 54. Seagate Strategic Research Programme ..............................................................................61 55. Shipbuilding Intervention Fund ...........................................................................................6 2 
56. Single Regeneration Budget ................................................................................................ ..62 
57. SMART ..................................................................................................................... ..............63 
58. SMART (Scotland) .......................................................................................................... .......64 
59. South Yorkshire productive investment scheme .................................................................66 60. Start programme ........................................................................................................... .........67 
61. The Britech Fund .......................................................................................................... .........68 
62. Wales Tourist Board – Inv estment Support Scheme ..........................................................69 
63. WDA Partnership Development ...........................................................................................70 
64. WDA Property  for Business ................................................................................................. .71 
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 1. Aeronautics Research Programme  
 [Formerly known as Civil Aircraft Research  and Technology Demons tration (CARAD)]  
 
The Programme superseded CARAD on 1
 April 2000 but retains the same objectives, criteria 
for support and level of funding as applied to CARAD. 
 
(a) Period covered by the notification 
 2001 and 2002. 
 (b) Policy objectives  
To maintain the competitiveness of the UK aer onautics industry by ensuring that essential 
aircraft technologies are available in the long term.   The Aeronautics Research Programme 
helps UK industry overcome the problem of financing long-term research. 
 (c) Background and authority for the scheme 
 Civil Aviation Act 1982. 
 (d) Form of the subsidy  
 Grant. 
 (e) To whom and how the subsidy is provided 
Support for up to 50 per cent of eligible costs for collaborative projects is available in core 
civil aircraft technology sectors.   Beneficiar ies include companies, research establishments 
and universities. 
 (f) Total amount budgeted 
 2001 £19,997 k 
 2002 £15,804 k  
Note: The Programme is managed by UK fiscal year  (1 April to 31 March) and the respective 
cash spend figures for these periods are: FY01/02 (£19,997k); FY02/03 (£21,266k). 
 
(g) Duration of programme 
The Scheme’s duration is not limited.  The current phase covers the five years from 
1 April 2001 to 31 March 2006.  The EC approve d financing for the period from 1 April 1999 
to 31 March 2001, with re-notification becoming necessary after five years.    
 
(h) Assessment of trade effects 
The objective is to support long-term pre- competitive research in essential aircraft 
technologies, not to assist production.    
  G/SCM/N/95/EEC/Add.15 
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 2. Bio-Wise  
(a) Period covered by the notification 
 2001 and 2002. 
 (b) Policy objectives  
To promote the use of biotechnology in the UK manufacturing industry and develop the UK 
biotechnology suppliers sector, by demons trating biotechnology uses and benefits. 
 
(c) Background and authority for the scheme 
The Statutory Authority for public expenditure  under this programme is the Science and 
Technology Act 1965.  The BIO-WISE Programme was announced by the Secretary of State 
for Trade and Industry in November 1999. 
 (d) Form of the subsidy  
• Grant funding of Demonstration Projects and Case Studies.   
• In kind Support in the form of advice to co mpanies on the possible uses and benefits of 
biotechnology to their specific processes. 
 
(e) To whom and how the subsidy is provided 
Grants are paid to collaborations of manuf acturing companies and biotechnology supplier 
companies, quarterly as a percentage of eligible project costs.  Up to 4 hours (EU State aid limit) of in kind support in the form of advice is given to 
companies on the possible benefits biotechnology can give their company. 
 (f) Total amount budgeted 
 2001:  Grant Aid:  £327,451 
  In Kind:  £123,799 
 2002:  Grant Aid:  £234,170 
 In Kind:   £178,598 
 (g) Duration of programme 
The Programme was to run for 4 years, ending on 31 March 2003.  An Exit strategy has now 
been implemented, extending the Programme to 31 December 2004. 
 (h) Assessment of trade effects 
An impact assessment of the BIO-WISE Program me and its effects in currently underway.  
Final statistics will be available by December 2003. 
 3. Business Links  
(a) Period covered by the notification 
 2001 and 2002. G/SCM/N/95/EEC/Add.15 
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(b) Policy objectives  
The scheme is aimed at improving the consiste ncy and quality of business support to SMEs.  
And providing a Gateway to the many Gove rnment programmes aimed at SMEs and pre-
starts with the aim of simplifying the process. 
 
(c) Background and authority for the scheme 
SBS is an executive agency of the DTI.  Authority for this scheme comes from the DTI, HM 
Treasury and the EU.  
Legal basis are covered by the Employment Ac t 1973 sections 2(1) and 2(2) (as substituted by 
section 25 of the Employment and Training Ac t 1988) and the Industrial Development Act 
1982, section 11.  
(d) Form of the subsidy  
Grant. 
 (e) To whom and how the subsidy is provided 
Business Link Operators (BLOs) provide (oft en subsidised) business advice to SMEs, pre-
starts and individuals. Grant funding is drawn down on the basis of identified need on a monthly basis using an invoice process. 
 
(f) Total amount budgeted 
 2001: £140 million 
2002: £140 million  
(g) Duration of programme 
1994-present, BLOs work on a three year rolling contract with BL Core Service funding 
allocations made annually.  Fundi ng covers one year at a time. 
 (h) Assessment of trade effects 
Customer Satisfaction and penetr ation levels recorded quarterly.  Gross Value Added (the 
recording of the financial impact BLO advice has made on a business) to come on-line by 
2003/04.  Targets relating to the creation of busin ess start-ups are applicable to all BLOs (but 
targets are owned by RDAs) and are recorded quarterly. 
 
4. Cleaner Coal R & D Programme 
 [Supporting technology transfer and export promotion activities are included] 
 (a) Period covered by the notification 
 2001 and 2002.  
  G/SCM/N/95/EEC/Add.15 
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 (b) Policy objectives  
(a) To provide seed corn fund ing to CCT stakeholders. 
(b) To act as a focus to enable a collaborative programme of R&D. 
(c) To promote the development and export of  environmentally friendly technologies. 
(c) Background and authority for the scheme 
 Science & Technology Act 1965. 
 (d) Form of the subsidy  
Grant. 
 
(e) To whom and how the subsidy is provided 
The subsidy is paid to contractors (2) w ho manage DTI’s Programme.  They manage a 
portfolio of projects on behalf of the DTI.  Subsidy is paid to them both for their management costs and as reimbursement (for having paid their sub-contractors). 
 
(f) Total amount budgeted 
 FY 2001/02 £4.4M (cash). 
FY 2002/03 £4.5M (accruals). 
 (g) Duration of programme 
 6 years from 1999. 
 
(h) Assessment of trade effects 
 No information. 
 
5. Climate Change Levy – Exemption for Certain Secondary Recycling Processes  
(a) Period covered by the notification 
 2001 and 2002. 
 (b) Policy objectives  
To negate any competitive disadvantage to those businesses using taxable commodities in 
selected recycling processes that compete with  businesses using exempt taxable commodities 
in “non-fuel” and “dual-use”, less environmentally benign primary processes. 
 
(c) Background and authority for the scheme 
(i) The European Commission granted State Aids approval for the exemption 
from CCL of taxable commodities used in “dual-use” and “non-fuel” 
processes. The Commission also agreed  with the UK Government’s proposal 
that relief be extended to environmenta lly friendly secondary (i.e. recycling) G/SCM/N/95/EEC/Add.15 
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 processes, which compete with primary processes benefiting from the dual-
use and non-fuel relief. 
(ii) The exemption is intended to remove the competitive disadvantage that 
would otherwise be experienced by environmentally beneficial recycling processes, which compete with primary processes that are eligible to receive 
dual-use and non-fuel relief. The exemption is thus designed to address a 
very limited circumstance in which the structure of the CCL could produce a result contrary to its overall environmental aims. The measure was introduced by extra statutory concession on 2 July  2002, with legislation now being 
introduced in the 2003 Finance Bill. 
(d) Form of the subsidy  
Tax exemption – operators of recycling processes that compete with processes that benefit 
from the non-fuel and dual-use exemptions do not  pay the levy on the supply of taxable 
commodities as defined in Finance Act 2000 Part II. 
 
(e) To whom and how the subsidy is provided 
The subsidy is provided to operators of  recycling processes only in very limited 
circumstances. For taxable commodities to be e ligible for the exempti on the recycling process 
in which they are used must: (a) be less ener gy intensive than the primary process; (b) be 
liable to a higher CCL charge per tonne of output than the primary process; and (c) the objective of the recycling process must be to pr oduce the same output as the primary process.  
 
Relevant operators inform their energy suppliers  that they are claiming the exemption, and 
their energy bills for taxabl e commodities used in the rele vant process are henceforth 
exclusive of CCL. 
 
(f) Total amount budgeted 
The full rates of the levy applied to taxabl e commodities during the period in question (i.e. 
2001-02) are: coal 0.15 (UK) pence per kWh; natural gas  0.15 (UK) pence per kWh; 
electricity  0.43 (UK) pence per kWh; and LPG  0.07 (UK) pence per kWh. These amounts 
represent the maximum unit value of the subsidy. 
 
 The following amounts have been budgeted for: 
  2001: £1.9 million  2002: £2.5 million  
(g) Duration of programme 
The exemption is scheduled to run from 1 April 2001 to 31 March 2011 – i.e. a period of 
10 years. 
 (h) Assessment of trade effects 
The exemption applies to individual processes me eting specific selection criteria. More than 
one company, operating in different sectors of the economy, may operate an eligible process. 
At April 2003, exemptions have been agreed for energy used in 3 different processes, 
covering 19 companies: four companies processing steel scrap using an electric arc furnace;  G/SCM/N/95/EEC/Add.15 
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 fourteen individual companies’ applications  for taxable commodities used in various 
treatments of aluminium scrap to produce recycl ed aluminium; and one company using gas in 
waste lead smelting. Production, import and export statistics are not available at this level of 
disaggregation. It is therefore not possible to provide data that could inform a meaningful assessment of trade effects. 
6. Coalfields Enterprise Fund 
(a) Period covered by the notification 
 2001 and 2002.  
 (b) Policy objectives  
Coalfields Enterprise Fund is a venture fund to  provide finance to start up and developing 
companies in a define list of areas which are former coal mining areas. 
 (c) Background and authority for the scheme 
 Powers under the Industrial Development Act 1982 
 
(d) Form of the subsidy  
Equity, quasi-equity and loans. 
 (e) To whom and how the subsidy is provided 
 Subsidy to the Fund in the form of a loan. 
 
(f) Total amount budgeted 
 2001:  N/A 
 2002:  N/A  
Please see note below under 7. 
 (g) Duration of programme 
 Fund has a limited life of 10 years running from 2003 to 2014. 
 (h) Assessment of trade effects 
 Limited - Increase in the number of small and medium size companies. 
 
7. Company Development Programme 
(a) Period covered by the notification 
 2001 and 2002.  
 G/SCM/N/95/EEC/Add.15 
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 (b) Policy objectives  
To encourage companies to plan and structure their training and develop activities in line with 
their key business objectives.  To promote management development by enc ouraging companies to invest in process and 
competence based management training activitie s as well as functiona l and knowledge based 
activities. To encourage companies to focus their tr aining and development activities on nationally 
recognised qualifications and accreditations. 
 
To encourage training and development within  projects designed to improve international 
competitiveness and export-led profitability and growth. 
  To help attract inward investment projects to Northern Ireland.  
 To ensure that the issues of targeting social  needs, equality and fair treatment are addressed. 
  To encourage companies to establish their own training infrastructures. 
 (c) Background and authority for the scheme 
The Company Development Programme was first introduced in 1990 and managed by the 
Training & Employment Agency.  The programme is now managed by Invest NI the new 
economic development agency which was established in April 2002.  Industrial Development Act (Northern Ireland) 2002. 
 (d) Form of the subsidy  
Grant. 
 (e) To whom and how the subsidy is provided 
The programme is open to companies in ma nufacturing and tradeable services which are 
engaged in exporting or import s ubstitution and to hotels and licensed guest inns certified by 
the Northern Ireland Tourist Board. 
 
(f) Total amount budgeted 
 2001: £11.5m 
2002: £9.5m 
 
(g) Duration of programme 
Ongoing. 
 (h) Assessment of trade effects 
During the two years 2000/01-2001/02 236 o ffers of assistance were made under the 
Company Development Programme.  All assistance was linked to the achievements of 
business objectives. 
  G/SCM/N/95/EEC/Add.15 
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 8. Compete Programme  
(a) Period covered by the notification 
 2001 and 2002.  
 (b) Policy objectives  
To stimulate manufacturing businesses in Northern  Ireland to develop innovative and high 
technology products and processes within a stra tegic business framework that improves their 
national and international competitiveness. 
 (c) Background and authority for the scheme 
The Compete programme was previously offe red by the Product and Process Development 
programme.  The programme operated under State Aid No N206/92 Ref SG(92)D/7501 
(5 June 1992).  This programme had re-no tification approval granted on 26 September 1995, 
up to the end of 1998 (State Aid No NN 92/95 reference No SG(95) D/11951), has re-
notification currently pending Ref NN96/00 (N 539/00) and has a new notification for the 
period 2003 to 2008 also currently pending Ref N92/2003. 
  Industrial Development Ac t (Northern Ireland) 2002. 
 (d) Form of the subsidy  
 R&D grant. 
 
(e) To whom and how the subsidy is provided 
Grants are provided to Northern Ireland manuf acturing businesses and internationally tradable 
service businesses including software.  Grant is awarded to individual businesses to develop 
innovative new products and manufacturing processes.  Grant is paid in arrears at an approved 
intensity against approve d and vouched expenditure. 
 (f) Total amount budgeted 
 2001: £4,76m 
 2002: £4.97m  
 Average Compete grant in 2001: £51 k 
Average Compete grant in 2002: £55 k 
 (g) Duration of programme 
The Compete programme duration is indefin ite.  The programme was launched in 1995 and 
Invest NI has no plans to terminate the programme. 
 (h) Assessment of trade effects 
The Compete Programme is formally evaluated every 5 years.  Segal, Quince Wicksteed 
consultants, reported the last evaluation in J une 1999.  The study included as assessment of 
the achieved and expected effects of Compete grant on increased sales related to 94 projects.  
In terms of cost-effectiveness of the Compete programme, the report concluded that £1 of G/SCM/N/95/EEC/Add.15 
Page 12  
 
 Compete assistance over 1994-98 is estimated to  be associated with £7.60 of sales in 1998 
and anticipated sales in 2000 of £13.20. 
 
Every Compete project is subjected to a ‘Post project completion evaluation’ three years after 
the end of the project to measure the commerc ial success of the project.  A study carried out 
in 2001 of the post project evaluations for 106 projects started and completed since April 
2001 gave the following results:  
 Commercial success:
 Highly successful    24% 
   Successful     41% 
   Partially successful    19% 
   Not successful     16%  
 
9. Competitiveness in the Oil and Gas Supplies Sector (COGSS) Aid scheme 
(a) Period covered by the notification 
 2001 and 2002.  
 (b) Policy objectives  
Project proposals must be  relevant to oil and gas exploration or production.  This means that 
their ultimate objective must be goods or services that will be marketed directly or indirectly to oil and gas companies, in the UK or in expor t markets.  OGID concen trates its resources on 
projects in the following areas:  
 
• Subsea Production Systems 
• Advanced Technology for Underwater Engineering 
• Exploration Technologies 
• Drilling and Production Technologies 
• Reservoir Technologies 
• Onshore Oil, Gas & Petrochemicals 
• Chemical/Process Equipment 
 
Projects must involve significant technological risk and innovation.  Routine product 
development is not supported under the programme. 
 
Projects must need Government support in order to go ahead, or for the project to proceed rapidly enough to stand a reasonable chance of commercial success.  If the project is 
receiving support under any other Government sch eme, it is not eligible for support from 
OGID. 
 
Projects must be commercially well conceived.  Applicants must  demonstrate a good understanding of the market sector at which their project is aimed, to show that they have 
thought through the obstacles, and that they have a credible route to commercialisation.  OGID will need to consider whether the applicant has, or is likely to be able to raise, any 
additional funding necessary to commercialise the project. 
 
Applicants must be companies, organisations su ch as universities or research institutions (or, 
exceptionally, individuals) operating in the UK and have the technical resources to undertake 
the project successfully, and the financial resour ces to provide their share of the funding, plus 
an adequate margin for contingency.  G/SCM/N/95/EEC/Add.15 
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In all but exceptional cases, the project must be collaborative i.e. there must be financial and 
technical input from companies ot her than the applicant e.g. from oil companies, companies 
in the oil and gas supplies sector or other parties with a direct interest in the development or 
commercialisation of the product or service.  OGID’s contribution to the costs of the project 
cannot exceed that of the applicants’ and, on  average, OGID has funded about 25 per cent of 
the costs of projects it has supported recently.  OGID can sometimes help applicants to identify companies who may be interest ed in supporting their project. 
 (c) Background and authority for the scheme 
Oil and Gas Industry Development (OGID Dir ectorate) which was formerly known as 
Infrastructure and Energy Projects (IEP) in Ju ly 1998 introduced a programme (COGGS) of 
support to the improvement of the competitiven ess of the UK suppliers to the oil and gas 
industry. The programme includes support to the development of new technology by SMEs and a contribution to a LINK programme in collaboration with EPSRC.    
 
IEP (now OGID) considered that the careful u se of this relatively low amount will lead to 
significant improvement in the competitiveness of  an industry which has grown from a very 
low level of activity in the 1970s to be the major player on the UKCS (£9Bpa) and has a leading position in the world-wide market (£200Bpa).   The funds are used to promote co-operation and collaboration across the full spectru m of scientific researchers, engineering 
companies and end-users oil companies. 
 
IEP, (now OGID and formerly OSO), previously operated a programme of support to UK companies predominantly SMEs, involving direct support to companies and participation in a 
LINK programme (Hydrocarbon Reservoir).      The ROAME statement for that programme 
of work covered the period 1995-1998. The revised  programme covers within the oil and gas 
sector only 
 
• development of new technology in SMEs 
• a LINK programme with E PSRC (research council) 
• projects covering improvements in business practice and management in the sector 
• studies of the sector's performance 
• subscriptions to industry bodies pursuing some of OGID’s objectives. 
 
Legislation under Section 8 of the Industrial  Development Act 1982 and Section 5 of the 
Science and Technology Act 1965. 
 (d) Form of the subsidy  
The COGSS grant is a notified state aid. 
 
(e) To whom and how the subsidy is provided 
The funds are used to promote co-operation and collaboration across the full spectrum of 
scientific researchers, engineering co mpanies and end-users oil companies. 
 (f) Total amount budgeted 
 2001: £1.7m 
 2002: £1.7m G/SCM/N/95/EEC/Add.15 
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(g) Duration of programme 
1998 – present. 
 (h) Assessment of trade effects 
The COGSS programme covers a broader range of subjects which contribute to the overall 
improvement of the performance of the sector .   The development of new technology 
continues to be the main thrust but at a lower leve l than in previous years.   It should be noted 
that a high level of leverage of funds used fo r this purpose has been achieved in the past.   
OGID continues to encourage applicants to  seek out assistance from the end-user oil 
companies for as many projects as possible. 
 
10. Emissions Trading 
(a) Period covered by the notification 
 2001 and 2002.  
 
(b) Policy objectives  
The objectives of the scheme are threefold – to  achieve a significant amount of absolute 
emission reductions at a reasonable cost, to en able business to gain practical experience of 
emissions trading ahead of a European and international system, and to help the City of London establish itself as a global centre for emissions trading. 
 
(c) Background and authority for the scheme 
The UK ETS has been established through a series of voluntary agreements between 
participants and the UK Government which incorpor ate the rules of the scheme.  In respect of 
'direct participants', the agreements are c ontracts under which the UK Government will make 
incentive payments to participants comply ing with the scheme rules, including annual 
commitments to limit emissions.  The Government 's authority to make incentive payments 
derives from section 153 of the Environmental Protection Act 1990.  In respect of the remaining target holders, the agreements are climate change agreemen ts under Schedule 6 of 
the Finance Act 2000 which allow those meeting energy efficiency and emissions targets to benefit from a lower rate of energy taxation.  
 
(d) Form of the subsidy  
Incentive payments for emission reductions. 
 (e) To whom and how the subsidy is provided 
The incentive payments are paid to Direct Pa rticipants (see 4 above) provided they have 
complied with the scheme rules. Principally th is includes ensuring that the participant has 
sufficient allowances in their ‘complian ce account’ (an account on the internet-based 
Emissions Trading Registry) to cover their ve rified annual emissions by the reconciliation 
deadline (31 March of each year). 
  G/SCM/N/95/EEC/Add.15 
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 The incentive money is paid within 28 working days of receipt of an annual emissions 
statement that has been verified by an accredite d verifier. The money is then paid into the 
participant’s nominated bank account either by an automated or manual process. 
 
The Climate Change Agreement Participants receive no incentive payment as they already 
receive an 80 per cent reduction on the Climate Change Levy (a tax on business for energy 
use). 
 (f) Total amount budgeted 
 2001: N/A 
2002: £42,270,641 
 (g) Duration of programme 
 April 2002 to March 2007. 
 
(h) Assessment of trade effects 
Minimal. The UK emissions trading scheme is a voluntary scheme whereby individual 
participants only receive the incentive paym ents for emission reductions going beyond 
business as usual emissions and those reducti ons required under existing regulations. The 
payment is to induce the participants to undert ake this added abatement and to undertake the 
risk of volunteering to enter a new market and take on a binding absolute cap on emissions.  
 
11. Energy Efficiency Best Practise Programme  
(a) Period covered by the notification 
 2001 and 2002.  
 
(b) Policy objectives  
To help meet the UK Climate Change targ ets to reduce greenhouse gas emissions by 
encouraging businesses to move towards a low carbon economy and contribute to the shaping of the emerging low carbon technology market.   To encourage the development and take-up of energy efficient and low carbon technologies 
by providing discretionary grants towards research and development projects in these areas, 
and via the provision of independent aut horitative information and guidance on energy 
efficiency performance measures and technol ogies and events and seminars for all non-
domestic energy users. 
 
(c) Background and authority for the scheme 
The Energy Efficiency Best practice progra mme was established in 1989 as the UK’s main 
energy efficiency information, advice and resear ch programme for organisations in the public 
and private sectors. 
 
The Carbon Trust has been established by Gove rnment to help businesses prepare for a low 
carbon future and to exploit the commercial opport unities that are on offer.  The Carbon Trust 
is responsible for administering support to  business through the non-domestic part of the 
Energy Efficiency Best Practice programme, which has been renamed as Action Energy. G/SCM/N/95/EEC/Add.15 
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Legal Authority for the Scheme is under powers contained in Section 5 of the Science and 
Technology Act 1965 and also (since the Carbon Trust are now responsible for running the 
scheme) under powers contained in Statut ory Instrument 2002 No 1686, made under 
Section 153(1) of the Environmental Protection Act 1990. 
 
(d) Form of the subsidy  
Grants towards projects of research and development of energy efficiency and low carbon 
technologies.   
Support via the provision of independent aut horitative information and guidance on energy 
efficiency performance measures and technologi es and by hosting events and seminars for all 
non-domestic energy users.  
(e) To whom and how the subsidy is provided 
To be granted support the beneficiary must be a company registered in the UK (this can 
include UK subsidiaries of overseas companies) or an organisation based in the UK. 
 
For R&D grants for projects to be eligible they  must meet a number of criteria, including 
potential to stimulate significant energy savings, clear route to successful exploitation of the 
results, and that without support the project would not go ahead. 
 
 Support will be available for the following stages of R&D:   Fundamental research  Industrial research 
 Pre-competitive development 
 Definition stage or feasibility studies  
Eligible costs include: personnel costs, cost of instruments, equipment and land and premises, 
consultancy and equiva lent services, additional overheads, other operating expenses.  
 
Aid is granted as a percentage of the eligible  costs.  The maximum aid intensities for the 
different stages of R&D are as follows: 
  Fundamental research 100%  Industrial research   50% 
 Pre-competitive development   25% 
 Feasibility study for in dustrial research 75% 
Feasibility study for pre-competitive development  50% 
 
There is the potential to increase the maximum aid intensity for Small and Medium Sized Enterprises, beneficiaries in  87(3)(a) and 87(3)(c) areas and for programmes undertaken as 
part of the Community’s current  framework programme for R&D. 
 
(f) Total amount budgeted 
 2001: Approximately £0.8 million. 
 2002:    Approximately £1.5 million.* 
 
*Estimated figure.  Figures for both 2001 and 2002 are based on financial years.  G/SCM/N/95/EEC/Add.15 
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(g) Duration of programme 
Ongoing. 
 (h) Assessment of trade effects 
There is no effect on trade as the only direct financial support relates purely to research, 
demonstration and development projects. 
 
12. English Cities Fund 
(a) Period covered by the notification 
 2001 and 2002.  
 (b) Policy objectives  
The scheme was set up to assist private investment in neglected areas of the country to bring 
brownfield sites and empty property back into use. 
 
(c) Background and authority for the scheme 
English Cities Fund is one of a number of measures designed to meet the Government’s 
Urban White Paper commitments to bring brownf ield sites and empty property into use and 
was approved as legitimate State aid by the European Union.  
The powers for this scheme are found in the Leasehold Reform, Housing and Urban 
Development Act 1993. 
 (d) Form of the subsidy  
The English Cities Fund is a limited partnership property development and investment vehicle 
set up as a joint venture between the public and private sectors. 
 (e) To whom and how the subsidy is provided 
This is not a grant-making fund but will opera te through long term investment solutions – 
investing in mixed use projects on the fringes of towns and city centres. 
 
(f) Total amount budgeted 
 2001: £117,000 (to one project) 
2002: £504,000 (to one project) 
 (g) Duration of programme 
 This approval remains in force until 2006. 
 (h) Assessment of trade effects 
None. 
 G/SCM/N/95/EEC/Add.15 
Page 18  
 
 13. Enterprise Grant Scheme 
(a) Period covered by the notification 
 2001 and 2002.  
 (b) Policy objectives  
Capital grant to aid expansion or modernisation of businesses including the assistance of start-
ups.  The creation of jobs is part of regional criteria but is not mandatory. 
 (c) Background and authority for the scheme 
 Section 8 of the Industrial Development Act 1982. 
 
(d) Form of the subsidy  
Grant. 
 (e) To whom and how the subsidy is provided 
Small businesses in Tier 1, Tier 2 and Tier 3 assisted areas of England, with fewer than 
250 employees.  Payments are made when businesses reach project expenditure trigger points as set out in their offer letter (mainly quarterly. 
 (f) Total amount budgeted 
 2001:  £3.6 million total budget spent overall 
2002:  £9.9 million total budget spent overall 
 (g) Duration of programme 
 3 years from 1 April 2000. 
 
(h) Assessment of trade effects 
 Scheme not yet evaluated, as it is relatively new. 
 
14. Enterprise Zones 
(a) Period covered by the notification 
 2001 and 2002.  
 
(b) Policy objectives  
To encourage industrial and commercial activ ity by the removal of certain fiscal and 
administrative burdens in certain defined areas. 
 
(c) Background and authority for the scheme 
The powers for this scheme are found under s179  and schedule 32 of the Local Government, 
Planning and Land Act 1980.  G/SCM/N/95/EEC/Add.15 
 Page 19 
 
 
  
(d) Form of the subsidy  
Enterprise Zones are intended to encourage vi gorous private-sector activity by removing 
certain tax burdens and by relaxing or speedi ng up the application of some statutory or 
administrative controls. 
 
(e) To whom and how the subsidy is provided 
Private sector activity within the Zone receives benefits through the removal of certain tax 
benefits. 
 
(f) Total amount budgeted 
 2001/2002: £62,424 
2002/2003: £68,859 (forecast) 
 (g) Duration of programme 
 Enterprise Zones are designated by th e Government for a period of 10 years. 
 This approval remains in force until 2006.  (h) Assessment of trade effects 
 None 
 15. Eureka Initiative 
(a) Period covered by the notification 
 2001 and 2002.  
 (b) Policy objectives  
To encourage and assist collaborative research and development projects between European 
companies, research organisations a nd higher education institutes (HEIs). 
 (c) Background and authority for the scheme 
 Science and Technology Act 1965. 
 
(d) Form of the subsidy  
Grant of up to 50 per cent of eligible project costs. 
 (e) To whom and how the subsidy is provided 
 Mainly given to SMEs, research organisations and HEIs.  Grant paid quarterly in arrears. 
 
(f) Total amount budgeted 
 2001: £3.5m. 
2002: £3.5m. G/SCM/N/95/EEC/Add.15 
Page 20  
 
  
(g) Duration of programme 
 Launched in 1985.  No end date set. 
 (h) Assessment of trade effects 
 Not available. 
 
16. Export Voucher scheme  
(a) Period covered by the notification 
 2001 and 2002.  
 
(b) Policy objectives  
To encourage SMEs to make use of outside assistance to develop a planned and structured 
approach to international trade a nd identify a clear export strategy. 
 
(c) Background and authority for the scheme 
 EVS was notified to the EU in 1995 and introduced in 1996. 
 (d) Form of the subsidy  
Grant. 
 
(e) To whom and how the subsidy is provided 
SMEs by way of a voucher scheme. 
 (f) Total amount budgeted 
Year 2001 – £359,179. 
 
(g) Duration of programme 
 From 1996 until 2001, each vouche r had a duration of 3 months. 
 (h) Assessment of trade effects 
 A valuable asset but under-utilised. Now replaced. St atistical analysis of EVS is not available. 
 
17. First Year Capital Allowances for Small a nd Medium Sized Businesses in Northern 
Ireland 
(a) Period covered by the notification 
 2001 and 2002.  
  G/SCM/N/95/EEC/Add.15 
 Page 21 
 
 
 (b) Policy objectives  
 Fostering indigenous enterprise and growth in Northern Ireland. 
 (c) Background and authority for the scheme 
The scheme was introduced in May 1998, for a period of 4 years, to help underpin the Good 
Friday Peace Agreement reached on 10 April 1998. 
 
It was notified to the European Commission as a State aid and approved by them under reference N579/98 
 
Legislation was introduced in the Finance Ac t 1998 (Section 83) and s ubsequently amended 
in Finance Act 1999 (Section 78) to comply with EC competition law. 
 (d) Form of the subsidy  
Tax concession. 
 
(e) To whom and how the subsidy is provided 
The subsidy is given as tax relief through a re duction in taxable profits equal to 100 per cent 
of the value of the qualifying capital investment. It is available to all small and medium businesses (both companies and unincorporated) who have taxable profits and incur spending 
on designated assets for use primarily in Northern Ireland. This compares to the relief 
normally available for SMEs in the UK where ta xable profits are reduced by 40 per cent of 
the value of the qualifying capital investment. 
 
Spending on certain classes of assets does not qualify under the scheme.  This includes expenditure on machinery and plant for leasi ng or letting on hire, cars, sea-going ships, 
railway assets or long-life assets, goods vehicles used in a road haulage business and assets 
for use in the agriculture and fishing sector ex cept where the expenditure has been authorised 
by the Northern Ireland authorities 
 (f) Total amount budgeted 
The figures below are estimated total costs, based  on estimates of the amount of investment in 
plant and machinery by SMEs in Northern Ireland. 
  2001: £25m 
2002: £20m 
 
(g) Duration of programme 
 Until 11 May 2002. 
 (h) Assessment of trade effects 
 No measurable effects expected. 
 G/SCM/N/95/EEC/Add.15 
Page 22  
 
 18. High Technology Fund 
(a) Period covered by the notification 
 2001 and 2002.  
 (b) Policy objectives  
The fund aims to address gaps in the provision of  equity funding for investment in early stage 
high technology SMEs by creating a “fund of fu nds”.  The Government has invested £20 
million into the “fund of funds” and this has been used to attract £126.1 million of investments into the fund from private sector i nvestors who had not previously invested in the 
early stage high technology sector of the venture capital market. 
 
(c) Background and authority for the scheme 
 Industrial Development Act 1982. 
 (d) Form of the subsidy  
There is no subsidy in the form of grants, loan s or tax concessions.  Instead, investors in the 
fund gain an enhanced return on their investme nt as a result of the subordinated position taken 
by the Government investment in relation to the timing of drawdowns and returns from 
realisations of investments. 
 (e) To whom and how the subsidy is provided 
It is only investors in the fund that gain from an enhanced return on their investment. 
 (f) Total amount budgeted 
The Government has invested, as a commercial in vestor, £20 million into the fund. £3 million 
was invested in 1999/2000 and £17 million was invested in 2000/2001. 
 
The £20 million was a “one-off” investment  and no further Government funds will be 
invested in the fund. 
 (g) Duration of programme 
 Two years initially, although the fund will have a minimum life of 10 years. 
 
(h) Assessment of trade effects 
None, the fund was created to address gaps in th e provision of equity funding for investment 
in early stage high technology SMEs. 
 
19. Highland Opportunity 
(a) Period covered by the notification 
 2001 and 2002.  
  G/SCM/N/95/EEC/Add.15 
 Page 23 
 
 
 (b) Policy objectives  
A regional scheme for investing in new or growing SMEs in the Highland Council area of 
Scotland, for development, dive rsification and job creation. 
 (c) Background and authority for the scheme 
 Section 48(4) of the Finance Act 1982. 
 (d) Form of the subsidy  
Loans in the range £1,000 - £50,000. 
 
(e) To whom and how the subsidy is provided 
Loans are provided to SMEs, unsecured below £2 0,000 and secured above that threshold, up 
to a maximum of 7 years duration at a maximum interest rate of 5 per cent. 
 (f) Total amount budgeted 
 2001/02:  £278,000 
2002/03:  £259,775 
 (g) Duration of programme 
 Open-ended. 
 
(h) Assessment of trade effects 
In year 2001/02, the most recent for which figures are available, the number of SMEs 
receiving loans was 45 with an  average loan of £6,177. 
  127 full-time equivalent jobs were created.  20. Highland Prospect Ltd  
(a) Period covered by the notification 
 2001 and 2002.  
 (b) Policy objectives  
 To secure major investment projects in the Highlands of Scotland. 
 (c) Background and authority for the scheme 
 Section 83 of the Local Government (Scotland) Act. 
 
(d) Form of the subsidy  
Loans. 
 G/SCM/N/95/EEC/Add.15 
Page 24  
 
 (e) To whom and how the subsidy is provided 
Any business enterprise in the Highland Area can apply for consideration for a low interest 
secured loan. 
 (f) Total amount budgeted 
 2001:  £403,000 
2002:  £650,000 
 (g) Duration of programme 
Indefinite. 
 
(h) Assessment of trade effects 
Minimal. 
 
21. Highlands & Islands: Enterprises R & D Innovation Scheme for SMEs 
(a) Period covered by the notification 
 2001 and 2002.  
 (b) Policy objectives  
To stimulate and support applied R&D by SMEs, as a precursor to i nvestment leading to 
diversification and expansion of the local ec onomy. There is a strong link between innovation 
by businesses and regional economic growth.  Th e level of expenditure by firms on R&D in 
the Highlands & Islands is less than the Scottish average, which is in-turn below the level in 
the UK.  The particular difficulties affecting R&D within this region are:   
 
(a) The predominance of SMEs (17,380, or 99.7 per cent of businesses in the region 
employ less than 200 persons). 
(b) The below average productivity of the economy (recent Eurostat figures for the 
annual GDP per capita in the Highlands & Is lands Region ranged from 75 per cent to 
77 per cent of the EU average in the period 1994 to 1997). 
(c) The high costs associated with peripherality  and sparseness of population.  This not 
only affects the costs of materials, but also the costs of services and expertise from 
the main R&D institutions, of which there are few in or near to the region.  There are 
no universities based in the region.  
(d) There is a small base to the pyramid of sk ills and expertise which is available to 
develop ideas and carry out research and development. 
(c) Background and authority for the scheme 
The scheme forms part of the economic and co mmunity development activity of the Scottish 
Government’s regional development agency in the Highlands & Islands region of Scotland.  
Highlands & Islands Enterprise was created by an act of parliament as a non-departmental 
regional body (Enterprise & New Towns Act (Scotland) 1990.  G/SCM/N/95/EEC/Add.15 
 Page 25 
 
 
  
(d) Form of the subsidy  
Grants. 
 (e) To whom and how the subsidy is provided 
Recipients must be SMEs according to the EU definition of an SME, or research 
establishments on behalf of SMEs. 
 (f) Total amount budgeted 
 2001:  £55,227 (actual expenditure) 
2002:  £215,357 (actual expenditure) 
 (g) Duration of programme 
 06.09.2001 to 31.12.2011 
 
(h) Assessment of trade effects 
No direct affects, as tradable goods are not normally produced in R&D projects.  
Consequential investment leads to production in goods and services in a wide variety of 
sectors (the scheme is non-sector specific and non- specific in terms of favouring neither local 
nor export market for the ultimate products).  The majority of firms in the region supply UK 
markets. 
 
22. Highlands and Islands Enterprise scheme fo r Initial Investment and Job Creation  
(a) Period covered by the notification 
 2001 and 2002. 
 
(b) Background and authority for the scheme 
Business creation and expansion via capital investment: the objectives are to increase and 
diversify employment, improve average incomes and regional GDP in a region featuring geographic disadvantages and parity of population. 
 (c) Background and authority for the scheme 
The scheme forms part of the economic and co mmunity development activity of the Scottish 
Government’s regional development agency in the Highlands & Islands region of Scotland.  
Highlands & Islands Enterprise was created by an act of parliament as a non-departmental 
regional body (Enterprise & New Towns Act (Scotland) 1990).   
 
(d) Form of the subsidy  
 Grants, Loans and Interest Relief Grant. 
 G/SCM/N/95/EEC/Add.15 
Page 26  
 
 (e) To whom and how the subsidy is provided 
All firms in assisted areas and SMEs only in non-assisted areas and all subject to sectoral 
restriction 
(f) Total amount budgeted  
 Payments 2001: grants: £8,754,943; interest subsidy: £ 9,389; loans: £480,157  
 Payments 2002: grants: £12,772,225; interest subsidy: £ 17,211; loans: £175,000 
 (g) Duration of programme 
 14.06.2001 to 31.12.2006. 
 
(h) Assessment of trade effects 
The assistance is provided to locally resident firms in a variety of sectors eligible under EU 
rules for Regional Aid.  The markets served ma y be local or non-local, but must result in 
viable and self-sustainable trading following th e investment.  The vast majority of firms 
assisted are small firms serving UK markets.  No estimates of production/sales are available 
as the assistance is directed at job and wealth creation, not production.  
 
23. Home Shipbuilding Credit Guarantee Scheme 
(a) Period covered by notification 
 2001 and 2002. 
 
(b) Policy objectives 
The objective of the Scheme is to finance the construction, completion or alteration of ships 
and mobile offshore installations at a yard firs t approved by the Secretary of State, through 
the guarantee of the repayment of loans (and the repayment of related interest) made to UK 
bodies.  
 
(c) Background and authority for the Scheme 
Section 10 of the Industry Act 1972 (as amende d by section 23 and 24 of the Industry Act 
1975 and Section 2 of the Shipbuilding Act 1979). 
 (d) Form of the subsidy  
 Loan Guarantees. 
 (e) To whom and how the subsidy is provided 
Ship owners, by way of a fixed rate of inter est (7.5 per cent on loan repayment periods up to 
8.5 years; commercial interest reference rate for loan repayment periods between 8.5 and 
12 years) and interest equalisa tion arrangements with the Banks. 
  G/SCM/N/95/EEC/Add.15 
 Page 27 
 
 
 (f) Total amount budgeted 
As a programme of loan guarantees the Scheme only involves expenditure if a loan defaults 
and the DTI Guarantee is called. There are no payments and committed expenditure. 
However, the DTI’s total commitment under th e Scheme as at 31 December 2001 and 2002 
was as follows: 
 
 2001: £147,705,000  2002: £112,300,000   (g) Duration of programme 
 The continuation of the Scheme is currently under  review by Ministers. 
 (h) Assessment of trade effects 
 The aim of the scheme is to ensure that UK buyers of ships have financing arrangements 
available to them which are as good as those in  other countries which are signatory to the 
OECD Understanding on Shipbuilding Subsidies and hence that UK yards are not relatively 
disadvantaged. 
 
24. Industry Forum Adaptation  
(a) Period covered by the notification 
 2001 and 2002. 
 
(b) Policy objectives  
Chemicals sector: To pump-prime the setting-up of a best practice resource to facilitate the 
reinforcement of British chemical and process sector companies. 
 
To help British industry achieve cost savings in manufacturing process management of 
£120m by the end of the three-year programme (2000 – 2003) (£61m achieved as of October 2002) 
 
Oil and Gas: DTI will provide assistance to LOGIC (Leading Oil and Gas Industry 
Competitiveness) for the first three years of ope ration. Additional funding has been raised by 
way of annual subscriptions from its members and from commercial activities. 
 
Metals: DTI is providing assistance to MICE (Metals Industry Competitive Enterprise) for the 
first five years of operation. Additional funding has been raised by way of in kind contributions from its partners and from comme rcial activities. The project is intended to 
improve competitiveness in the metals industries 
 (c) Background and authority for the scheme  
 DTI legislation: Science and Technology Act 1965 
 
The Competitiveness White Paper, “Our Comp etitive Future” published in December 1999, 
stressed the critical role of sectoral partnerships, industry supply chain initiatives and 
networking. This scheme for “Industry Forum Ad aptation” was proposed in the white paper. 
 G/SCM/N/95/EEC/Add.15 
Page 28  
 
 Chemicals: White paper - Building a Knowle dge Driven Economy – SoS approved £15m to 
be made available to UK industrial sectors to develop their own Industry. November 2000 –Chemicals Unit/DTI contracted with Chemical Industries Association  
 
Oil and Gas: The Secretary of State approved the bid by Oil and Gas Industry Development 
(OGID), DTI, Aberdeen for the LOGIC (Lead ing Oil and Gas Industry Competitiveness), 
project to adapt the model of Industry Forum to  the needs of the oil and gas extraction sector. 
LOGIC will provide to the oil and gas indus try consultancy support and training in the 
introduction of improvements to supply chain management. With the award of this grant, and provided LOGIC meets its business plan, it shou ld become self-financing in year five. 
 
Metals: The project was approved to adapt the model of Industry Forum to the needs of the 
metals production and processing sectors. MICE  will provide to these sectors consultancy 
support and training in the introduction of lean manufacturing and improvements to supply chain management.  
 
(d) Form of the subsidy  
Grant.  
 (e) To whom and how the subsidy is provided 
Chemical sector: Chemical Industries Association; generate invoices on a quarterly basis, 
submitted to DTIs Chemicals Unit for payment by credit transfer. 
 
Oil and Gas: Grant from the Innovation budget to LOGIC (Leading Oil and Gas Industry Competitiveness), Aberdeen The grant is 38 per cent rate of the net eligible costs incurred and 
defrayed and is payable by instalments on submission by LOGIC. Each claim is accompanied 
by: 
 
• Project progress report 
• Latest annual accounts 
• Estimate of project costs 
• Report from an independent accountant  
 
This project is managed and monitored by O il and Gas Industry Development (OGID), DTI, 
Aberdeen. 
 
Metals: Grant from the Innovation budget to METSKILL, the metals industry’s national 
training organisation based in Sheffield.  The gr ant is 45 per cent of the net eligible costs and 
is payable by instalments on submission of claims by MICE. Each claim is accompanied by:  
• Project progress report 
• Latest annual accounts 
• Estimate of project costs 
  In addition, each quarter requires a:  
• Report from an independent accountant  
 
Materials & Engineering Unit, Department of Trade and Industry, London monitors this 
project.  G/SCM/N/95/EEC/Add.15 
 Page 29 
 
 
  
(f) Total amount budgeted  
 Chemicals:  FY 2001/2: £625,016 
 FY 2002/3: £498,000 
 
 Oil and Gas: 2001: £365,464 
   2002: £625,052   Metals:  2001:  £582,134 
 2002:  £614 838 
 
(g) Duration of programme 
 No time-limit.  
 (h) Assessment of trade effects 
 Chemicals: Not known at this stage. 
 
Oil and Gas: The overall objective is to im prove the competitiveness of the UK supplies 
industry in the sector and thereby maximise the development of UK hydrocarbons resources. 
A global measure of effectiveness of the work wo uld be a reduction in the overall cost of 
production from UKCS oil and gas fields from $11- 12 per barrel to less than $10 per barrel. 
 
Metals: The overall objective is to improve th e productivity and competitiveness of the UK 
metals production and processing sectors by incr easing the introduction of lean manufacturing 
techniques and improved supply ch ain management.  Much of th e project cost was incurred 
early on in the project and involved the recruitment and training of the expert engineers. 
 
25. Invest NI – Property Development Agreement 
(a) Period covered by the notification 
 2001 and 2002. 
 (b) Policy objectives  
Encourage the private sector to construct build ings for occupation by Invest NI assisted 
projects. 
 (c) Background and authority for the scheme 
 Industrial Development Act (NI) 2002. 
 
(d) Form of the subsidy (i.e., grant, loan, tax concession. Etc.) 
Grant. 
 (e) To whom and how the subsidy is provided 
The subsidy is paid to property developers usually as a lump sum on satisfactory completion 
of the building. G/SCM/N/95/EEC/Add.15 
Page 30  
 
  
(f) Total amount budgeted 
 2001: £1,038,929.75 
 2002: £1,117,378.07  
(g) Duration of programme 
Indefinite. 
 (h) Assessment of trade effects 
Minimal. 
 26. Invest NI – Property Development scheme 
(a) Period covered by the notification 
 2001 and 2002. 
 
(b) Policy objectives  
Encourage the private sector to construct build ings for occupation by Invest NI assisted 
projects.  
 (c) Background and authority for the scheme 
 Industrial Development Act (NI) 2002. 
 
(d) Form of the subsidy  
Grant. 
 (e) To whom and how the subsidy is provided 
The subsidy is paid to property developers usually as a lump sum on satisfactory completion 
of the building. 
 (f) Total amount budgeted 
 2001: £49,600 
 2002: £77,000 
 
(g) Duration of programme 
Indefinite. 
 (h) Assessment of trade effects 
Minimal. 
  G/SCM/N/95/EEC/Add.15 
 Page 31 
 
 
 27. Invest NI – Sites and Factories 
(a) Period covered by the notification 
 2001 and 2002. 
 (b) Policy objectives  
 To provide site and factory for invest client companies. 
 (c) Background and authority for the scheme 
 Industrial Development Act (NI) 2002. 
 
(d) Form of the subsidy  
Invest NI finances the acquisition of sites and building of standard advance factories which 
are then provided to client companies of Invest NI at current market value.  
 (e) To whom and how the subsidy is provided 
Invest NI finances the acquisition of sites and buildings of standard advance factories which 
are then provided to client companies of Invest NI at current market value.  Provision is an 
ongoing process with a number of sites and factories remaining unleased or not sold at any given time.  
 (f) Total amount budgeted 
 2001: £13,638,909 
 2002: £8,914,465  (g) Duration of programme 
Indefinite. 
 
(h) Assessment of trade effects 
Minimal. 
 
28. Launch Investment for Civil Aerospace Projects 
(a) Period covered by the notification 
 2001 and 2002. 
 (b) Policy objectives  
 Design, development, education ai d, labour, materials and overheads. 
 
(c) Background and authority for the scheme 
 Civil Aviation Act 1982. 
 G/SCM/N/95/EEC/Add.15 
Page 32  
 
 (d) Form of the subsidy 
 A repayable, but risk-sharing Government investment. 
 (e) To whom and how the subsidy is provided 
Assistance towards research and development is reimbursable and is levied against sales of 
airframes, engines and their suppliers applied thro ughout their lifetime.  The recipients of the 
investment are manufacturers of civil aircraft and aircraft engines. 
 (f) Total amount budgeted 
 2001: £45 million 
 2002: £98.8 million 
 (g) Duration of programme 
Indefinite. 
 
(h) Assessment of trade effects 
Collaborative research and development schemes were established to assist UK industry in 
maintaining and improving its competitive position by undertaking pre-competitive 
innovative R&D Programmes which would, afte r Government support ended, lead to the 
development of improved processes and products. 
 29. LINK Collaborative Research scheme 
(a) Period covered by the notification 
 2001 and 2002. 
 (b) Policy objectives  
The LINK Collaborative Research Scheme ai ms at strengthening collaboration between 
industry, universities and research centres in key areas of science, technology and engineering. 
 
It is a UK Government-wide initiative involving  most UK Government Departments with 
significant interest in R&D.  It is operate d by the Office of Science and Technology, 
Department of Trade and Industry. 
 (c) Background and authority for the scheme  
 The legal basis for the scheme is the Science and Technology Act 1965. 
 
(d) Form of the subsidy  
 Government support is im plemented through grants. 
  G/SCM/N/95/EEC/Add.15 
 Page 33 
 
 
 (e) To whom and how the subsidy is provided 
Beneficiaries of the grants are industrial companies, universities and research centres.  Each 
supported project must include at least one industrial company and one university or research centre. 
 
The LINK Collaborative Research Scheme supports industrial research projects.  Intensity of 
the aid cannot exceed 50 per cent of the project’s eligible costs.  Where public research organisations participate in the programme, thei r contribution is included in the calculation of 
the aid intensity. 
 
 With effect from May 2002, the scheme was widened to also cover: 
 
• fundamental research, with an aid intensity of 100 per cent. Assistance to firms is only 
possible if this type of research is not linke d to any industrial or commercial objective of 
a particular enterprise, and a wide dissemination of the results of the research is guaranteed; 
• technical feasibility studies preparatory to indus trial research with an aid intensity of up 
to 75 per cent; 
• industrial research carried out in collaboration between firms, with an aid intensity of up 
to 50 per cent; 
• technical feasibility studies preparatory to pre-competitive development activity, with a 
maximum aid intensity of 50 per cent and, 
• pre-competitive development activities carried  out in collaboration between firms and 
research institutes, with a maximum aid intensity of 25 per cent. 
 
(f) Total amount budgeted  
 2001/02:  £43 million (total public funding to all participants). 
 2002/03:  £43 million (total public funding to all participants).  (g) Duration of programme 
 The scheme is not limited.  Current notification to December 2006 
 
(h) Assessment of trade effects 
The LINK Collaborative Research Scheme may give an advantage to certain companies and 
strengthen their position compared to that of competitors in other Member States.  By notifying the Scheme to the EC, the UK has complied with their obligation under 
Article 88(3) of the EC Treaty.  The commission has concluded that the aid fulfils the criteria 
to be considered compatible with the EC Treaty. 
 
30. Local authorities – Assistance for SMEs 
(a) Period covered by the notification 
 2001 and 2002. 
 (b) Policy objectives  
To allow local authorities in England, Sco tland and Wales to support Small and Medium 
Enterprises. G/SCM/N/95/EEC/Add.15 
Page 34  
 
  
(c) Background and authority for the scheme 
S2 of the Local Government Act 2000 (formerly  S33 of the Local Government and Housing 
Act 1989) 
 
(d) Form of the subsidy  
 Grants, loans, guarantees, advice. 
 (e) To whom and how the subsidy is provided 
This scheme allows local authorities, as part of their responsibility for promoting economic, 
social and environmental well-being in their ar eas, to support SMEs operating in their area 
from their authority's budget (rather than through central government schemes) through a variety of subsidies. 
 (f) Total amount budgeted 
 2001: £83,527,344 
 2002: £79,291,891  (g) Duration of programme 
 This approval remains in force until 2006. 
 
(h) Assessment of trade effects 
31. Merseyside – Special Area & Key Side Investment Grant Scheme 
(a) Period covered by the notification 
 2001 and 2002. 
 
(b) Policy objectives  
To promote the development, modernisation an d efficiency of an industry and to create, 
expand or sustain productive capacity.  Assisted pr ojects must create or safeguard jobs and be 
commercially viable and sustainable 
 (c) Background and authority for the scheme 
The scheme was introduced to en able Local Authorities in Merseyside to assist non-SMEs in 
situations where a project capable of bringing significant economic benefits to Merseyside 
requires local financial support in order to proceed. 
 (d) Form of the subsidy  
Discretionary grants to secure investment by  non-SMEs in situations where local grant 
support is essential to enable the project to proceed.  Each project must clearly demonstrate additionality and there must be a clear ju stification as to why grant is required. 
  G/SCM/N/95/EEC/Add.15 
 Page 35 
 
 
 (e) To whom and how the subsidy is provided 
Non-SMEs can be assisted in any sector not specifi cally restricted by EC sectoral restrictions.  
The subsidy is by way of grant to support inv estment and the project must take place within 
the assisted area of Merseyside.  
 
(f) Total amount budgeted 
 2001: £2,015M 
 2002: not available   7. Duration of programme 
 
 The programme will run until 31 December 2006 unless a replacement programme is notified. 
 (g) Assessment of trade effects 
Project should not directly displace investment or  jobs elsewhere.  Projects must provide a net 
benefit in terms of trade to the Merseyside sub-region. 
 
32. MG rover training aid  
(a) Period covered by the notification 
 2001 and 2002. 
 
(b) Policy objectives  
Giving mainly general training to staff of the direct recipient company to increase the long-
term employability of individual workers and br ing wider benefits to the wider community by 
developing facilities and expertise within the local training structure. 
 
 Creating courses available all other companies. 
 
Increasing the skills base in the West Midlands wh ich is currently the most likely region in 
UK to report difficulties in skilled recruitment. 
  Expansion of learning partnerships to be a foundation for a culture of life long learning. 
 
(c) Background and authority for the scheme  
Learning and Skills Act 2000, Chapter 21, Part On e, Subsections 2 (3)(c): 3.(1)(b): 3.(3)(a) 
and (c): 4.(a, b, and c); 5(1)(a);5(2)(a, b and c). 
 
(d) Form of the subsidy  
Grant. 
 (e) To whom and how the subsidy is provided 
 MG Rover as a grant against claims for eligible expenditure. 
 G/SCM/N/95/EEC/Add.15 
Page 36  
 
 (f) Total amount budgeted  (aid pa id in calendar 2001 or financ ial year in 2001/2002 and aid 
budgeted or spent if available in calenda r 2002 or financial year in 2002/2003) 
 Paid 2001/2002   £3,051,000     Budget  2001/02   £2,634,772 
 Paid 2002:/ 2003    £ Nil            Budget  2002/03   £1,169,011  
(g) Duration of programme 
 To December 2005. 
 (h) Assessment of trade effects  
 Not known. 
 
33. NETS (New Entrants’ Training Scheme) 
(a) Period covered by the notification 
 2001 and 2002. 
 
(b) Policy objectives  
Improve the productivity of craft and rural trad e micro businesses located  in the more rural 
areas of England with a modular work based training programme for their new starters.  
 (c) Background and authority for the scheme 
UK Scheme operated by the Countryside Agency under Section 9 of the Local government 
Act 1947 and with the approval of DEFRA in 2000. 
 (d) Form of the subsidy  
Grant. 
 
(e) To whom and how the subsidy is provided 
Grant aid is paid to two training providers  to deliver the tuition and administer the 
reimbursement of travel and accommodation claims. 
 (f) Total amount budgeted 
 2001: £0.46M 
 2002: £0.45M 
 (g) Duration of programme 
 Ends March 2004. 
 
(h) Assessment of trade effects 
 Little effect – micro business sector working in local and some national markets. 
  G/SCM/N/95/EEC/Add.15 
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 34. New Deal 
(a) Period covered by the notification 
 2001 and 2002. 
 (b) Policy objectives  
New Deal is a key part of the Government's strategy to promote work for those who can, 
which is balanced with support for those who ca nnot work. This objective is underpinned by 
three public targets:  
- demonstrate progress by spring 2006 on increasing the employment rate and 
reducing the unemployment rate over the economic cycle. 
- over the three years to spring 2006, increase the employment rates of 
disadvantaged areas and groups, taking account of the economic cycle – lone 
parents, minority ethnic, people aged 50 and over, those with the lowest qualifications, and the 30 local authority districts with the poorest initial 
labour market position, and significantly reduce the difference between their 
employment rates and the overall rate. 
- reduce the proportion of children in households with no one in work over the 
three years from spring 2003 to spring 2006 by 6.5 per cent. 
The Government uses a number of delivery me chanisms to encourage people into work, 
including the following for whic h the New Deals are one tool: 
 
- Jobcentre Plus (the UK public employm ent service) which helps people to 
find work and receive the benefits to which they are entitled and employers to fill their vacancies; 
- policies to increase the labour supply by encouraging the inactive to look for 
work; 
- the continuation of existing policies aime d at increasing the efficiency of the 
labour market; 
- tailoring of strategies to the specific needs of disadvantaged groups; 
- increasing employer involvement (and promoting to them use of untapped 
labour supply). 
(c) Background and authority for the scheme 
New Deals give jobseekers and, in some cases, those on health related benefits, the 
opportunity to develop their employability and find work. There are six New Deals: 
  New Deal for Young People  (aged 18-24 years) (NDYP). 
 
 New Deal 25 plus  (for Adults) (ND25+). 
 G/SCM/N/95/EEC/Add.15 
Page 38  
 
 New Deal for Lone Parents : a voluntary programme designed specifically to help lone 
parents who want to work. It is available to a ll lone parents who are not in work or who are 
working less than 16 hours a week. 
  New Deal for Disabled People : voluntary, for those on health related benefits. 
 
New Deal for Partners : a voluntary scheme for those whose partners have been claiming 
benefits – including various invalidity benefits - for six months or more. 
 
 New Deal for 50 Plus 
 
The European Commission set out its view, in a letter dated 29 October 1998, that 
Article 87 (1) – previously Article 92 – is not  applicable to the New Deal Programme and 
therefore that the current New Deal programme does not involve State Aid.  The Government 
announced in March 2000 that it intended to enhan ce the current New Deal 25 plus to bring it 
more in line with the New Deal for 18-24 y ear olds.  These changes did not affect the 
character of the scheme, nor its general app licability, so no new State Aid issues arose. 
 (d) Form of the subsidy  
 Direct payment to participating employer at set rates (see below). 
 
(e) To whom and how the subsidy is provided 
To a participating employer. The subsidy paya ble to employers is intended to compensate 
them for possible reduced productivity, and the extra commitment to training.  The primary 
intention is that the subsidy act s as an incentive to encourage em ployers to recruit long term 
unemployed jobseekers. 
 
To participate in the New Deal, and receive the subsidy, the employer must sign an Employer Agreement that outlines the following quality criteria:  
- New Deal employees will receive training, which must be outlined in the 
Individual Training Plan (see below); 
- employers will, where New Deal empl oyees show the necessary aptitude and 
commitment, aim to continue to empl oy them at the end of the subsidy 
period; 
- existing employees will not be made redundant to offer Employment Option 
jobs; and 
- the employer must not make a cash profit from the subsidy and must agree to 
meet the requirements of the National Minimum Wage (NMW). 
When an employer signs the Agreement, th e Jobcentre Plus will select and send to the 
employer a job seeker.  When the employer has agreed the Individual Training Plan with the 
job seeker the Jobcentre Plus pays to the employer the subsidy (see below) either as a lump sum or staggered payments, according to the choice of the employer. 
 
 Subsidies paid to employers at the following rates:  
- for NDYP, up to £60 per week, for up to 26 weeks  G/SCM/N/95/EEC/Add.15 
 Page 39 
 
 
 - for ND25+, up to £75 per week, again for up to 26 weeks. 
For NDYP an additional training subsidy of  up to £750 per New Deal employee can be 
claimed. 
   (f) Total amount budgeted 
 2001: Financial Year 2001-02 
 
- NDYP employer subsidies - 11.9m GBP 
- ND25+ employer subsidies - 14.4m GBP 
- NDYP subsidies to employers for training - 3.7m GBP (no equivalent for 
ND25+) 
  
 2002: FY 2002-03 (provisional outturn figures)  
- NDYP employer subsidies - £13.3m 
- ND25+ employer subsidies - £12.1m 
- NDYP subsidies to employers for training - £1.7m 
(g) Duration of programme 
 The subsidised employment option is part of the NDYP and ND 25+ and lasts for 26 weeks. 
 
However, the New Deal programme provides more than that element and intensifies the 
support to an individual the longer they are unemployed.  A young person who has been 
unemployed for six months or an adult for 18 m onths is required to join the New Deal.  The 
job seeker gets a Personal Adviser, who supports  them throughout.  The programme begins 
with a Gateway period, lasting up to 4 months , aimed at helping people into jobs, tackling 
barriers to work and providing people with the soft skills they need to succeed in the labour 
market.  Those who do not find work in this initial period are required to take part in an 
intensive activity period lasting 3 months, wh ich provides flexible, individually-tailored 
access to basic skills training, work-focused tr aining, work experience and support for self-
employment.  For those who are still unemployed at the end of this period, there is a short and 
intensive follow-through support to ensure they are helped to build on their experience and 
move quickly into employment.  As well as s ubsidised work, there is an option under NDYP 
of 12 months full-time education or training. 
 (h) Assessment of trade effects 
 No trade effects – this programme is pa rt of the Government’s public service. 
 
35. NI – Aid in favour of Northern Ireland Events Company 
(a) Period covered by the notification 
 January – December 2001. 
 G/SCM/N/95/EEC/Add.15 
Page 40  
 
 (b) Policy objectives  
Public funding support for major sports, arts a nd cultural events which impact positively on 
the international image of NI, create opportuni ties for social cohesion and generate regional 
economic benefit. 
 
(c) Background and authority for the scheme 
The scheme provides government funding in support of a 10-year major events strategy for 
NI.  NI had Article “87(3) a” status under the Treaty. 
 (d) Form of the subsidy  
 Grant - Underwriting facility. 
 (e) To whom and how the subsidy is provided 
Grants are provided to event organisers. Grants  are made against eligible expenditure on 
approved events and are cash payments to the event organisers. 
 
(f) Total amount budgeted 
 2001:  £1.1m 
 2002:  N/A  (g) Duration of programme 
Ongoing. 
 (h) Assessment of trade effects 
 Either nil or negligible. 
 36. NI – Buying Time Assistance Scheme 
(a) Period covered by the notification 
 2001 and 2002. 
 (b) Policy objectives 
The scheme is intended to provide short-term support to enable companies in difficulty to 
present a restructuring plan on a timescale enabling a decision to be made on the 
appropriateness of such a plan. 
 (c) Background and authority for the scheme 
Buying Time forms part of the Rescue and Rest ructuring Guidelines.  The authority for the 
scheme is Industrial Developmen t Act (Northern Ireland) 2002. 
 (d) Form of the subsidy 
 Share Capital.  G/SCM/N/95/EEC/Add.15 
 Page 41 
 
 
  
(e) To whom and how the subsidy is provided 
The grant is provided to manufacturing and internationally traded service companies in 
Northern Ireland who are experiencing trading difficulties. 
 
(f) Total amount budgeted 
 2001:   £773,324 
 2002:  £1,068,250 
 
(g) Duration of Programme 
 2001/02 to 2006. 
 
(h) Assessment of Trade effects 
 To be evaluated. 
 37. NI – CCL Exemption for Northern Ireland Natural Gas 
(a) Period covered by the notification 
 The notification covers the period from 1 April 2001 to 31 March 2006. 
 (b) Policy objectives 
The energy market in Northern Ireland differs markedly from the rest of the United Kingdom. 
Specifically, natural gas is not widely ava ilable to business and domestic energy users. 
Consequently, in order to encourage the developm ent of the fledgling gas market in Northern 
Ireland, a temporary exemption from the levy w as sought for natural gas for a period of up to 
5 years. The exemption, in turn, would redu ce carbon emissions (consistent with the overall 
objective of the CCL), as businesses switched fro m high carbon fuels such as fuel oil to 
natural gas. 
 (c) Background and authority for the scheme 
The primary law for the CCL is contained in the Finance Act 2000 Part II, clause 30 and in 
Schedules 6 and 7. Legislation for this partic ular exemption is provided in Schedule 6. 
 
(d) Form of the subsidy  
Tax exemption – business consumers of natural gas in Northern Ireland are exempt from the 
CCL. 
 (e) To whom and how the subsidy is provided 
The subsidy is provided to owners of business/ commercial facilities, who consume, or will 
consume natural gas in Northern Ireland. Natu ral gas is provided to these businesses free from 
the CCL. The full rate of the levy applied to  natural gas during the period in question 
(i.e. 2001-02) is 0.15 (UK) pence per kWh. He nce, for each kWh of gas consumed by these 
businesses in Northern Ireland, the subsidy h as a maximum value of 0.15 (UK) pence. 
 G/SCM/N/95/EEC/Add.15 
Page 42  
 
 (f) Total amount budgeted 
The maximum subsidy per unit is 0.15 (UK) pence per kWh. Using outturn data on gas 
consumption by those businesses that would normally be subject to the levy, the estimated total value of the exemption is: 
 
 2001: £1.8 million 
 2002: £3.1 million  (g) Duration of programme 
The exemption is scheduled to run from 1 April 2001 to 31 March 2006 – i.e. a period of 
5 years. 
 (h) Assessment of trade effects 
In 2001 and 2002 approximately 12.7 and 12.5 TWh of natural gas was imported to Northern 
Ireland. In 2001 approximately 12.5 per cent of all gas imports was supp lied to industrial and 
commercial consumers who are liable to pay the CCL; the remaining 87.5 per cent was 
supplied to the power generation and domestic sectors, which are outside the scope of the 
levy. 
 
The proportion of total gas imports supplied to  industrial and commercial consumers in 2002 
is not yet available. Based on past trends, an estimated 16.6 per cent of all gas imports would 
be supplied to these end-users. 
 
It is not currently possible to identify indi vidual industrial and commercial users (and the 
sectors they belong to) receiving natural gas supplies. It is therefore not possible to identify production, import and export statistics for t hose sectors benefiting from the subsidy, and 
subsequently, analyse any trade effects. 
 
38. NI Selective Financial Assistance 
(a) Period covered by the notification 
 2001 and 2002.  
 
(b) Policy objectives 
This is the principle scheme of assistance used  in Northern Ireland to attract new inward 
investment and encourage existing companies to  develop their international competitiveness 
leading to growth and greater employment opportuni ties.  It is the equivalent of the Regional 
Selective Assistance Scheme in Great Britain. 
 
The SFA Scheme relates solely to the setting up of a new establishment, the extension of an 
existing establishment or the starting up of an activity involving a fundamental change in the product or production process of an existing establis hment.  The latter may be rationalisation, 
diversification or modernisation prog rammes being undertaken by companies. 
 
(c) Background and authority for the scheme 
 Industrial Development Ac t (Northern Ireland) 2002. 
  G/SCM/N/95/EEC/Add.15 
 Page 43 
 
 
 (d) Form of the subsidy  
 Capital grant, revenue grant, loan or loan guarantees or share capital.  
 
(e) To whom and how the subsidy is provided 
Companies in the manufacturing and internati onal traded service sectors (in line with EU 
restrictions on shipbuilding, coal and steel, sy nthetic fibres, vehicles, textiles and clothing, 
and agriculture and food processing). 
 (f) Total amount pledged 
 2001:   £81,297,249 
 2002:  £62,544,304 
 (g) Duration of Programme 
Indefinite. 
 
(h) Assessment of Trade effects 
Subject to periodic evaluation.  Most recent evaluation (completed 2002) indicates that during 
the 1980s and 1990s, Selective Financial Assistan ce offered to industry in NI increased both 
employment and productivity in NI’s manuf acturing sector by between 7 per cent and 
10 per cent. 
 39. NI Technology Fund (NITECH) 
(a) Period covered by the notification 
 2001 and 2002. 
 (b) Policy objectives  
The Fund’s main objective is to encourage Research & Development activities of spin-outs 
and start-ups from research. There is also a fu rther objective of encouraging research within 
already existing Small to Medium sized Enterprises. Support will only be given to companies and researchers in Northern Ireland. 
 (c) Background and authority for the scheme 
The proposal to establish the NITECH Growth F und was announced by the Chancellor of the 
Exchequer as part of his 1998 package of ec onomic initiative for Northern Ireland.  The 
authority for this scheme comes from the No rthern Ireland Order 1982 and its subsequent 
revisions as well as State Aid N 481/01. 
 
(d) Form of the subsidy  
 This will normally take the form of equity  funding but occasionally will be small grants. 
 G/SCM/N/95/EEC/Add.15 
Page 44  
 
 (e) To whom and how the subsidy is provided 
This subsidy is aimed at Small to Medium sized Enterprises, individual researchers, research 
teams and university departments within Northe rn Ireland. The investment by the Fund will 
amount to a maximum of 60 per cent of the elig ible costs of for industrial research and 
35 per cent of the costs for pre-competitive research. 
 
(f) Total amount budgeted 
 2002-2003:  £800,000 
 (g) Duration of programme 
 The NITECH Fund will run from 1
 January 2002 – 31 December 2006. 
 (h) Assessment of trade effects 
Due to the fund’s limited span of operation an assessment of trade effects is not yet feasible. 
This will be made available through annual reports to be submitted to the European 
Commission. The first of these will be due after the 31
 March 2004. 
 
40. NI Tourism Challenge Fund 
(a) Period covered by the notification 
 2001 and 2002. 
 
(b) Policy objectives 
To improve the competitiveness of activities and products identified by the Northern Ireland 
Tourist Board as being of particular significance and benefit to the development of the tourist 
industry in the region. 
 
(c) Background and authority for the scheme 
The aid is administered as a competition financed  by the Department of Enterprise, Trade and 
Investment (formerly the Department of Ec onomic Development) and managed by the 
Department in conjunction with the Northern Ireland Tourist Board.  
 
The Industrial Development (Northern Ireland) Order 1982 provides a statutory basis for the 
Department of Economic Development to provid e financial assistance to the tourism industry. 
 
The Tourism (Northern Ireland) Order 1992 provides a statutory basis for the Northern Ireland Tourist Board to provide financial assistance to the tourism industry. 
 
(d) Form of the subsidy 
Assistance available under the Fund is availabl e in the form of capital grant assistance to 
viable capital projects in the tourism sector. E ligible capital costs attract assistance of up to 
50 per cent up to a maximum of £500,000. 
  G/SCM/N/95/EEC/Add.15 
 Page 45 
 
 
 (e) To whom and how the subsidy is provided 
The competition was open to all individuals and or ganisations involved in the tourist industry 
in Northern Ireland. 
 (f) Total amount budgeted 
The original budget was for £4M to be expende d in the financial years 1998-99 to 2002-03. 
The budget was revised to £2.7M for the lifetime of the scheme.  
  2001:  £997,620.30  2002:  £379,387.00 
 2003: to date £75,280.83 
 Balance Payable:  £258,711.87  Total Grant: £1,711,000  (g) Duration of programme 
 April 1999 to March 2003. 
 (h) Assessment of trade effects 
The Fund will provide a boost to the development of the tourism infrastructure in Northern 
Ireland and will put the region in a better positi on to deliver a high quality tourism product. 
Raising the competitiveness and profile of the tourism industry will help the sector assume a 
more important position in the econom ic future of Northern Ireland. 
 
41. NI Tourist Development Scheme 
(a) Period covered by the notification 
 2001 and 2002. 
 
(b) Policy objectives  
To improve the Northern Ireland tourism industry’s competitive position and to increase its 
economic contribution. 
 (c) Background and authority for the scheme 
The TDS scheme is operated in Northern Ireland by Invest Northern Ireland (Invest NI) for 
Accommodation projects and by the Northern  Ireland Tourist Board for Attractions & 
Amenities projects. Both agencies are part of  the Department of Trade, Enterprise and 
Investment. 
 
The Tourism (Northern Ireland) Order 1992 – Article 11(2) – empowered the then 
Department of Economic Development to develop a scheme entitled “Tourist Industry 
(Financial Assistance) Scheme 1992” – commonly referred to as the Tourism Development Scheme. Under this scheme the Northern Ireland Tourist Board (NITB) may provide 
discretionary Selective Financial Assistance  to any body or person satisfying laid-down 
criteria. 
 G/SCM/N/95/EEC/Add.15 
Page 46  
 
 Under the Industrial Development Act (Northern Ireland) 2002, the functions of the NITB in 
connection with the provision of financial assi stance under Article 11(2) for the purposes of 
providing or improving touris t accommodation were abolished; and accordingly, in Article 
11(1)(c)(iii) of the Tourism Order 1992, the words “tourism accommodation or” ceased to have effect.  The power of Invest NI to provide financial assistance to the tourism 
accommodation sector resides in the Industrial - Development (Northern Ireland) Act 2002.  
 (d) Form of the subsidy  
TDS available under the Fund is provided as assi stance of last resort and is available in 
several forms: 
 
 – capital grant, loans, equity, inte rest relief grant, loan guarantees. 
  Eligible capital costs attract assistance of up to 25 per cent.  
(e) To whom and how the subsidy is provided 
TDS is available to the private sector, local authority and voluntary sector for the 
development of tourist accommodation and amenitie s and, with prior departmental approval, 
for certain marketing activities.  There is no auto matic entitlement to financial assistance. It is 
at the discretion of NITB/Invest NI to provide financial assistance to any project that, in their 
opinion, will increase tourism activity to and with in Northern Ireland and the revenue derived 
from it. It is general policy not to assist those projects that cater purely for a Northern Ireland 
recreational market rather than tourism. 
 
A beneficiary is required to contribute 25 per cen t of the total project costs by way of equity, 
loans or assets. 
 
(f) Total amount budgeted 
  The Annual accommodation budget is some £3 m. Actual accommodation expenditure was: 
  2001: £3,332,414.98  2002: £3,822,589.73 
 
(g) Duration of programme 
 1 January 2000 to 31 December 2006. 
 (h) Assessment of trade effects 
The Fund provides incentives for the devel opment and refurbishment of tourism 
accommodation properties in Northe rn Ireland and enables the re gion to deliver a high quality 
tourism product. Raising the competitiveness and pr ofile of the tourism industry will help the 
sector assume a more important position in the economic future of Northern Ireland. 
 
42. NI – Urban Development Grant (UDG) Scheme  
(a) Period covered by the notification 
 2001 and 2002. 
  G/SCM/N/95/EEC/Add.15 
 Page 47 
 
 
 (b) Policy objectives 
The Scheme is an instrument of Urban Regene ration. Its principle objective is economic and 
physical regeneration of deprived inner city areas by the stimulation of private enterprise and investment through the development of vacant,  derelict or underused land or buildings 
 
(c) Background and authority for the scheme 
 Statutory & Legal basis – The Social Need (Northern Ireland) Order 1986. 
 Awaiting EC State Aid approval.  (d) Form of the subsidy  
Grant. 
 (e) To whom and how the subsidy is provided 
To developer/occupiers and speculators. Grant is paid on construction works on lodgement of 
architects certificates certifying that  work has been completed. 
 
(f) Total amount budgeted 
 2001: £6,540,039 
 2002: £4,312,010  (g) Duration of programme 
Indefinite. 
 (h) Assessment of trade effects 
No trade effect. The UDG schem e is largely about shortfall gap funding of speculative 
office/retail developments for letting. Where ther e are developer/occupier schemes they relate 
to small retail and or office developments where there are no trade effects. 
 
43. NI – Viridian Growth Fund  
(a) Period covered by the notification 
The Fund was set up as a 10-year limited partners hip that can be extended with the consent of 
all investors to 12 years to facilitate successful exits from the Fund. 
 
The active investment period will last for 5- 6 years and there will then be a period of 
4-5 years during which funds will be mana ged with the aim of successfully exiting 
 (b) Policy objectives  
The main objective of the scheme is to address perceived gaps in the provision of venture 
capital and loan funding for small enterprises in the manufacturing and tradable services sectors, based in Northern Ireland.  The objective is to address market failure in the deal size 
range £50k-£250k. 
 G/SCM/N/95/EEC/Add.15 
Page 48  
 
 By addressing gaps in the provision of funding, it is expected that the development of the 
SME sector will be accelerated and additional jobs  will be created. In addition, the promotion 
of enterprise will be strengthened leadin g to a reduction in grant dependency. 
 
A regional objective is to bring the level of venture capital activity in NI up to the UK 
average and thereby ensure that growth comp anies are not disadvantaged through lack of 
funding for start up and expansion. 
 (c) Background and authority for the scheme 
The legal basis for the scheme is Article 7 of the Industrial Development (NI) Order 1982, as 
well as the Fund contract and operating guidelines. 
 
The Fund was set up as a limited partnership,  registered under the Limited Partnership 
Act 1907. This is a standard vehicle for this type of fund in the UK. 
 
(d) Form of the subsidy 
Private sector investment in the Fund will require underpinning of around 33 per cent grant 
support, in order to show a sufficiently attractive rate of return for the private sector to induce 
it to invest. 
 (e) To whom and how the subsidy is provided 
The subsidy is provided to the Fund to enable  it to offer commercial investment terms in 
order to attract private sector investors. 
 (f) Total amount budgeted 
 2001: £333k (year 1) 
 2002: £594k (year 2) 
 (g) Duration of programme 
The Fund was set up as a 10 year limited partnershi p that can be extended with the consent of 
all investors to 12 years to facilitate successful exits from the Fund. 
 
The active investment period will last for 5- 6 years and there will then be a period of 
4-5 years during which funds will be manage d with the aim of successfully exiting. 
 (h) Assessment of trade effects 
The supply side effect is that small businesses will be able to access funds at the right price 
and at the right time to help them develop th eir business.  The Fund will provide start-up and 
development capital in a mix of equity and loans. 
 
On the demand side, the Fund will encourage investor ready proposals, will stimulate 
entrepreneurship and should accelerate the shift away from grant dependency. 
  G/SCM/N/95/EEC/Add.15 
 Page 49 
 
 
 44. Non-Fossil Fuel Obligation (NFFOs) 
(a) Period covered by the notification 
2001 and 2002. 
 (b) Policy objectives  
The UK Government is committed to supporting the development of renewable energy and 
the specific objectives of the NFFO scheme are to encourage: 
 
• diverse, secure and sustainable energy supplies; 
 
• reduction in emission of pollutants; 
 
• development of internationally co mpetitive renewables industries. 
 (c) Background and authority for the scheme 
Sections 32 and 33 of the Electricity Act 1989 a nd subsequent Orders. Also Section 67 of the 
Utilities Act 2000 and subsequent Orders.  St ate Aid reference for NFFO is N153/98.  
 
(d) Form of the subsidy  
Grant. 
 (e) To whom and how the subsidy is provided 
Under the NFFO scheme, Orders were made which required the then public electricity 
suppliers (now the supply successor companies) to  contract with renewable generators for the 
supply of electricity generated from renewable sources.  The price paid for the electricity 
under those contracts is above the market price fo r electricity and the electricity suppliers are 
compensated for this by payments out of th e Fossil Fuel Levy, which was provided for in 
section 33 of the Electricity Act.  The levy is charged on the electricity supplies of all licensed electricity suppliers. 
 
It should be noted that the NI-NFFO costs are pa ssed through direct to customers by Northern 
Ireland Electricity Plc – no levy applies in No rthern Ireland , nor any subsidies paid under 
paid under the NI-NFFO arrangements. 
 
(f) Total amount budgeted 
 For England & Wales: 
 
 2001: £79.17m 
2002: £24.73m (For 2001, the total levy spend amounted to £79.17 million whilst for 2002, the levy spend continued to March 2002 only.   Since the introduction of the Renewables 
Obligation in April 2002, negative amounts have  arisen as receipts from suppliers have 
exceeded the total payments due to generators .  This has resulted from the added value of 
ROCs from NFFO contracts being sold with the power to suppliers, the effect has been a net 
surplus of almost £25m). 
 
  G/SCM/N/95/EEC/Add.15 
Page 50  
 
 For Scotland: 
 
 2001:  £3.8m 
2002: Difficult to estimate at this stage because of the way in which figures are collected.  
Possible range is between £8m and £17m    
 
 For Northern Ireland: 
 
 2001:  £7.8 m  2002:  £8.5 m 
 
(g) Duration of programme 
 The last remaining contracts expire in 2018. 
 (h) Assessment of trade effects 
The NFFO scheme was designed to stimulat e the UK renewables industry with the 
expectation that electricity so produced would be mainly supplied to the UK domestic market. 
 
45. Open Courses 
(a) Period covered by the notification 
 2001 and 2002. 
 
(b) Policy objectives  
Improve the skills of the work force /diversi fy the product range of rural micro businesses 
working the crafts and rural trades. 
 
(c) Background and authority for the scheme 
UK Scheme operated by the Countryside Agency under Section 9 of the Local government 
Act 1947 and with the approval of Defra in 2000. 
 (d) Form of the subsidy  
Grant. 
 
(e) To whom and how the subsidy is provided 
Grant paid to two training providers to s ubsidise the tuition costs of employees attending 
short development courses in the crafts and rural trades.  
 
(f) Total amount budgeted 
 2001: £0.023M 
 2002: £0.012M  (g) Duration of programme 
 Ends in March 2004.  G/SCM/N/95/EEC/Add.15 
 Page 51 
 
 
  
(h) Assessment of trade effects 
 Little effect – micro business sector working in local and some national markets. 
 
46. Partnership support for regeneration  
(a) Period covered by the notification 
 2001 and 2002. 
 (b) Policy objectives  
Support private sector initial investment in a wi de range of land a nd property regeneration 
projects which would not proceed without public sector support. 
 (c) Background and authority for the scheme 
Regional Development Agencies Act 1998, Greater London Authority Act 1999 and 
Leasehold Reform, Housing and Urban Development Act 1993  
 
 UK notification 19 November 1999  European Commission approva l letter of 28 February 2001 
 
• State aid N 747/A/99 - Partnership support fo r regeneration (1): Support for speculative 
developments 
• State aid N 747/B/99 - Partnership support for regeneration (2): Support for bespoke 
developments 
 
(d) Form of the subsidy  
 Under both speculative and bespoke approvals: 
 
• Regeneration Grant 
• Loans  
 
 Under speculative only: 
 
• Joint Venture arrangements preferable to private sector 
 (e) To whom and how the subsidy is provided 
Aid is provided to the developer.  There are a number of eligible costs for project costing.  
Payments are made pro rata to th e developer’s qualifying expenditure. 
 (f) Total amount budgeted 
Funding comes from the nine Regional Develo pment Agencies (RDAs) ‘Single Pot’ budgets 
and from English Partnerships budget.  Ther e is no ring-fenced money for this scheme. 
 
For example, under the speculative gap-funding scheme, one RDA spent £350,000 in 
2002/2003, whereas another RDA spent £11,581,619 in the same period. 
 G/SCM/N/95/EEC/Add.15 
Page 52  
 
 (g) Duration of programme 
 The approval remains in force until 31 December 2006. 
 (h) Assessment of trade effects 
None. 
 
47. R and D for Renewable and Sustainable Energy 
(a) Period covered by Notification 
 2001 and 2002. 
 
(b) Policy Objectives  
 To help increase research and development in the renewable and sustainable energy sector. 
 (c) Background and authority for the scheme  
Government objectives to find alternative sources of energy production through more 
environmentally friendly and sustainable ways. 
  Science and Technology Act 1965.  (d) Form of the subsidy  
Grant. 
 
(e) To whom and how is the subsidy provided 
 To companies with in the sustainable energy R and D field. 
  Grant is up to 75 per cent. 
 
(f) Total amount budgeted 
 2001: £13m 
 2002: £12.1m  (g) Duration of programme 
 Current Contract run until April 2005 with possible extensions. 
 (h) Assessment of trade effect 
The development of the market should increase.  The grant allows for research into the 
Renewables sector to be continued. 
  G/SCM/N/95/EEC/Add.15 
 Page 53 
 
 
 48. R&D Tax Credit 
(a) Period covered by the notification 
 2001 and 2002. 
 (b) Policy objectives  
The aim of the R&D tax credit is to encourag e innovation by companies which are small and 
medium-sized enterprises (SMEs).  To do this, it gives companies, including high-tech start-
ups, an incentive to take up R&D activities, a nd encourages companies already carrying out 
R&D to increase their levels of R&D. 
 
(c) Background and authority for the scheme 
The R&D tax credit was introduced in 2000 after extensive consultation both on the details of 
the scheme (Inland Revenue technical note “Research and Development: New tax incentives for small and medium-sized companies” - Marc h 1999) and on the definition of research and 
development (Inland Revenue technical not e “Research and Development: Definition and 
Appeals” - January 1999).  
 
It was notified to the European Commission as a State aid and approved by them under reference N802/99. 
 
Legislation governing the scheme was introduced  in the Finance Act 2000 (Schedules 20 and 
21) and subsequently slightly amende d in the Finance Act 2002 (Schedule 15). 
 (d) Form of the subsidy  
 Tax relief (see below). 
 
(e) To whom and how the subsidy is provided 
The incentive is given as an increased tax re lief for certain spending on R&D. Small or 
medium sized companies are able to claim relief equal to 150 per cent of their qualifying 
R&D expenditure. A company paying tax at th e 2001 small companies’ rate (20 per cent), 
therefore saves in tax 30 per cent of the cost of the qualifying R&D.  
 
A company not yet in profit may surrender the re lief to the Exchequer in return for a payment 
representing 24 per cent of the cost of the R&D.  This represents a discount of 20 per cent on 
the cash value of the tax credit if used against profits, where the company is taxed at the small 
company rate of 20 per cent. The amount surre nderable is limited to the lower of the 
proportion of the unrelieved loss attributable to the qualifying R&D expenditure, and the 
gross Pay-As-You-Earn tax and National Insura nce Contributions paid by the company for 
the period of the claim. 
  The availability of R&D tax credit to a corpor ate SME is subject to the following criteria: 
 
(a) the qualifying expenditure for the R&D ta x credit for any accounting period of the 
company is limited to the aggregate of: 
• the direct costs of staff directly involved in carrying out the R&D activity. 
These costs comprise the gross remuneration (excluding benefits-in-kind) G/SCM/N/95/EEC/Add.15 
Page 54  
 
 plus national insurance contributions payable by the company, plus 
contributions to a pension scheme paid by the company; plus 
• the cost of consumable stores u sed directly in the R&D activity; plus 
• if the company subcontracts all or part of the R&D while retaining 
ownership rights of any intellectual property produced, 65 per cent of the payments due to the subcontractor (representing a generalised measure of 
the costs above). Alternatively, the co mpany may claim the actual costs of 
the subcontractor’s staff directly involved in the R&D and its cost of consumable stores. This latter rule is  the only option where the principle and 
subcontractor are connected. 
(b) the qualifying expenditure must exceed a th reshold minimum. This is set at an 
annualised rate of £25,000 a year. Spending at or above £25,000 qualifies for the tax 
credit in full. No tax credit is available if the spending does not meet this threshold. 
(c) the R&D tax credit will not be available on R&D spending that has been met by a 
grant or subsidy. No R&D expenditure will qualify for the tax credit if incurred in 
relation to a project in receipt of any other notifiable State aid (see paragraph 12). 
(d) R&D spending by joint ventures and consortia will be eligible for the R&D tax credit, 
but only insofar as the tax credit can be limited to corporate SMEs. 
It is proposed to change some of these rules this year, subject to approval by the European 
Commission. 
 (f) Total amount budgeted 
The figures below are estimated
 total costs for the Research and Development (R&D) tax 
credit scheme. 
  2001: 70M  2002: 200M  
They relate to financial years 2001-02 and 2002-03, and are based upon data extracted from 
company tax returns in January 2003. Total co st for calendar years on the receipts basis has 
been calculated. This suggests that calendar year  and financial year estimates are likely to be 
similar, especially after rounding. 
 
Data constraints do not allow robust calculation of subsidy per unit. Figures for the amount of 
subsidy provided per company would be of lim ited relevance as the R&D tax credit is 
provided to firms of different sizes and from different sectors. 
 (g) Duration of programme 
Indefinite. 
 
(h) Assessment of trade effects 
The aim of the R&D tax credit scheme is to  increase innovation by companies, flowing from 
increases in their R&D expenditure.  There is no territorial limit to R&D carried out in the 
UK, but the incentive does operate by reducing UK corporation tax, so there may be some  G/SCM/N/95/EEC/Add.15 
 Page 55 
 
 
 impact on decisions to locate R&D.  However the measure applies only to SMEs, and it is 
larger companies that tend to operate intern ationally, particularly when it comes to the 
location of R&D, so the impact of the R&D ta x credit on such location decisions is likely to 
be small.   
 
No assessment of the impact of the R&D tax credit is yet available since the relief has only 
been operating for a short time (and academic evidence suggests that R&D tax credits only 
start to show an effect in the longer term). 
 
The following data (Source: ‘Research and De velopment in UK Business 2001’, Office for 
National Statistics)  provides, though, some indication of the present position. It shows the 
proportion of business R&D performed in the UK th at is accounted for by UK owned  and by 
none UK owned companies. 
  Intramural Expenditure 
 
 
 £ million  
 
 1999 2000 2001
UK-owned businesses 7779 7903 7681
Non UK-owned businesses 3523 3607 5001
 
 As percentage of total business R&D in UK  
 
 1999 2000 2001
UK-owned businesses 69% 69% 61%
Non UK-owned businesses 31% 31% 39%
 
It is not possible to provide a robust estimate of the impact of the R&D tax credit on trade effects using present data. There are two major caveats in trying to determine the effect of the tax credit scheme from these figures: 
 
(i) The data covers all companies, not just SMEs 
(ii) Many different factors other than tax credits affect the amount of R&D 
expenditure conducted in the UK by both UK and foreign firms. 
This is clearly an area that requires further investigation. In the course of monitoring and 
evaluating of the tax credit, we aim to improve our data in this area. 
 
49. Regional Selective Assistance  
(a) Period covered by the notification 
 2001 and 2002. 
 
(b) Policy objectives  
 To assist economic development in areas of special hardship. 
 G/SCM/N/95/EEC/Add.15 
Page 56  
 
 (c) Background and authority for the scheme 
 The Industrial Development Act 1982. 
 (d) Form of the subsidy  
 Mainly grant (also loan, guarantee and shares). 
 
(e) To whom and how the subsidy is provided 
The scheme is available to eligible projects of manufacturing and service sector firms of any 
size based in or moving into the Assisted Areas of Great Britain.  
 
Financial assistance is on a discretionary basis, usually in the form of a grant phased against 
achievement of progress on the project (jobs & capital costs).   
 (f) Total amount budgeted 
 2001/02: £230.3m. 
 2002/03: £224.3m. 
 (g) Duration of programme 
 Indefinite. 
 (h) Assessment of trade effects 
This scheme is designed to help areas of special difficulty to compete on level terms with 
more advantaged regions. 
 
50. Regional Venture Capital Funds 
(a) Period covered by the notification 
 2001 and 2002. 
 (b) Policy objectives  
The Government is seeking to establish a minimum of 9 viable regionally based, commercial 
funds to address the “equity gap” encounter ed by SMEs seeking small scale (£500k and 
below) investment.  To date 8 funds (covering the East Midlands, North East, North West, 
Yorkshire & the Humber, London, South West, South East and West Midlands) are 
operational and an operational fund in the E ast of England will be established in 2003. 
  The funds are managed by experienced Fund Ma nagers with appropriate FSA authorisations. 
 
(c) Background and authority for the scheme 
 Industrial Development Act 1982. 
  G/SCM/N/95/EEC/Add.15 
 Page 57 
 
 
 (d) Form of the subsidy 
There is no subsidy in the form of grants, loan s or tax concessions.  Instead, investors in the 
fund gain an enhanced return on their investme nt as a result of the subordinated position taken 
by the Government investment in relation to the timing of drawdowns and returns from 
realisations of investments. 
 
(e) To whom and how the subsidy is provided 
 It is only investors in the fund that gain from an enhanced return on their investment. 
 (f) Total amount budgeted 
The budget is not adopted annually.  The Gove rnment will commit a total of £80 million to 
the Programme over 3 years.  The drawdown of  this investment will be determined in 
response to commercial investment d ecisions made by the fund managers. 
 (g) Duration of programme 
 4 years initially, although the individual funds  are expected to have lives of 10 years. 
 (h) Assessment of trade effects 
None - The RVCF Programme aims to assist growing SMEs by addressing an “equity gap” 
that has been identified when SM Es seek small scale investment. 
 51. Renewables Obligation and Capital Grants for Renewable Technologies 
(a) Period covered by Notification 
 2001 and 2002. 
 (b) Policy Objectives  
 To help the development of the Renewable Industry. 
 (c) Background and authority for the scheme   
 The Scheme was set up to meet objective surround the renewable energy sector. 
  The Renewables Obligation Order 2002. 
 
(d) Form of the subsidy  
Grants. 
 (e) To whom and how is the subsidy provided 
 Companies within the Renewable energy sector. 
 (f) Total amount budgeted  
 2001: Nil G/SCM/N/95/EEC/Add.15 
Page 58  
 
  2002: Nil 
 (g) Duration of programme 
 Current contract runs to 31 March 2005. 
 
(h) Assessment of trade effect 
 Development and improvement of the Renewable Energy sector. 
 
52. Rover Hams Hall Training support  
(a) Period covered by the notification 
 2001 and 2002. 
 (b) Policy objectives  
• Giving mainly general training to staff of the direct recipient company to increase the 
long term employability of individual worker s and bring wider benefits to the wider 
community by developing facilities and expertise within the local training structure. 
• Creating courses available all other companies. 
• Increasing the skills base in the West Midlands  which is currently the most likely region 
in UK to report difficulties in skilled recruitment. 
• Expansion of learning partnerships to be a foundation for a culture of life long learning. 
 (c) Background and authority for the scheme  
Learning and Skills Act 2000, Chapter 21, Part On e, Subsections 2 (3)(c): 3.(1)(b): 3.(3)(a) 
and (c): 4.(a, b, and c); 5(1)(a);5(2)(a, b and c). 
 
(d) Form of the subsidy  
Grant. 
 (e) To whom and how the subsidy is provided 
 BMW Hams Hall as a grant against eligible expenditure. 
 
(f) Total amount budgeted  
 Paid 2001/2002  £1,080,000 Budget 2001/2002 £1,080,000 
 2002/2003  £918,824 Budget 2002/2003  £2,631,926  
(g) Duration of programme 
 To December 2004. 
 (h) Assessment of trade effects 
 Not Known. 
  G/SCM/N/95/EEC/Add.15 
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 53. Scotland - Grants for Owner Occupation (GRO) 
(a) Period covered by the notification 
 2001 and 2002. 
 (b) Policy objectives  
The purpose of the GRO grant scheme is, by providing grants towards the provision of 
housing for owner occupation, to support the social inclusion and community regeneration 
objectives of Scottish Ministers by promoting mixed tenure and sustainable communities through the provision of low cost owner occupied housing as part of wider efforts to ensure effective physical, social and environmental regeneration.  
 
GRO grants for the provision of housing for owner occupation are therefore intended to 
increase the supply of owner occupation in areas wh ere there is a shortage of low cost home 
ownership opportunities and/or to meet the n eeds of those who are unable to afford owner 
occupied housing because their incomes are too low.  Proposals which involve the provision 
of high value housing, that is housing which is not affordable to those whose aspirations are 
met by low cost home ownership housing are therefore ineligible for grant funding. 
  Specifically, GRO grants are targeted at three types of project.  
 Type 1 
 
Projects which contribute to tenure diversification in single tenure priority housing estates or neighbourhoods forming part of an area-based regeneration strategy, thereby providing a mix 
of rented and owner occupied housing.   
 
Houses are provided to designated client groups.  After a fixed time, any houses not sold to 
priority groups are offered on the open market. 
 
 Type 2 
 
Projects which contribute to strategies fo r regenerating older urban neighbourhoods, 
particularly where these are categorised by a limited supply of good quality houses for owner 
occupation and/or by limitations in the range  of available house sizes and types relative to 
demand. 
 
Where the existing market for owner occupied housing is limited in size or access for low-
income purchasers is restricted by price, ta rgeting of low-income purchasers and first time 
buyers is likely to be an explicit objective.  Where these factors are not present, client group 
targeting may be relatively less important as a primary objective. 
 
 Type 3 
 
Projects which contribute to the provision of housing for owner occupation at affordable 
prices in pressured market area (usually in rura l locations) where the supply of such housing 
is limited in quantity, or where access for lo wer income households wishing to become owner 
occupiers is constrained by market forces. 
 
Grants will only be made available where the houses provided are to be offered for sale to 
prioritised categories of people, such as those unable to obtain social rented housing, local G/SCM/N/95/EEC/Add.15 
Page 60  
 
 residents living in rented accommodation through lack of opportunities locally to purchase a 
home, first time buyers and those with a family  or work connection with the area wanting to 
return.  For projects involving initial sales at less than full mark et value, Communities 
Scotland/local authorities will seek to clawback any surplus profits made following the first 
re-sale of the grant funded house where this takes place within a minimum period of five 
years and a maximum period of 10 years of the initial sale. 
 (c) Background and authority for the scheme 
Authority given by EU in agreement State Aid No 497/01 – United Kingdom – Grants for 
Owner Occupation – Scotland 
 
(d) Form of the subsidy  
Grant. 
 (e) To whom and how the subsidy is provided 
 Applicants for GRO grant are expected to be: 
 
• Private housing suppliers,  that are individuals, partnerships or registered companies 
set up for the purposes of providing housing.  These organisations may or may not undertake the construction works concerned themselves.  They are all undertakings 
within the context of Article 87/1 of the EC Treaty. 
  
• Housing trusts,  that is private organisations fo rmed by groups of individuals or 
organisations who share a common purpose rela ting to the provision and/or management 
of housing for sale or rent.  Housing trus ts will normally be corporate bodies and may 
have charitable status. 
 
Housing associations that are not register ed by Communities Scotland may also qualify 
for assistance.  They must, however, be demonstrably independent of any registered 
body. 
 
Any proposal involving a company formed by or involving a local authority will require referral within the Scottish Executive. 
 
(f) Total amount budgeted 
 2001/02: £7.495m (Outturn) 
 2002/03: £6.344m (Budget)  (g) Duration of programme 
 December 2001 to 31 December 2006. 
 (h) Assessment of trade effects 
 N/A. 
  G/SCM/N/95/EEC/Add.15 
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 54. Seagate Strategic Research Programme  
(a) Period covered by the notification 
 2001 and 2002. 
 (b) Policy objectives  
The Start Programme aims to stimulate and increase the level of industrial research 
undertaken by Northern Ireland Companies.   START offers financial support for 
technologically based, industrially relevant , pre-competitive research and development 
projects. 
 
(c) Background and authority for the scheme 
Economic competitiveness is directly rela ted to business expenditure on research and 
development (BERD).  The START programme was established to encourage Northern 
Ireland companies to invest in technologically  based, industrially focussed research and 
development (R&D), because their expenditure on R&D (and in particular their expenditure 
on industrial/strategic research) was seen to lag well behind ma ny of their major competitors 
in the rest of the United Kingdom and the rest of  the World.  The current legislative authority 
for the programme comes from the Industria l Development Act (Northern Ireland) 2002. 
 
When the proposed amount of assistance exceeds £2 million (approx  €2.8 million) the START programme is required to notify and seek specific approval from the European 
Union.  This project involved an offer of £5.2 million (approx €7.3 million) grant assistance 
and was therefore notified. 
 (d) Form of the subsidy  
 Assistance on this project was provided in the form of a grant. 
 
(e) To whom and how the subsidy is provided 
Seagate Technology (Ireland).  The company subm its claims for grant approximately every 
three months. 
 (f) Total amount budgeted 
 2001: £1.7 million (€2.4 million) 
 2002: £0.19 million (€0.27 million)  (g) Duration of programme 
 1998 to 2002. 
 
(h) Assessment of trade effects 
This industrial research project only finished in February 2002 and it is still too early to 
evaluate the trade effects of the project.  A final technical appraisal was carried out in November 2002 and this concluded that the project has been immediately be neficial in that it 
has led to increased employment in a high unemp loyment area of Northern Ireland of skilled G/SCM/N/95/EEC/Add.15 
Page 62  
 
 scientists and engineers as well as helping to embed the company’s manufacturing operations 
within Northern Ireland. 
 
55. Shipbuilding Intervention Fund 
(a) Period covered by notification 
 2001 and 2002. 
 (b) Policy objectives 
The purpose of the scheme was to  enable UK shipbuilding yards to obtain contracts against 
international competition in order to secure jobs.  
 
(c) Background authority for the scheme 
The Shipbuilding Regulation EC No 1540/98 da ted 29 June 1998 which established new rules 
on aid to shipbuilding and the Industrial Development Act 1982, Sections 7 and 8. 
 
(d) Form of subsidy 
Grant. 
 (e) To whom and how the subsidy is provided 
By grant, which is paid directly to the shipya rd, in instalments pro rata with the payment of 
the purchaser’s instalment as and when each build ing stage has been r eached. Ships take on 
average one year to build. A ten per cent reten tion is made until the final audited construction 
costs are known. 
 (f) Total amount budgeted 
 The amounts spent under the scheme for the last two calendar years were as follows: 
 
 2001: £4,897,780  2002: £2,029,118  (g) Duration of programme 
The Scheme is closed to new applications. A pplications were eligible only for contracts 
signed on or before 31 December 2000.  
 (h) Assessment of trade effects 
 The aim of the Scheme was to secure jobs in the UK’s shipbuilding industry. 
 56. Single Regeneration Budget  
(a) Period covered by the notification 
 2001 and 2002. 
  G/SCM/N/95/EEC/Add.15 
 Page 63 
 
 
 (b) Policy objectives  
The Single Regeneration Budget is not sector specifi c.  It enables regeneration policy to build 
on past strengths, with the objective of build ing on initiatives proposed by local partners; be 
responsible to local needs and priorities and attract private and public investment. 
 
(c) Background and authority for the scheme 
 Housing Grants, Constructi on and Regeneration Act 1996. 
 (d) Form of the subsidy  
Grant. 
 
(e) To whom and how the subsidy is provided 
The grant provided under the single regeneration budget supports a wide range of activities, 
including development funds offering grants and loans to new and existing small businesses, 
consultancy, advisory services and training.  The provision of business facilities and joint 
marketing initiatives and the provision of managed workspace/office areas. 
 (f) Total amount budgeted 
 2001: £32.2m for 22,185 businesses, average subsidy £1,452 per business 
 2002: £25.5m for 21,023 businesses, average subsidy £1,213 per business 
 
(g) Duration of programme 
Indefinite. 
 (h) Assessment of trade effects 
 No measurable effect on production, consumption, imports and exports. 
 
57. SMART 
(a) Period covered by the notification 
 2001 and 2002. 
 (b) Policy objectives  
The Smart scheme is on of the UK’s foremost  policy instruments for supporting near-market 
research and development projects by SMEs. 
 
Wales: Smart will help individuals and SMEs by providing grant support to research, design 
and develop technologically innovative produc ts and processes to achieve the overall 
objective to aid better exploita tion of industrial potential. 
 (c) Background and authority for the scheme 
Science and Technology Act 1965 Section 5.  Reviews and Studies element of Smart falls 
under Section 11. G/SCM/N/95/EEC/Add.15 
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(d) Form of the subsidy  
Grant. 
 (e) To whom and how the subsidy is provided 
Small businesses in England with less than 250 employees.  Quarterly payments direct to 
businesses up to the maximum amount specifi ed in a formal offer letter.  
  Wales: Individuals and companies in Wales via three grants instruments.  
(f) Total amount budgeted 
 For England 2001: £27.9 million 
   2002: £30 million   For Wales 2001: £4.024 million 
   2002: £7.795 million 
 (g) Duration of programme 
 3 years from 1 January 1999. 
 (h) Assessment of trade effects 
An evaluation of the scheme was undertaken in 2001.  Since the scheme began in the 1980’s 
it has provided finance of more than £200 million to more than 3,000 companies.  At the time this research was done annual turnover in th e economy was nearly £500 million higher as a 
result of Smart with annual exports increased by £270 million and employment increased by 8,000. 
 
58. SMART (Scotland) 
 This covers the SMART Stage 2, SPUR and SPUR
PLUS Programmes. 
 (a) Period covered by the notification 
 2001 and 2002. 
 
(b) Policy objectives  
The SMART, SPUR and SPUR
PLUS Programmes are the Government's foremost policy 
instrument for supporting R&D projects with commercial potential by SMEs. The Programme 
helps SMEs improve their competitiveness by developing new, highly innovative and 
commercially viable products or processes i nvolving a significant technological advance for 
UK industry or the sector concerned. 
 (c) Background and authority for the scheme 
The Scottish Executive has the authority to deli ver the scheme, as a Devolved Administration, 
under the Science and Technology Act 1965.  
  G/SCM/N/95/EEC/Add.15 
 Page 65 
 
 
 (d) Form of the subsidy  
 SMART, SPUR and SPURPLUS are all provided as grant support. 
 (e) To whom and how the subsidy is provided 
 The subsidy is provided to SMEs as follows: 
 
- (SMART Stage 1-75 per cent grant for a technical feasibility study prior to 
industrial research up to a maximum grant of £45,000. Awarded to small businesses only. This grant is counted as de minimis aid therefore expenditure on this particular subsidy is not included in the report. However, 
as it forms part of the overall SMART, SPUR and SPUR
PLUS Programme and 
the effects arising from the subsidy cannot be differentiated, they are 
therefore included in the assessment of trade effects under question 9). 
- SMART Stage 2-35 per cent grant for industrial research through to pre-
competitive development. This grant is  only available for projects which are 
a follow on from SMART Stage 1. Up to £150,000 in total is available under 
both Stage 1 and Stage 2. 
- SPUR – 35 per cent grant for industrial research through to pre-competitive 
development up to a maximum grant of £150,000. Awarded to medium-sized businesses only. 
- SPUR
PLUS – 35 per cent grant for industrial research through to pre-
competitive development up to a maximum grant of £450,000. Awarded to 
small and medium-sized businesses. 
(f) Total amount budgeted 
 01/04/01 - 31/03/02 £2,911,286 
 01/04/02 - 31/03/03 £4,718,545 
 
(g) Duration of programme 
 N230/98 expired on 31 March 2003.  
 
A new state aid notification (N650/2002) was submitted to the European Commission under 
the Community Framework for State Aid for Research and Development (OJ 96/C 45/06; 
17.2.96) on 1 October 2002 and was appr oved on 20 December 2002. This state aid 
notification will, amongst other things, allow th e Scottish Executive to continue delivering the 
SMART, SPUR and SPURPLUS Programmes from 1 April 2003 to 31 March 2006.  
 (h) Assessment of trade effects 
There is no Scotland specific data, however, the r esults of a recent UK-wide evaluation of the 
SMART & SPUR Programme
 demonstrated that SMART and SPUR have provided a 
significant boost to the UK, resulting in an increased annual turnover in the economy of 
nearly £500 million, annual exports of nearly  £270 million and employment by more than 
8,000 jobs.  
 G/SCM/N/95/EEC/Add.15 
Page 66  
 
 The UK report (and a further report commissioned by the Scottish Executive to evaluate, in 
more detail, the impact of SMART & SPUR in Scotland) demonstrated that SMART and SPUR also provide significant spill-over bene fits. The Programmes genuinely encourage 
technological innovation in SMEs with project s resulting or expecting to result in new 
products, processes or services reaching the market; an improvement in technological 
knowledge and skills and a wide range of longer  term benefits including improved image and 
performance of business, improved relations hips with public research bodies and other 
businesses.  
 
The reports highlighted that SMART and SPUR a ddress distinct market fa ilures in the supply 
of finance to SMEs. Almost all recipients would have been inhibited from pursuing the 
objectives of their projects without the grant support due to a lack of finance. SMEs are inhibited from investing unsupported in R&D beca use of risk and uncertainty, both of which 
are classic signs of market failure. SMART and SPUR are highly regarded by SMEs and the investment community (venture capitalists, business angels, etc) and have acquired a 
reputation for identifying and assisting new st art-up and existing high tech businesses with 
growth potential. Recipients reported that obtaining a SMART or SPUR grant significantly enhanced their image amongst the investment  community and increased their success in 
obtaining private sector funding.  
 
SMART and SPUR demonstrate very high levels  of additionality, with the majority of 
recipients indicating they would not have gone ahead with their projects without the grant 
support. Of the small number of those that w ould have gone ahead, the projects would have 
been significantly delayed or reduced in scope. 
 
59. South Yorkshire productive investment scheme  
(a) Period covered by the notification 
 2001 and 2002. 
 (b) Policy objectives  
To further competitiveness through the developm ent of new products and processes by large 
companies in the traditional sectors of engineering, materials and manufacturing. 
 
(c) Background and authority for the scheme 
The legal basis of the scheme is the Sout h Yorkshire Single Programming Document for 
2000-2006. 
 
(d) Form of the subsidy  
The form of subsidy is grant to a maximum of 35 per cent of eligible project costs – within 
the regional aid guidelines.  
 (e) To whom and how the subsidy is provided 
The subsidy is provided to large companies in the sectors specified above.  It is administered 
through grant regimes operated by intermed iary bodies such as the Business Link South 
Yorkshire. 
  G/SCM/N/95/EEC/Add.15 
 Page 67 
 
 
 (f) Total amount budgeted 
 The maximum budget available is £5 million on the basis of £1 million per annum. 
 (g) Duration of programme 
 2000-2006. 
 
(h) Assessment of trade effects 
 Not applicable at this stage. 
 
60. Start programme 
(a) Period covered by the notification 
 2001 and 2002. 
 (b) Policy objectives  
To stimulate and increase the level of indus trial research undertaken by Northern Ireland 
companies and to increase the number of compan ies undertaking industrial research, either on 
their own or in partnership with one or ot her of the two Northern Ireland universities. 
 (c) Background and authority for the scheme 
Economic competitiveness is directly rela ted to business expenditure on research and 
development (BERD).  The START programme was established to encourage Northern 
Ireland companies to invest in technologically  based, industrially focussed research and 
development (R&D), because their expenditure on R&D (and in particular their expenditure 
on industrial/strategic research) was seen to lag well behind ma ny of their major competitors 
in the rest of the United Kingdom and the rest of  the World.  The current legislative authority 
for the programme comes from the Industria l Development Act (Northern Ireland) 2002. 
 
(d) Form of the subsidy  
Assistance is normally in the form of a gr ant.  However, in some cases, the START 
programme may provide assistance in a repayable form e.g. full equity or redeemable preference shares. 
 
(e) To whom and how the subsidy is provided 
The programme is open to Northern Ireland based companies and Northern Ireland 
universities.  Assistance is offered (at the lesse r) of 50 per cent of eligible costs or £2 million 
(approx. €2.8 million).  In exceptional circ umstances, university only projects may be 
supported at a level up to and including 100 per cent.  There is no minimum level of 
assistance.  In the case of grant assistance, grant is payable on vouched and approved 
expenditure incurred by the project participants. 
 (f) Total amount budgeted 
 2001: £4.47 million (€ 6.26 million) 
 2002: £3.05 million (€ 4.27 million) G/SCM/N/95/EEC/Add.15 
Page 68  
 
  
(g) Duration of programme 
Indefinite. 
 (h) Assessment of trade effects 
The START Programme is evaluated every 5 years and the last evaluation took place in 2001.  
Based on 1996 and 1999 statistical data, th e 2001 evaluation concluded, the START 
programme was responsible for an additional 9 per cent increase in Northern Ireland BERD 
and an additional 50 per cent increase in busin ess expenditure on industrial/strategic research, 
when expressed as percentages of Gross Domestic Product. 
 
61. The Britech Fund 
(a) Period covered by the notification 
 2001 and 2002. 
 
(b) Policy objectives  
The overall objective of the scheme is to strengthen UK-Israel science and technology 
collaboration. 
 (c) Background and authority for the scheme  
By a letter dated 15 June 1999, registered on 17 June 1999, the UK authorities notified the 
Commission, in accordance with Article 88(3) of the EC Treaty, of the aid scheme “The 
Britech Fund”.  By a letter dated 12 July 1999, the Commission asked for further information in order to make a complete assessment of  the case.  By a letter dated 3 August 1999, 
registered on 6 August 1999, the UK provided further information relating to the State aid notification Number N 355 / 99.   
 
By a letter dated 25 October 1999, the UK was notified that the Commission had accordingly 
decided to consider the aid to be compatible with the EC Treaty and that the scheme complied 
with the Community Framework for State Aid for Research and Development rules published 
in the Official Journal ( OJ C 45 / 5, Dated 17 February 1996 ). 
 
The scheme is primarily an industrial researc h and development activity, as defined in the 
Community Framework for State Aid for Research and Development rules.  The legislation under which the aid is granted is th e UK Science and Technology Act 1965. 
 (d) Form of the subsidy 
The aid is given in the form of advances of gr ant, repayable in the event of a successful 
outcome of research and development activities.  Aid will be repayable up to a maximum of 150 per cent of the aid given, based on repayment of 5 per cent of the annual sales or other income such as royalties or licensing agreements. 
 (e) To whom and how the subsidy is provided 
Aid under the scheme will predominantly be gi ven to private sector SMEs.  Nevertheless, 
larger businesses which have particular expe rtise in bringing a project to fruition may  G/SCM/N/95/EEC/Add.15 
 Page 69 
 
 
 participate.  For the purpose of the scheme, UK  businesses will primarily be considered to be 
those which are incorporated, operate and have  headquarters in the UK.  Israeli businesses 
will primarily be considered to be those which are incorporated, operate and have 
headquarters in Israel.  The aid recipients ar e those organisations successful in passing a peer 
review of their project proposals.  The criteria applied in the selection procedure are that the 
projects each involve at least one UK and at least one Israeli private sector business, the 
projects are research and development projects and designed to result in new commercial products and processes.  The aid is given in the form of advances of grant, repayable in the 
event of a successful outcome of research and development activities.   
 
(f) Total amount budgeted  
 2001:  £0.790 M aid paid to UK companies in the financial year 2001 / 2002 
 2002:  £1.135 M aid paid to UK companies in the financial year 2002 / 2003  (g) Duration of programme 
Five years commencing 1 January 2000.  The continuation of the scheme after 31 December 
2004 is dependent on the joint agreement of th e Governments of the UK and the State of 
Israel, respectively, following a review which is  due to take place during 2004.  Either the UK 
or the State of Israel can terminate the scheme by giving six months notice in writing to the other Government. 
 
(h) Assessment of trade effects 
The Commission has examined the aid scheme in  the light of Article 87(3)(c) of the EC 
Treaty and the Research and Development framewo rk and has found that the scheme is in 
conformity with that framework.  Therefore the scheme does not adversely affect trading conditions to an extent contrary to the common interest.  The Commission decided to raise no 
objections to the scheme.  In the period to 31 March 2003 no projects under the scheme had 
reached a commercial stage. 
 
62. Wales Tourist Board – Investment Support Scheme 
(a) Period covered by the notification 
 2001 and 2002. 
 
(b) Policy objectives  
 Enhance the quality of the tourism product in Wales. 
 (c) Background and authority for the scheme 
 Section 4 of the Development of Tourism Act 1969. 
 (d) Form of the subsidy  
Grant. 
 G/SCM/N/95/EEC/Add.15 
Page 70  
 
 (e) To whom and how the subsidy is provided 
Subsidy is provided as a grant to both privat e and public sector organisations Undertaking 
tourism development 
 (f) Total amount budgeted 
 2001: £3.0m 
 2002: £3.0m  (g) Duration of programme 
 Indefinitely, pending advi ce from sponsor department. 
 
(h) Assessment of trade effects 
Independent evaluation carried out by Segal Quince Wicksteed (2000) demonstrate positive 
impacts, good value and additionality 
  63. WDA Partnership Development 
(a) Period covered by the notification 
 2001 and 2002. 
 (b) Policy objectives  
To ensure the availability of suitable business pr emises within which initial investment can be 
established. 
 (c) Background and authority for the scheme 
 Authority N656/99. 
 
(d) Form of the subsidy  
Grant. 
 (e) To whom and how the subsidy is provided 
Property developers, investment companies and fi nancial institutions in Wales via four grant 
instruments. 
 
(f) Total amount expended 
 2001: £3.105m 
 2002: £10.735m  
(g) Duration of programme 
 31 December 2006. 
  G/SCM/N/95/EEC/Add.15 
 Page 71 
 
 
 (h) Assessment of trade effects 
 Not applicable. 
 
64. WDA Property for Business 
(a) Period covered by the notification 
 2001 and 2002. 
 (b) Policy objectives  
To ensure the availability of suitable business pr emises within which initial investment can be 
established. 
 
(c) Background and authority for the scheme 
 Authority N655/99. 
 (d) Form of the subsidy  
Grant. 
 (e) To whom and how the subsidy is provided 
 Companies in Wales via three primary grant instruments. 
 (f) Total amount expended 
 2001: £2.697m 
 2002: £17.187m  (g) Duration of programme 
 31 December 2006. 
 
(h) Assessment of trade effects 
 Not applicable. 
  
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