WORLD TRADE  
ORGANIZATION  G/SCM/N/186/EEC/Add.27 
23 December 2009 
 
 (09-6601) 
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 Communities
* relates to subsidy 
programmes of the United Kingdom . 
 
_______________ 
 
                                                      
* On 1 December 2009, the Treaty of Lisbon amendi ng the Treaty on European Union and the Treaty 
establishing the European Comm unity (done at Lisbon, 13 Decembe r 2007) entered into force.  
On 29 November 2009, the WTO received a Verbal Note  (WT/L/779) from the Council  of the European Union 
and the Commission of the European Communities stating that, by virtue of the Treaty of Lisbon, as of 
1 December 2009, the European Union replaces and succeeds the European Community. G/SCM/N/186/EEC/Add.27 
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UNITED KINGDOM 
 
TABLE OF CONTENTS 
 
Page 
 
I. AERONAUTICS RESEARCH PROGRAMME ............................................................4  
II. BIO-ENERGY INFRASTRUCTURE SCHEME (SCOTLAND)..................................5  
III. CAPITAL GRANTS FOR RENEWABLES TECHNOLOGIES..................................6  
IV. CARBON TRUST APPLIED RE SEARCH OPEN CALL ............................................6  
V. CCL (CLIMATE CHANGE LEVY) - EXEMPTION FOR ELECTRICITY 
EXPORTS FROM GOOD QUALITY COMBINED HEAT AND POWER ...............7  
VI. CDC GROUP PLC.............................................................................................................9  
VII. DIRECT RESEARCH IN LOW CARBON TECHNOLOGY ....................................10  
VIII.  EUREKA INITIATIVE...................................................................................................12  
IX. EXCISE DUTY TO BIO ETHANOL USED AS ROAD FUEL ..................................12  
X. GRANT FOR R&D WITHIN AN INDIVIDUAL BUSINESS ....................................13  
XI. GREEN FUEL CHALLENGE PILOT PROJECT – BIOGAS...................................14  
XII. GREEN FUEL CHALLENGE PILOT PROJECT – METHANOL...........................15  
XIII.  HIGHLAND OPPORTUNITY LIMITED ....................................................................16  
XIV.  HIGHLANDS & ISLANDS ENTERPRISE – R&D INNOVATION 
SCHEME FOR SMES.....................................................................................................16  
XV. INVEST NI - PROPERTY DEVELOPMENT SCHEME............................................18  
XVI.  LANDLORD'S ENERGY SAVING ALLOWANCE ...................................................18  
XVII.  NI – AGGREGATES LEVY:  EXTENDED RELIEF FOR AGGREGATE COMMERCIALLY EXPLOITED IN  NORTHERN IRELAND................................20
 
XVIII.  NI – ALL ISLAND COLLABORATIV E R&D SCHEME – INNOVA......................23  
XIX.  NI – BUYING TIME ASSISTANCE SCHEME ...........................................................24  
XX. NI – COMPANY PROGRAMME ROUND THREE (2003 – 2008)............................25  
XXI.  NI:  FILM PRODUCTION FUND .................................................................................26  
XXII.  NI – GAS PIPELINE .......................................................................................................27  
XXIII.  NI:  IRISH LANGUAGE BROADCAST FUND ..........................................................28  
XXIV.  NI – RESTRUCTURING AID........................................................................................29  
XXV.  NI:  SCREEN FUND........................................................................................................29  
XXVI.  NI – SELECTIVE FINANCIAL ASSISTANCE...........................................................30  
XXVII.  NI – SMART..................................................................................................................... 31 
XXVIII.  NI – START PROGRAMME .........................................................................................32   G/SCM/N/186/EEC/Add.27 
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  XXIX.  NI – TECHNOLOGY FUND (NITECH).......................................................................34  
XXX.  NI – VIRIDIAN GROWTH FUND ................................................................................35  
XXXI.  REDUCED RATE OF EXCISE DUTY ON BIODIESEL ...........................................36  
XXXII.  R&D TAX CREDIT.........................................................................................................37  
XXXIII.  REGIONAL SELECTIVE ASSISTANCE....................................................................39  
XXXIV.  RENEWABLES OBLIGATION ORDER 2006............................................................40  
XXXV.   SCOTTISH RESEARCH AND DEVELOPMENT SCHEME....................................41  
XXXVI.  SELECTIVE FINANCIAL INVE STMENT FOR ENGLAND...................................42  
XXXVII.  VACCINES RESEARCH RELIEF................................................................................43  
XXXVIII. WASTE RESEARCH AND INNOVATION PROGRAMME AND WASTE 
DEMONSTRATOR PROGRAMME.............................................................................46  
XXXIX.  WELSH RESEARCH AND DEVELOPMENT SCHEME..........................................48  
XL. YORKSHIRE AND HUMBER - PROLONGATION OF YH R&D 
SCHEME FOR LARGE COMPANIES ........................................................................49 G/SCM/N/186/EEC/Add.27 
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I. AERONAUTICS RESEARCH PROGRAMME 
 [Formerly known as Civil Aircraft Resear ch and Technology Demonstration (CARAD)] 
  The Programme superseded CARAD on 1st April 2000 but retains the same objectives, 
criteria for support and level of funding as applied to CARAD. 
 1. Period covered by the notification
 
  2007 and 2008 
 
2. Policy objectives
 
  To maintain the competitiveness of the UK aeronautics 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. 
 3. Background and authority for the scheme
 
  Civil Aviation Act 1982  
4. Form of the subsidy
 
  Grant  5. 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.  Beneficiari es include companies, research establishments and 
universities.  6. Total amount budgete d (in millions of £)
 
 
 2007 £9.03  2008 £0.63  7. 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.  
 Note:  No new project commitments have been  entered into since 31 March 2004, when the 
Scheme closed to new work.  Spe nd will continue to the completion of existing commitments in period 
ending UK financial year 1 April 2008 - 31 March 2009 . 
 8. 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/186/EEC/Add.27 
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  II. BIO-ENERGY INFRASTRUCTURE SCHEME (SCOTLAND) 
 The scheme supported projects for both supply chai n infrastructure and installation of boilers.  
The State aid notification for the supply chain infr astructure element of the scheme was provided by 
the above notification.  
1. Period covered by the notification
 
  Fiscal Years:   April 2007 - March 2008 (2007/08)    April 2008 - March 2009 (2008/09)  
2. Policy objectives
 
  The aim of the Scottish Biomass Support Sche me was to promote th e biomass (primarily 
wood-fuel) sector in Scotland.  
 The objectives of the scheme were: 
 
• The strategic transformation of the Scottish Biomass wood fuel sector market; 
• supporting rural economies by creating sustainable green jobs; 
• contributing towards renewable energy targets; 
• maximizing carbon savings; 
• create a market for biomass heating and CHP equipment and services; 
• where possible alleviate fuel poverty. 
3. Background and authority for the scheme
 
  The Scheme operates under the Environmental Protection Act 1990 
 
4. Form of the subsidy
 
  Capital grant  
5. To whom and how the subsidy is provided
 
 
• All organizations based in Scotland of varying size and structure; 
• (both public and private) are eligible to apply; 
• private householders are not eligible; 
• funding cannot be given out retrosp ectively under any circumstances. G/SCM/N/186/EEC/Add.27 
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  6. Total amount budgete d (in millions of £)
 
  2007 £2.94  2008 £0  
7. Duration of programme
 
  The scheme was launched in * 2007.  (Payments are scheduled to end in end March 2008*)  
8. Assessment of trade effects
 
  An assessment of the trade effects is due to be undertaken later this year.  
III. CAPITAL GRANTS FOR RENEWABLES TECHNOLOGIES 
IV. CARBON TRUST APPLIED RESEARCH OPEN CALL 
 [Formerly named Low Carbon Innovation Program me (LCIP), which in turn superseded the 
Energy Efficiency Best Practice Programme]  1. Period covered by the notification
 
 
 2007 and 2008 
 2. Policy objectives
 
  The purpose of the Carbon Trust Applied Res earch Open Call is the reduction of greenhouse 
gas emissions with particular emphasis on reductio n of emissions from UK sources.  By supporting 
the development of low-carbon technology, the Carbon Trust aims to bridge the funding gap in the market caused by the presently exis ting lack of internalization of carbon costs.  Carbon Trust funding 
will help to secure the funding continuum that is vital to the successful delivery to market of low 
carbon technologies.  The purpose of the scheme is to support the United Kingdom and the European 
Community in meeting, as a minimum, their international commitments under the Kyoto Protocol. 
 
 The development of low-carbon technologies will lead  to clear horizontal benefits.  It will in 
particular lead to environmental benefits and simultaneously to increased levels of energy (carbon) 
efficiency for energy users.  UK Energy use is  evenly divided between buildings, industry and 
transport.  Positive benefits fl owing from the development and use of new low-carbon technology will 
therefore not be sector specific but accrue acro ss all sectors.  The development of low carbon 
technology will benefit a wide range of industries as well as society as a whole. 
 3. Background and authority for the subsidy
 
  The Carbon Trust Applied Research Open Call is administered by The Carbon Trust ("the 
Trust"), an independent not for profit company formed  to invest public and eventually private finance 
in low-carbon technology and innovation.   The operation of the scheme by the Trust will be supervised by the UK Department of Energy 
and Climate Change ("DECC") and where appropria te the Devolved Administrations of Scotland, 
Wales and Northern Ireland. 
  G/SCM/N/186/EEC/Add.27 
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   The Trust will operate Carbon Trust Applied Research Open Call on the basis of its Grant 
Offer letters from DECC and the Devolved Administrati ons of Scotland, Wales and Northern Ireland.  
The legal bases for providing money to the Carbon Trust for its programmes in England, Wales and Scotland, including Carbon Trust Applied Research Open Call, are the Science and Technology Act 
1965 and the Environmental Protection Act 1990.  In  Northern Ireland, the legal bases are the 
Industrial Development (Northern Ireland) Order 1982 (NI 15) and the Energy Efficiency (Northern 
Ireland) Order 1999 (NI 3) as amended by the Indu strial Development Act (Northern Ireland) 2002. 
 4. Form of the subsidy
 
 
 The form of the subsidy takes the shape of research and development grants. 
 5. To whom and how the subsidy is provided
 
  Universities and SMEs (small scale technology de velopers) are the main beneficiaries of the 
R&D grant funding of the Carbon Trust Applied Research Open Call. 
 6. Total amount paid (in millions of £)
 
  2007 £2.4  2008 £1.6 
 
 Note:  This is the amount of state aid funding paid out in the above calendar years, not the amount budgeted during this time.  7. Duration of the programme
 
 
 The Carbon Trust Applied Research Open Call is anticipated to have a duration of at least 
five years.  At present funding is secured for the first three years.  8. Assessment of trade effects
 
 
 No material trade effects given the small size of individual R&D grants and the types of 
organizations that receive the aid.  These are ve ry small companies in the technology development 
stage and do not have material export capacity.  
V. CCL (CLIMATE CHANGE LEVY) - EXEM PTION FOR ELECTRICITY EXPORTS 
FROM GOOD QUALITY COMBINED HEAT AND POWER 
1. Period covered by the notification
 
  2007-2008  2. Policy objectives
 
 
 Combined heat and power (CHP) is a low- carbon technology, which can be between 25 and 
30 per cent more efficient in primary energy usag e than more traditional forms of secondary energy 
generation.  The aim of the scheme is to encourag e more usage of this type of power generation, 
which is currently at a competitive disadvantage due to  the fact that it is significantly more expensive 
to produce power from CHP than from conventional power plants. 
  The EU Cogeneration Directive (2004/8/EC) ca me into force on 21 February 2004, allowing 
Member States until 21 February 2006 to transpo se it into national law.  The Directive places an G/SCM/N/186/EEC/Add.27 
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  obligation on Member States to ensure that s upport for CHP is based on useful heat demand and 
primary energy savings.  It sets out a methodol ogy for assessing the energy efficiency of CHP 
schemes based on harmonized efficiency referen ce values for the separate production of heat and 
power.  
3. Background and authority for the subsidy
 
  In 2001, the Commission approved the exem ption of non-commercial CHP from the UK's 
climate change levy (CCL).  This exemption wa s specific to electricity produced for industrial 
purposes, i.e. used on-site. 
 
 The UK authorities decided to extend this ex emption to CHP plants that "export" the 
electricity, i.e. that distribute electricity via lo cal networks for supply to the public.  The Commission 
approved this further exemption as allowable State aid in 2003.  
 The exemptions for CHP apply only to "good quality CHP", as defined by the UK's CHP 
Quality Assurance (CHPQA) programme.  CHPQA pr ovides the methods and procedures needed to 
assess and certify the efficiency of the full range of CHP schemes in the UK,  ensuring that incentives 
are targeted fairly and only benefit those schemes whose output is certified as good quality i.e. output that meets certain electrical and power efficienci es.  After good quality CHP electricity output has 
been identified through CHPQA, any additional pow er output is treated as conventional power 
generation, and so does not qualify for CCL exemp tion.  The CHPQA Standard is currently being 
amended so it is fully consistent with the definitio n in Article 12(2) of the Cogeneration Directive. 
  Basic legislation for the climate change levy is contained in Schedule 6 of the Finance Act 
2000, which provides for the exemption from the levy of electricity outputs from good quality CHP 
that are sold direct from the generators to end users.  Section 123 of the Finance Act 2002 inserted 
paragraph 20A into Schedule 6 of the Finance Act 2000.  This paragraph provides the mechanism to 
exempt from the levy supplies of electricity generated from good quality CHP sold by licensed 
electricity utilities to end users.  4. Form of the subsidy
 
 
 Tax relief:  exemption from the climate change levy.  5. To whom and how the subsidy is provided
 
 
 This scheme exempts good quality CHP supplied by licensed suppliers from climate change 
levy charged to consumers for elec tricity exports.  This benefits CHP operators wishing to sell good 
quality CHP electricity to licensed suppliers by help ing to make up the shortfall between the market 
price obtainable for CHP electricity and its cost of production.   The Office of the Gas and Electricity Market s (OFGEM), as the UK's main energy regulator, 
has the lead role in ensuring that any units of electricity sold as having been generated by good quality 
CHP do in fact originate from this source.  They use a mechanism similar to the system of levy 
exemption certificates already used for tracking re newable electricity, using information derived from 
the CHPQA programme, which already monitors and certifies good quality CHP electricity outputs on 
an annual basis.  In this way, HM Revenue and Cu stoms are able to audit sales of levy-free electricity 
through their normal assurance procedures. 
  G/SCM/N/186/EEC/Add.27 
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  6. Total subsidy per y ear (in millions of £)  
  2007 £25  2008 £25  
7. Duration of the programme
 
  The Commission considered a ten-year exemption of the levy to be appropriate in order to 
guarantee the effectiveness of this measure, th ereby running from 1 April 2003 - 31 March 2013. 
 
8. Assessment of trade effects
 
  This measure helps enhance the economics of  CHP and therefore helps to stimulate the 
growth of CHP capacity or, when market conditions  are poor such as in the last few years, helps 
maintain installed capacity in the UK.  It does not affect any one particular sector of the UK economy.  
While we have no data that can provide statistical ev idence of the impact of this measure, it is clear 
that its value (currently c.£4.56 per MWh) has helped.  
VI. CDC GROUP PLC 
1. Period covered by the notification
 
 
 2007 and 2008 
 2. Policy objectives
 
  The objective is to increase the amount of cap ital available to CDC Group plc (an investment 
company wholly owned by the UK government) by exem pting it from UK corporation tax, in order to 
maximise the impact of its mission.   CDC's mission is "to invest its capital so as to  maximize the creation and long term growth of 
viable businesses in poorer developing countries th rough responsible investment and mobilizing 
private finance". 
 
 The tax exemption enables CDC to  re-invest all the returns on its capital for the benefit of the 
poorer developing countries.  3. Background and authority for the subsidy
 
 
 Legislative authority for the Secretary of St ate for International Development to issue an 
order making CDC Group plc exempt from UK co rporation tax was provided under section 20 
(Schedule 3) of the Commonwealth De velopment Corporation Act of 1999. 
  It has been approved, for a duration of 20 years (commencing on 1 May 2003), under 
Article 87(3)(c) of the Treaty establishing the Eur opean Union, by the European Commission in their 
decision "State Aid number C 46/2002 (ex No. 56/2OOl) - United Kingdom" dated 5 March 2003. 
 4. Form of the subsidy
 
 
 An exemption from UK Corporation tax operating with effect from 1 May 2003. 
 G/SCM/N/186/EEC/Add.27 
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  5. To whom and how the subsidy is provided
 
 
• To CDC Group plc. 
• By means of a statutory order making the company exempt from UK corporation tax. 
6. Total amount budgete d (in millions of £)  
 
 2007 £244.5 
 2008  £(84.0) recorded a loss in 2008.  The figur e is therefore the expe cted tax credit/charge 
on the accounting (loss)/profit of CDC Group at the UK tax rate of 28.5 per cent  7. Duration of the programme
 
 
 The tax exemption has no set term under the Commonwealth Development Corporation Act 
of 1999, but is only valid as long as the UK government holds a special share in CDC Group plc as defined in the Articles of Association of the company.   The European Commission have set a maximum duration of 20 years as a condition of their 
approval. 
 8. Assessment of trade effects
 
  The nature of CDC's mission to invest in the private sector in the poorer developing countries is the provision of capital to enterprises unable othe rwise to gain access existing capital markets, and 
to stimulate further private investment flows.  We  do not therefore consider CDC to be in competition 
with other investors or that there are any discernible trade effects.  
VII. DIRECT RESEARCH IN LOW CARBON TECHNOLOGY 
1. Period covered by the notification
 
 
 2007 and 2008  2. Policy objectives
 
 
 This programme addresses impor tant "innovation gaps" and reduces the risks for the private 
sector involvement in early-stage technology deve lopment with the ultimate aim of accelerating low-
carbon products to market.  3. Background and authority for the scheme
 
 
 This is a new scheme which complements the existing "Applied Research Open Call" scheme 
for R&D project grant funding administered by the Carbon Trust.  The new scheme is intended to 
support larger projects (>£500,000) and will use qu asi-commercial mechanisms such as equity 
investment and convertible debt.   G/SCM/N/186/EEC/Add.27 
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  4. Form of the subsidy  
  The scheme covers four aid measures:  
• Aid for R&D projects through equity, quasi -equity, convertible loans and direct 
non-repayable grants; 
• aid for IPR costs for SMEs through non-repayable grants; 
• aid for Young Innovative Enterprises through non-repayable grants; 
• aid for the loan of highly-qualified personnel non-repayable through grants. 
5. To whom and how the subsidy is provided
 
  The scheme is open to businesses of all sizes and research organisations involved in the 
development of low carbon technologies 
 
6. Total amount budgeted, calendar years (in millions of £)
 
  2007 £0 (the scheme was only launched in 2008)  2008 £3.7  
7. Duration of programme
 
  Six years  8. Assessment of trade effects
 
 
 The European Commission has found that the sch eme does constitute State aid, but that it is 
line with the guidelines provided in the R&D&I Fram ework and therefore passes the balancing test.  
Due to the knowledge spill over market failure for i nvestment in early-stage R&D and the relatively 
small amounts being provided the scheme is not expect ed to have a significant effect on international 
trade. 
 
 The Commission findings for each of the aid measures are given below.  
 Aid for R&D Projects: 
 "The commission can therefore conclude that  the aid for R&D projects is in line with 
point 5.1 of the R&D&I Framework." 
 
 Aid for IPR costs for SMEs:  
 "The commission can therefore conclude that th e aid to SMEs for IPR costs complies with the 
R&D&I Framework."   Aid for young innovative enterprises:  
 The commission can therefore conclude that th e aid for young innovative enterprises is in line 
with the R&D&I Framework."  
 Aid for the loan of highly qualified personnel:  
 The commission can therefore conclude that th e aid for the loan for highly qualified personnel 
is in line with the R&D&I Framework." G/SCM/N/186/EEC/Add.27 
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VIII.  EUREKA INITIATIVE 
1. Period covered by the notification
 
  2007 and 2008 
 
2. Policy objectives
 
  To encourage and assist collaborative research  and development projects between European 
companies, research organizations a nd higher education institutes (HEIs). 
 
3. Background and authority for the scheme
 
  Science and Technology Act 1965  
4. Form of the subsidy
 
  Grant of up to 50 per cent of eligible project costs  5. To whom and how the subsidy is provided
 
 
 Mainly given to SMEs, research organisations and HEIs - grant paid quarterly in arrears. 
 6. Total amount budgete d (in millions of £)
 
  2007 £0 
 2008 £0 
 7. Duration of programme
 
  Launched in 1985 - no end date set.  
8. Assessment of trade effects
 
  Not available  
IX. EXCISE DUTY TO BIO ETHANOL USED AS ROAD FUEL 
1. Period covered by the notification
 
  2007 and 2008  2. Policy objectives
 
 
 The Government is keen to support alternativ e fuels that produce environmental benefits, and 
recognises that bioethanol can offer environmental advantages compared with conventional fuels, in 
terms of both greenhouse gas emissions and local air quality.   The purpose of the incentive is to help offset  the higher production costs of bioethanol and 
enable it to compete more effectively with mineral based petrol. 
  G/SCM/N/186/EEC/Add.27 
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  3. Background and authority for the subsidy  
  The duty incentive announced by the Chancellor in Budget 2003.  Legislation on the duty incentive was included in Finance Act 2004 and th e incentive was introduced  with effect from 
1 January 2005. 
 
4. Form of the subsidy
 
  The form of aid is a tax concession.  The duty ra te for bioethanol used as road fuel is 20 pence 
per litre below the rate for ultra-low sulphur petrol. 
 
5. To whom and how the subsidy is provided
 
  Producers of bioethanol set aside for use as road fuel.  
6. Total amount budgete d (in millions of £)
 
  2007 £30  2008 £40  7. Duration of the programme
 
 
 The state aid notification was approved until 2011.   The Government has announced that the 
duty differential of 20 pence per litre will cease from 2010.  8. Assessment of trade effects
 
 
 The introduction of the duty incentive has led to an  increase in the use of road fuel bioethanol.  
By the end of 2007, 150 million litres were releas ed for use and in 2008, this figure increased to 
205 million litres.  This is 130 per cent higher than  the 85 million litres that were released in 2005 
 
X. GRANT FOR R&D WITHIN AN INDIVIDUAL BUSINESS 
1. Period covered by the notification  
  2007 and 2008  2. Policy objectives
 
 
 To improve the overall innovation performan ce of the UK economy by helping business to 
successfully exploit new ideas  3. Background and authority for the subsidy
 
 
 Section 5 of Science and Technology Act 1965 
 4. Form of the subsidy
 
  Assistance is provided in the form of discreti onary grants paid direct to the recipient. 
 G/SCM/N/186/EEC/Add.27 
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  5. To whom and how the subsidy is provided
 
  Aid is restricted to individuals or enterpri ses falling within the definition in the "Community 
guidelines on state aid for small and medium-si zed enterprises" (OJ L 107, 30.4 1996, p.4). 
 
 Offers of aid are made via a formal undertaki ng between the awarding body and the recipients 
concerning the conditions of the scheme and the decision to offer aid.  6. Total amount budgete d (in millions of £)
 
 
 2007 £27 
 2008 £27  7. Duration of the programme
 
 
 Grant for R&D came into operation on 1 June  2003.  The scheme will be amended if 
necessary to comply with the terms of any new Co mmunity Framework for State aid for Research and 
Development.  8. Assessment of trade effects
 
 
 Grant for R&D is a new scheme replacing the former Smart scheme.  The latest evaluation of 
Smart showed that in 2000 turnover was £500m higher and exports £270m higher as result of Smart. 
 
XI. GREEN FUEL CHALLENGE PI LOT PROJECT – BIOGAS 
1. Period covered by the notification  
 
 2007 and 2008  2. Policy objectives
 
  Environmental 
 
3. Background and authority for the subsidy
 
  Pre Budget Report (PBR) 2000 announced a Green Fuel Challenge.  PBR 2001 announced that this project was one of the successful applican ts.  A Statutory Instrument allowing biogas used in 
the project to be used duty free was introduced in  2006 and lasts for a period of five years. 
 4. Form of the subsidy
 
  The form of aid is a tax concession.  No dut y is charged on the biogas used in the project. 
 
5. To whom and how the subsidy is provided
 
  The producer of biogas running the pilot project  6. Total amount budgete d (in millions of £)
 
 
 2007 £0  2008 £0.038   G/SCM/N/186/EEC/Add.27 
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  7. Duration of the programme  
  The project is expected to end in 2011.  8. Assessment of trade effects
 
 
 The project, which aims to test the environmental impact of biogas obtained from landfill sites and used in vehicles and to test the emissions characteristics and performance of the vehicles, was delayed owing to a number of technical difficu lties.  However, these have been overcome and the 
project is gradually getting under wa y.  As the work is still in the developmental phase, there are no 
trade effects to report. 
 
XII. GREEN FUEL CHALLENGE PILOT PROJECT – METHANOL 
1. Period covered by the notification
 
 
 2007 and 2008 
 2. Policy objectives
 
  Environmental  
3. Background and authority for the subsidy
 
  Pre Budget Report (PBR) 2000 announced a Green Fuel Challenge.  PBR 2001 announced that this project was one of the successful applicants .  A Statutory Instrument allowing methanol used 
in the project to be used duty  free was introduced in 2003 and lasts for a period of five years. 
 
4. Form of the subsidy
 
  The form of aid is a tax concession.  No duty is charged on the methanol used in the project. 
 5. To whom and how the subsidy is provided
 
 
 The producer of methanol running the pilot project  6. Total amount budgeted
 
 
 2007 £0 
 2008 £0  7. Duration of the programme
 
  The project is expected to end in 2008. 
 
8. Assessment of trade effects
 
  The project, which aims to test the environm ental impact of near 100 per cent methanol 
blends in diesel type engines and test the emis sions characteristics and performance of the vehicles, 
has been hampered owing to lack of funds, and is  gradually coming to an end.  There are no trade 
effects to report.  G/SCM/N/186/EEC/Add.27 
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  XIII.  HIGHLAND OPPORTUNITY LIMITED 
1. Period covered by the notification
 
  2007 and 2008  
2. 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. 
 
3. Background and authority for the scheme
 
  Section 48(4) of the Finance Act 1982  4. Form of the subsidy
 
 
 Loans in the range £1,000 - £50,000  5. To whom and how the subsidy is provided
 
  Loans are provided to SMEs, unsecured below £50,000, up to a maximum of seven years 
duration at a maximum interest rate of 5 per cent. 
 6. Total amount budgete d (in millions of £)
 
  2007 £0.32 
 2008 £0.74 
 7. Duration of programme
 
  Open-ended.  
8. Assessment of trade effects
 
  In year 2007, the most recent for which figures are available, the number of SMEs assisted during the year was 33 with an average loan of £9,57 5.  136 full-time equivalent jobs were created or 
retained. 
 
XIV.  HIGHLANDS & ISLANDS ENTERPRISE – R&D INNOVATION SCHEME FOR 
SMES 
1. Period covered by the notification
 
  2007 and 2008 
  G/SCM/N/186/EEC/Add.27 
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  2. Policy objectives  
  To stimulate and support applied R&D by SMEs , as a precursor to investment leading to 
diversification and expansion of the local econo my.  There is a strong link between innovation by 
businesses and regional economic growth.  The leve l 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 and averaged 71 per cent in 2000 – 2002 on a comparable basis of 15 EU Member States). 
(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. 
3. 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). 
 
4. Form of the subsidy  
  Grants  5. To whom and how the subsidy is provided
 
 
 Recipients must be SMEs according to th e EU definition of an SME, or research 
establishments on behalf of SMEs.  6. Total amount of grant payments (in millions of £)
 
 
 2007 £0.455  2008 £0.723  7. Duration of programme
 
 
 6 September 2001 to 31 December 2008. 
  The scheme has been replaced by the EU a pproved Scottish Research and Development and 
Innovation Scheme from 1 January 2009.  G/SCM/N/186/EEC/Add.27 
Page 18  
 
  8. Assessment of trade effects
 
  No direct affects, as tradable goods ar e not normally produced in R&D projects.  
Consequential investment leads to production in goo ds and services in a wide variety of sectors (the 
scheme is non-sector specific and non-specific in term s of favouring neither local nor export market 
for the ultimate products).  Virtually all co mpanies assisted trade on the UK market only. 
 
XV. INVEST NI - PROPERTY DEVELOPMENT SCHEME 
1. Period covered by the notification
 
 
 2007 and 2008 
 2. Policy objectives
 
  To encourage the private sector to develop property for occupation by Invest NI assisted 
projects. 
 3. Background and authority for the scheme
 
  Industrial Development Order (NI) 1982.  Industrial Development Act (NI) 2002. 
 
4. Form of the subsidy
 
  Grant  
5. To whom and how the subsidy is provided
 
  The subsidy is paid to companies undertaking the development of industrial & commercial property usually as a lump sum on satisfactory completion of the works.  6. Total amount budgete d (in millions of £)
 
 
 2007 £0.55  2008 £0.73  7. Duration of programme
 
 
 Indefinite  8. Assessment of trade effects
 
  Minimal 
 
XVI.  LANDLORD'S ENERGY SAVING ALLOWANCE 
1. Period covered by the notification
 
  2008 (scheme introduced 8 July 2008) 
  G/SCM/N/186/EEC/Add.27 
 Page 19 
 
 
  2. Policy objectives  
  Increasing energy efficiency in residential pr operty can make a significant contribution to 
reducing carbon emissions.  There is a particular need  for action targeted at the rented residential 
sector, since such properties produce more emissions th an other homes.  This reflects a market failure 
in the residential rented property sector, whic h discourages landlords from improving the energy 
efficiency of the properties that they let.  Ther e is a real incentive for a homeowner to improve the 
energy efficiency of their home, which does not exis t for landlords.  This is because the benefits of 
such improvements, in the form of increased comfor t and lower utility bills, are enjoyed by the tenant 
and not to the landlord.  It is this market failure  that the Landlords Energy Saving Allowance seeks to 
address. 
 3. Background and authority for the scheme
 
  The 2006 Pre-Budget Report announced the schem e would apply to corporate landlords of 
residential property, subject to State aid a pproval from the European Commission.  Primary 
legislation was laid in 2007 and following receipt  of State aid approval in May 2008, secondary 
legislation was laid in June 2008.   Primary Legislation:  Finance Act 2007, section 17  Secondary legislation:  The Energy-Savi ng Items (Corporation Tax) Regulations 2008 
 
4. Form of the subsidy
 
  LESA allows landlords to deduct from their taxable profits the costs of acquiring and 
installing certain energy saving items in the prope rties they rent, thus reducing their liability to 
corporation tax. 
  The allowance is capped at £1,500 per dwelling a year and the qualifying materials are:  loft 
insulation, cavity wall insulation, solid wall insulation, hot water system insulation, draught proofing and floor insulation.  
5. To whom and how the subsidy is provided
 
  The allowance is available to corporate landlor ds of residential properties.  The allowance 
enables the beneficiary to deduct the costs of acqui ring and installing specified energy-saving items in 
the residential properties they let when computing th e taxable profits of their property business.  Such 
costs are not deductible under normal tax rules. 
 6. Total amount budgete d (in millions of £)
 
  2007 £0 (scheme started in 2008)  2008 £5 (applies to the period 8/7/08 - 31/3/09) 
 
7. Duration of programme
 
  8 July 2008 - 31 March 2015  
8. Assessment of trade effects
 
  No assessment has been made as no such effects are anticipated. 
 G/SCM/N/186/EEC/Add.27 
Page 20  
 
  XVII.  NI – AGGREGATES LEVY:  EX TENDED RELIEF FOR AGGREGATE 
COMMERCIALLY EXPLOITED IN NORTHERN IRELAND 
1. Period covered by the notification
 
  2007 and 2008 
 
2. Policy objectives
 
  The main objectives of the scheme are to support sustainable development and increase the environmental benefits of the aggregates levy in Northern Ireland.  Specifically, by linking the receipt 
of tax relief with the need for operators to undert ake improvements to the way their operations are 
run, the scheme supports UK Government efforts at  sustainable development, and encourages the 
efficient use of natural resources;  the schem e has been designed so that it does not have 
disproportionate effects on co mpetition and economic growth. 
 
3. Background and authority for the subsidy
 
  Following the introduction of the aggregates levy and the original Northern Ireland relief scheme in April 2002, the UK Government was concer ned to ensure that the levy was achieving its 
desired environmental objectives, both in Northern Ireland and the rest of the UK, without unforeseen 
and undesirable economic impacts.  Initial indications after the first year of the levy suggested that, 
while Great Britain had benefited from reduced use of  virgin aggregates and a growth in the recycled 
aggregates sector, Northern Ireland had not been  benefiting from the levy in the same way. 
  Representations from the quarrying industry in  Northern Ireland, and other anecdotal 
evidence from the region, suggested that particular lo cal factors were preventing the levy from having 
the environmental impact there it was designed to ac hieve.  These factors included the unavailability 
of recycled aggregate and alternative materials in Northern Ireland (with a consequent inability for the 
industry to adjust in the timescale allowed under the original relief scheme);  adverse competition 
from an increase in illegal quarrying operations in  Northern Ireland and undeclared (and therefore 
untaxed) imports of virgin aggregate from the Re public of Ireland across the land border.  These 
factors were preventing the levy from having the e nvironmental impact it was designed to achieve.  
Moreover, it was suggested that the problem was likely to get significantly worse and increasingly 
affect processed product businesses as their relief was reduced, further undermining the 
environmental impact of the levy in Northern Ireland.   The UK Government therefore commissioned research, which considered the validity of the 
industry information and helped inform possible re medial options.  The Symonds' Group (specialist 
consultants in the quarrying and construction sect ors) undertook this work and their report was 
published on 10 December 2003.   The Symonds' report demonstrated that the levy was not working as a normal economic instrument in Northern Ireland, by having an impact on demand through the price mechanism.  
Instead, prices of aggregates had risen very little , but demand for legitimate aggregates had fallen 
because of the competition that the levy encourag ed from untaxed imports of aggregates from the 
Republic of Ireland, and from illegal quarries.  In Northern Ireland, therefore, the levy was not 
achieving its main environmental objective of reduc ing the environmental impact of aggregates 
quarrying - indeed, the opposite was the case since ill egal quarries can be expected to operate without 
any regard for normal environment practices.   Competition from these sources was having a 
detrimental economic effect on legitimate supplie rs of unprocessed virgin aggregate, and greatly 
reduced existing incentives to utilize r ecycled and alternative materials. 
  G/SCM/N/186/EEC/Add.27 
 Page 21 
 
 
   Symonds' research also suggested that it w as unrealistic to expect the aggregates and 
construction sectors to increase their use of levy-free r ecycled and alternative materials in a period of 
five years, because availability of such materials in  Northern Ireland is quite modest and the necessary 
infrastructure for their collection and processing is virtually non-existent.  Symonds also suggested 
that such sources of alternatives and materials for recycling that do exist tend to vary by region, 
mainly arising in or very close to Belfast and the surrounding urban area.  Moreover, the availability 
of cheap virgin aggregate and of cheap landfill sites for disposing of construction and demolition 
wastes (instead of reusing them) meant that there wa s little incentive to use such  recycled material as 
was available.  This was of particular concern to  the UK Government because it critically undermined 
the objective of the original relief schem e for manufacturers of processed products. 
 
 The overall conclusion the UK Government drew from the Symonds' findings was that the environmental aims of the levy were unlikely to be  met in Northern Ireland, as the levy and relief 
scheme existed at the time.  
 Finance Act 2003 replaced section 30A of Part II of the Finance Act 2001, which contains the 
legislation for the aggregates levy, with a new section 30A.  This section permits the Commissioners 
of Revenue and Customs to make regulations governing entitlement to tax credits for aggregate used 
in Northern Ireland for a prescribed purpose.  The regulations covering the relief scheme from 
1 April 2004 are the Aggregates Levy (North ern Ireland Tax Credit) Regulations 2004 
(SI 2004/1959). 
 
4. Form of the subsidy
 
  The form of aid is tax relief, linked to ne gotiated agreements committing beneficiaries to 
making environmental performance improvements.  The details of the relief scheme are as follows: 
 
• The relief covers aggregate used in pr ocessed products and virgin aggregate; 
• the relief is fixed at 80 per cent of the full rate for the full duration of the scheme 
(1 April 2004 to 31 March 2011).  The full rate of levy between 1 April 2004 and 31 March 2008 was £1.60 per tonne - the amount  of aid beneficiaries received during 
that period was therefore £1.28 per tonne of aggregate.  The full rate of levy increased to £1.95 per tonne from 1 April 2008 to 31 March 2009 - the amount of aid 
beneficiaries received during that period w as therefore £1.56 per tonne of aggregate; 
• eligibility to relief is conditional upon claima nts entering into and complying with the 
terms of a negotiated agreement.  The relief is not discretionary - if the conditions of 
the agreements are met the business is  automatically entitled to relief; 
• the environmental improvements that quarry operators sign up to are regularly 
monitored and reviewed; 
• aggregate used to manufacture processed products in Northern Ireland which is 
subsequently exported from the UK is eligible for the 80 per cent relief; 
• as quarry owners extracting aggregate in Great  Britain or the Republic of Ireland are 
not in a position to enter into agreements a nd do not have to incur the cost of making 
the necessary environmental improvements, th eir aggregate is not eligible for the 
relief, even if it is commercially  exploited in Northern Ireland. G/SCM/N/186/EEC/Add.27 
Page 22  
 
   The negotiated agreements set targets for im provement in environmental performance of 
quarrying operations;  among the areas of performan ce covered are air quality, blasting, dust, energy 
efficiency, groundwater and waste management.  E ach agreement is individually tailored to the 
circumstances of the quarry, taking into account, for example, current standards and scope for 
improvement.  The UK Government devised a framework for drawing up and monitoring such 
environmental performance agreemen ts with quarry operators based upon a framework set out in its 
Code of Practice and Compliance Scheme and is derived from a report produced for the UK 
Government by consultants from the HELM Group.   The Department of the Environment in No rthern Ireland (DoENI) is responsible for 
conducting the initial assessment of a quarry's enviro nmental standards and monitoring performance 
against the targets set out in the agreement.  Co mpliance is reflected by the issue/renewal of a 
certificate by DoENI, which, in turn, is used by  the business to support claims to relief during the 
period of the certificate's validity.  
 The scheme is in line with the scope provided in paragraph 51(2)(b) of the Community 
guidelines on State aid for environmental protecti on.  The scheme addresses the levy's unintended 
economic impacts in Northern Ireland, while still de livering environmental benefits, in accordance 
with the levy's objectives.  5. To whom and how the subsidy is provided
 
 
 The beneficiaries are businesses that are regi stered with HM Revenue and Customs for the 
aggregates levy and that commercially exploit virgin  aggregate in Northern Ireland.  Aggregate or 
products made from aggregate sent from Northern Ir eland to Great Britain are not eligible for the 
relief and are subject to the full rate of  levy upon first commercial exploitation. 
 
6. Total amount budgete d (in millions of £)  
  2007 £30  2008 £30  
7. Duration of the programme
 
  The relief came into effect on 1 April 2004 and will continue until 31 March 2011. 
 8. Assessment of trade effects
 
 
 An industry survey in 2002 of a sample of quarry operators found that 52 employees had been made redundant in the firms surveyed in the period April to September 2002, and that a further 58 employees were expected to be made redundant  if there was no improvement in the economic 
downturn of the aggregates industry following the introduction of the levy.  
 In addition, the survey showed that 280 jobs could be lost in Northern Ireland as a result of 
aggregates processing companies relocating over the border to the Republic of Ireland, if processed 
products were not given any further prot ection against distortion of competition. 
  The extended relief scheme is having a significan t impact in helping to prevent these, and 
future, job losses. 
  G/SCM/N/186/EEC/Add.27 
 Page 23 
 
 
  XVIII.  NI – ALL ISLAND COLLABORATIVE R&D SCHEME – INNOVA 
1. Period covered by the notification  
  2007 and 2008  
2. Policy objectives
 
  Northern Ireland and the Republic of Ireland spend approximately 1.5 per cent of their GPD 
on R&D initiatives, whereas the EU average largely exceeds 2 per cent of the GDP.  Ireland ranks for 
12th lowest country in terms of GPD spend on R& D among developed economies.  Therefore there is 
a need to invest on R&D in order to boost economic  growth in Northern Ireland and the Republic of 
Ireland and also to target 3 per cent of GPD for overall R&D spending as agreed at the Barcelona European Council.   The aim of the pilot scheme is to address this weakness by encouraging and supporting 
enterprises to undertake collaborative cross-borde r research and technological development with 
commercial potential in order to stimulate growth , strengthen competitiveness and encourage flows of 
technology among network of companies, particularly  SMEs in Northern Ireland and the Republic of 
Ireland.   The pilot scheme is targeted at R& D in the biotechnology, medical devices and 
pharmaceuticals sectors.  This, it will support compani es that are developing their R&D activity in the 
wider life and health technologies sectors, acting in cross-border collaboration with other companies. 
  It is anticipated that, depending on a positiv e external review, the pilot scheme would be 
rolled out on a larger scale at a later stage,  subject to appropriate State aid approval. 
 
3. Background and authority for the scheme
 
  The legal basis for the scheme is the British/ Irish Agreement Act 1999, which authorises the 
awarding body (InterTradeIreland:  a non-departmental  public body) to administer and fund projects 
under the proposed scheme. 
 
4. Form of the subsidy
 
  Assistance will be provided in th e form of non-repayable grants. 
 
5. To whom and how the subsidy is provided
 
  The pilot scheme is targeted at SMEs, although large companies will be eligible to apply.  
The estimated number of recipients is from 10 to 20.  It is anticipated that 9 projects will be supported 
in the pilot phase giving rise to 18 company participants.  
6. Total amount budgete d (in millions of £)
 
  2007 £0.38  2008 £0.12  
7. Duration of programme
 
  The pilot scheme will operate for three years fro m the date of the Commission's approval.  
The first 12 months will be allocated to the approva l of projects for funding under the scheme.  The G/SCM/N/186/EEC/Add.27 
Page 24  
 
  maximum duration of a project will be 24 months.  The budget for this pilot scheme is approximately 
£3m (about €4.1m) of which approxi mately €570,000 will be used dur ing the 1st year, €3m during the 
2nd year and €500,000 during the 3rd year, amounting in total €4.106,665.  The maximum grant per company is €200,000.  
8. Assessment of trade effects
 
  An independent evaluation was carried out in  2007 concluded that the Innova programme 
should continue to be geared towards supporting high-risk, high-return research and development 
activities. 
 
XIX.  NI – BUYING TIME ASSISTANCE SCHEME 
1. Period covered by the notification
 
  2007 and 2008 
 
2. 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 viability of such a 
plan. 
 
3. Background and authority for the scheme
 
  Buying Time forms one part of Invest NI's  support under the European Commission's Rescue 
and Restructuring Guidelines. 
 
 Authority for the scheme: Industrial Development Act (NI) 2002   Industrial Development Order (NI) 1982.  4. Form of the subsidy
 
 
 Loan 
 5. To whom and how the subsidy is provided
 
  The loan is provided to manufacturing and internationally traded service companies in 
Northern Ireland who are experiencing trading difficulties. 
 6. Total amount budgete d (in millions of £)
 
  2007 £0.5  2008 £0.4 
 
7. Duration of Programme
 
  Indefinite  
8.  Assessment of Trade effects
 
  To be evaluated   G/SCM/N/186/EEC/Add.27 
 Page 25 
 
 
  XX. NI – COMPANY PROGRAMME ROUND THREE (2003 – 2008) 
1. Period covered by the notification  
  2007 and 2008  
2. Policy objectives
 
  To stimulate manufacturing and other businesses in Northern Ireland to develop innovative 
and high technology products and processes within a strategic business framework that improves the 
national and international competitiven ess of the business.  Specifically: 
 
• To increase the level and quality of pre- competitive development research and 
development in Northern Ireland; 
• to increase the number of businesses involved in research and development; 
• to increase the number of well-designed and commercially successful Northern 
Ireland products introduced in both home and export markets. 
3. Background and authority for the subsidy
 
 
 Compete seeks to address the comparatively low investment in R&D in Northern Ireland 
relative to UK and US averages.  Compete is vital part of Invest Northern Ireland's strategy to 
promote innovation, stimulate higher levels of R&D and Design, and improve knowledge transfer to 
Northern Ireland industry.  
 Authority: The Industrial Development (NI) Act 2002. 
  The Industrial Development (NI) Order 1982  4. Form of the subsidy
 
  Direct grants, equity and / or loans 
 
5. To whom and how the subsidy is provided
 
  Manufacturing and internationally trad able service businesses in Northern Ireland 
 
6. Total amount budgete d (in millions of £)
 
  2007 £3.3  2008 £7.3  7. Duration of the programme
 
 
 To 31.12.2008.  Replaced by Invest NI's Grant for R&D  8. Assessment of trade effects
 
 
 Subject to periodic evaluation, the latest of which took place in 2004 - the evaluation found, 
amongst other things, that:  G/SCM/N/186/EEC/Add.27 
Page 26  
 
  • The programme was effective in increasing R&D in it its target base; 
• there is a case for government support for additional business R&D. 
XXI.  NI:  FILM PRODUCTION FUND 
1. Period covered by the notification
 
  2007 and 2008 
 
 The State aid for the Northern Ireland Film  Production Fund was subsumed within a new 
State aid approval in February 2007 – Nort hern Ireland Screen Fund N593/2006 which was 
subsequently subsumed within state aid appr oval No. 70/2009 Northern Ireland Screen Fund 
 2. Policy objectives
 
 
 The Fund was set up to provide finance for the production of quality film and television drama products in Northern Ireland.  The Fund is  in line with the Communication on certain legal 
aspects relating to cinematographic and ot her audio-visual guidelines (2002/C 43/04). 
 
3. Background and authority for the subsidy
 
  Industrial Development Act (Northern Ireland) 2002 
 4. Form of the subsidy
 
 
 Loan 
 5. To whom and how the subsidy is provided
 
  The Scheme is limited to film and television production companies. 
 
6. Total amount budgete d (in millions of £)
 
  2007 £0.77  2008 £0.02 
 
7. Duration of the programme
 
  Expired in February 2007 as subsumed within  State aid approval N593/2006 Northern Ireland 
Screen Fund which was subsequently subsumed w ithin state aid approval No. 70/2009 Northern 
Ireland Screen Fund. 
 
8. Assessment of trade effects
 
  Not relevant   G/SCM/N/186/EEC/Add.27 
 Page 27 
 
 
  XXII.  NI – GAS PIPELINE 
1. Period covered by the notification  
  2007 and 2008  
2. Policy objectives
 
  The development and maintenance of an effici ent, economic and co-ordinated gas industry in 
Northern Ireland.  
3. Background and authority for the subsidy
 
  On 21 September 2001, the Northern Ireland Executive announced its support for the development of a multi million pound gas project.  The support is in the form of a grant package up to £38m, including an Irish Government contribution of €12.7m / £8.5m. 
 
 The project involves the construction by Bord Gais Eireann United Kingdom, BGE (UK), a subsidiary of the state owned Republic of Ireland gas company, of a gas pipeline from Dublin to 
Antrim (known as the South - North pipeline) which will link with a pipeline from near Carrickfergus 
to Londonderry (the North West pipeline).  
 The pipeline to the North West was completed in October 2004 and the company completed 
construction of the South-North pipeline in October 2006.   These gas transmission pipelines will facilitate the supply of gas to ten towns along their routes. 
 
 The subsidy is being paid under th e Energy (Northern Ireland) Order 2003. 
 4. Form of the subsidy
 
  Grant payments 
 
5. To whom and how the subsidy is provided
 
  BGE (UK) - Grant payments  
6. Total amount budgete d (in millions of £)
 
  2007 £3.32  2008 £0  7. Duration of the programme
 
 
 The North West pipeline was constructed in 2004 and the South/North pipeline was built in 
2006.  8. Assessment of trade effects
 
 
 Will facilitate the development of the gas indus try in Northern Ireland and also cross border 
trading.  G/SCM/N/186/EEC/Add.27 
Page 28  
 
  XXIII.  NI:  IRISH LANGUAGE BROADCAST FUND 
1. Period covered by the notification
 
  2007-2008  
 However, state aid for the Irish Language Br oadcast Fund was subsumed within a new State 
aid approval in February 2007 - Nort hern Ireland Screen Fund N593/2006). 
 2. Policy objectives
 
 
 The Fund was set up to provide finance for the production of quality moving image products 
(film, television or other moving image) in the Irish  Language in Northern Ireland.  The Fund is in 
line with the Communication on certain legal as pects relating to cinematographic and other 
audio-visual guidelines (2002/C 43/04).  
3. Background and authority for the subsidy
 
  Education & Library Services Etc Gran ts Regulation (Northern Ireland) 1994 
 Article 87 of the EC Treaty  4. Form of the subsidy
 
 
 Loan  5. To whom and how the subsidy is provided
 
 
 The Scheme is limited to film, televisi on or other moving image production companies. 
 6. Total amount budgete d (in millions of £)
 
  2007 £0.22  2008 £0 
 
7. Duration of the programme
 
  Expired in February 2007 as subsumed within state aid approval N593/2006 Northern Ireland 
Screen Fund which was subsequently subsumed within state aid approval No70/2009 Northern 
Ireland Screen Fund. 
 8. Assessment of trade effects
 
  Not relevant   G/SCM/N/186/EEC/Add.27 
 Page 29 
 
 
  XXIV.  NI – RESTRUCTURING AID 
1. Period covered by the notification  
  2007 and 2008  
2. Policy objectives
 
  To provide short-term support to enable comp anies in difficulty to implement a restructuring 
plan on an appropriate timescale enabling th em to return to long term viability. 
 
3. Background and authority for the subsidy
 
  Restructuring Support forms one part of Invest NI's support under the European Commission's Rescue and Restructuring Guidelines.  
 Authority for the scheme: The Industrial Development Act (NI) 2002. 
     The Industrial Development Order (NI) 2002.  4. Form of the subsidy
 
  Grant, Equity, Loan. 
 
5. To whom and how the subsidy is provided
 
  The supported is provided to manufacturing and internationally traded service companies in 
Northern Ireland who are experiencing trading difficulties. 
 
6. Total amount budgete d (in millions of £)
 
  2007 £0.175  2008 £0  
7. Duration of the programme
 
  Indefinite  8. Assessment of trade effects
 
 
 To be evaluated  
XXV.  NI:  SCREEN FUND 
1. Period covered by the notification
 
 
 2007 and 2008 
  The state aid approval for the Northern Ire land Screen Fund was amended in March 2009 
with a re-designated state aid approval No70/2009 Northern Ireland Screen Fund. 
 G/SCM/N/186/EEC/Add.27 
Page 30  
 
  2. Policy objectives
 
  The primary objective is to provide financ ial assistance for the development and production 
of moving image or audiovisual product.  Funds will be  provided to help deliver  a consistent flow of 
high quality and culturally significant programmi ng including Irish Language programming with the 
ultimate aim of ensuring that the culture and cr eative potential of Northern Ireland is expressed 
through moving image.  The Fund is in line with the Communication on certain legal aspects relating 
to cinematographic and other audio-visual guidelines (2002/C 43/04).  3. Background and authority for the subsidy
 
 
 Education and Library Services Etc Grants Re gulation (Northern Ireland) 1994 & Industrial 
Development Act (Northern Ireland) 2002 (replacing  The Industrial Development (Northern Ireland) 
Order 1982.  
4. Form of the subsidy
 
  Loan  5. To whom and how the subsidy is provided
 
 
 The Scheme is limited to film and television production companies. 
 6. Total amount budgete d (in millions of £)
 
  2007 £3.69 
 2008 £5.05 
 7. Duration of the programme
 
  Two years as superseded in March 2009 by  state aid approval No. 70/2009 Northern Ireland 
Screen Fund. 
 
8. Assessment of trade effects
 
  Not relevant  XXVI.  NI – SELECTIVE FINANCIAL ASSISTANCE 
1. Period covered by the notification
 
  2007 and 2008  2. Policy objectives
 
 
 This is the principle scheme of assistance used  in Northern Ireland to attract new inward 
investment and encourage existing companies to de velop their international competitiveness leading 
to growth and greater employment opportunities.  It is the equivalent of Grant for Business 
Investment in England. 
 
 The SFA Scheme relates 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 establishment.  G/SCM/N/186/EEC/Add.27 
 Page 31 
 
 
   
3.  Background and authority for the scheme  
  The Industrial Development Act (NI) 2002.  The Industrial Development Order (NI) 1982. 
 
4.  Form of the subsidy
 
  Capital grant, revenue grant, loan or loan guarantees or share capital.  
5.  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, synthetic fibres, vehicles, textiles and clothing, and agriculture and food processing). 
 
6. Total amount pledged (in millions of £)
 
  2007 £19  2008 £42  
7.  Duration of Programme
 
  Notified to the European Commission until 31.12.2013.  8. Assessment of Trade effects
 
 
 Subject to periodic evaluation.   The scheme was most recently evaluated as part of a wider review of Regional Aid in the United Kingdom.  The scheme has contributed to business growth in Northern Ireland and focuses 
increasingly on productivity improvements. 
 
XXVII.  NI – SMART 
1. Period covered by the notification
 
  2007 and 2008. 
 
2. Policy objectives
 
  To support research and development into t echnologically innovativ e products and processes 
or buy external consultancy to improve their use and exploitation of technology.  Smart aims to: 
 
• Improve the future competitiveness of th e Northern Ireland economy by supporting 
innovative individuals and SMEs, which are a dynamic source of new wealth, and by 
encouraging more SMEs to become innovative;  and 
• Help contribute towards a climate whic h encourages investment in innovative 
technology by individuals, firms and fina ncial institutions and which stimulates a 
market in technological advice. 
 G/SCM/N/186/EEC/Add.27 
Page 32  
 
  3. Background and authority for the subsidy
 
  The SMART scheme is delivered in Northern Ireland by Invest NI, Northern Ireland's economic development agency.  
 Authority: The Industrial Development (NI) Order 1982 
   The Industrial Development (NI) Act 2002  4. Form of the subsidy
 
 
 Grant support towards: 
 
• Feasibility studies, up to 75 per cent of eligible project costs up to a maximum 
assistance of £45,000. 
• Micro projects, up to 50 per cent of eligible costs up to a maximum assistance of 
£10,000. 
• Development projects, up to 40 per cent of e ligible project costs up to a maximum of 
£150,000. 
5. To whom and how the subsidy is provided  
  Individuals and SMEs  6. Total amount budgete d (in millions of £)
 
 
 2007 £0.27  2008 £0.52  7. Duration of the programme
 
 
 To 31 December 2008.  Replaced by Invest NI's Grant for R&D. 
 8. Assessment of trade effects
 
  The scheme was evaluated in December 2007.  The evaluation concluded that there was a 
strategic rationale for the continuation of [in itiatives such as] the SMART Programme as Northern 
Ireland continues to have low levels of expenditure on Busi ness Expenditure R&D (BERD).  
Displacement was considered low.  
XXVIII.  NI – START PROGRAMME 
1. Period covered by the notification
 
 
 2007 and 2008.  2. Policy objectives
 
 
 To stimulate and increase the level of indus trial research undertaken by Northern Ireland 
companies and to increase the number of companies undertaking industrial research, either on their own or in partnership with No rthern Ireland's universities. 
  G/SCM/N/186/EEC/Add.27 
 Page 33 
 
 
  3. Background and authority for the scheme  
  The START programme was established to enc ourage Northern Ireland companies to invest 
in technologically based, industrially focussed r esearch and development (R&D), because their 
expenditure on R&D (and in particular their expendi ture on industrial/strategic research) was seen to 
lag well behind many of their major competitors in th e rest of the United Kingdom and the rest of the 
world.   Authority: The Industrial Development (NI) Act 2002.    The Industrial Development (NI) Order 1982. 
 
4. Form of the subsidy
 
  Predominantly grant.  In some cases, the START programme may provide assistance in a 
repayable form e.g. full equity or redeemable preference shares. 
 
5. To whom and how the subsidy is provided
 
  Northern Ireland based companies and Northern Ireland universities.  Assistance is offered up 
to 50 per cent of eligible costs.  In exceptiona l circumstances, university only projects may be 
supported at a level up to and including 100 per cent.  In the case of grant assistance, grant is payable 
on vouched and approved expenditure in curred by the project participants. 
 6. Total amount budgete d (in millions of £)
 
  2007 £1.5 
 2008 £4.9 
 7. Duration of programme
 
  To 31.12.2008 – Replaced by Invest NI's Grant for R&D  
8. Assessment of trade effects
 
  The START programme was evaluated in Marc h 2006.  The evaluation found, amongst other 
things, that:  
• There was a strategic rationale for gove rnment supporting the START programme; 
• support towards pre-competitive research undert aken by companies does not displace 
other research activity. 
 G/SCM/N/186/EEC/Add.27 
Page 34  
 
  XXIX.  NI – TECHNOLOGY FUND (NITECH) 
1. Period covered by the notification
 
  2007 and 2008  
2. Policy objectives
 
  To encourage Research & Development activiti es of spin-outs and start-ups from research.  
There is also a further objective of encouraging research within existing Small to Medium sized 
Enterprises. 
 
3. Background and authority for the scheme
 
  The proposal to establish the NITECH Growth Fund was announced by the Chancellor of the 
Exchequer as part of his 1998 package of  economic initiative for Northern Ireland. 
 
 Authority: The Industrial Development (NI) Order 1982    The Industrial Development (NI) Act 2002  4. Form of the subsidy
 
 
 This will normally take the form of equity  funding but occasionally will be small grants. 
 5. 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 Northern Ireland.  The investment by the Fund will amount 
to a maximum of 60 per cent of the eligible costs of  for industrial research and 35 per cent of the costs 
for pre-competitive research.   Support is provided though appointed Fund managers.  
6. Total amount budgete d (in millions of £)
 
  2007 £0.58  2008 £0  
7. Duration of programme
 
  1st January 2002-31st December 2006.  8. Assessment of trade effects
 
 
 The NITECH fund was evaluated in April 2007.  The evaluation found that: 
 
• Market failure exists within the equity market for supporting early-stage technology 
companies; 
• there is a need for public support for early-stage investments. 
  G/SCM/N/186/EEC/Add.27 
 Page 35 
 
 
  XXX.  NI – VIRIDIAN GROWTH FUND 
1. Period covered by the notification  
  2007 and 2008  
2. Policy objectives
 
  To address perceived gaps in the provision of ve nture capital and loan funding in the deal size 
range £50k-£250k.  
 To bring the level of venture capital activity in  NI up to the UK average and thereby ensure 
that growth companies are not disadvantaged thr ough lack of funding for start up and expansion. 
 3. Background and authority for the scheme
 
 
 By addressing gaps in the provision of funding, it is expected that the development of the 
SME sector will be accelerated and additional jobs w ill be created.  In addition, the promotion of 
enterprise will be strengthened leadi ng to a reduction in grant dependency. 
  Authority: The Industrial Development (NI) Order 1982    The Industrial Development (NI) Act 2002 
   The Limited Partnership Act 1907 
 4. Form of the subsidy
 
  Private sector investment in the Fund is unde rpinned by around 33 per cent grant support in 
order to show a sufficiently attractive rate of re turn for the private sector  to induce it to invest. 
 5. 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.  Invest ments are made by a fund manager in small and 
medium sized enterprises in the manufacturing and tradable services sectors, based in Northern 
Ireland.  6. Total amount budgete d (in millions of £)
 
 
 2007 £0.98 
 2008 £3.7  7. Duration of programme
 
  To 31 December 2008.  Fund fully invested. 
 
8. Assessment of trade effects
 
  To be evaluated  G/SCM/N/186/EEC/Add.27 
Page 36  
 
  XXXI.  REDUCED RATE OF EXCISE DUTY ON BIODIESEL 
1. Period covered by the notification
 
  2007 and 2008  
2. Policy objectives
 
  The Government is keen to support alternativ e fuels that produce environmental benefits, and 
recognises that biodiesel can offer environmental ad vantages compared with conventional fuels, in 
terms of both greenhouse gas emissions and local air quality. 
 
 The purpose of the incentive is to help off set the higher production costs of biodiesel and 
enable it to compete more effectively with mineral based diesel.  3. Background and authority for the subsidy
 
 
 The duty incentive was announced by the Chancellor in Budget 2001.  Legislation on the duty incentive was included in Finance Act 2002 and the in centive was introduced in July of that year. 
 4. Form of the subsidy
 
 
 The form of aid is a tax concession.  The duty ra te for biodiesel is 20 pence per litre below the 
rate for ultra-low sulphur diesel.  5. To whom and how the subsidy is provided
 
 
 Producers of biodiesel 
 6. Total amount budgete d (in millions of £)
 
  2007 £70  2008 £180 
 
7. Duration of the programme
 
  The Government has announced that the duty di fferential of 20 pence per litre will cease from 
2010. 
 
8. Assessment of trade effects
 
  The introduction of the duty incentive has led to increased use of road fuel biodiesel. 
350 million litres of biodiesel were released for u se in 2007, and 890 million litres were released in 
2008.  Prior to the introduction of the duty differential, no biodiesel was used in the UK. 
  G/SCM/N/186/EEC/Add.27 
 Page 37 
 
 
  XXXII.   R&D TAX CREDIT 
1. Period covered by the notification  
  2007 and 2008  
2. Policy objectives
 
  The aim of the R&D Tax Credit Scheme is to  encourage innovation by companies which are 
small or medium-sized enterprises (SMEs).  It gives an incentive to companies including high risk 
start-ups to take up R&D activities and also encourages companies already carrying out R&D to 
increase their level of spend. 
 3. Background and authority for the scheme
 
  The R&D Tax Credit Scheme 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" - March 1999) and on the definition of research 
and development (Inland Revenue technical note "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.  Amendments have been no tified and approved under references N245/2003 (on 
4 September 2003), N293/2004 (on 6 December 2004) N816/2006 (on 4 December 2006) and 
N33/2007 (on 15 January 2007).   Legislation governing the scheme was introdu ced in the Finance Act 2000 (Schedules 20 and 
21) and subsequently amended in the Finance Act 2002 (Schedule 15), the Finance Act 2003 
(Schedule 31), the Finance Act 2004 (section 141), the Finance Act 2006 (Sections 28 and 29 and Schedules 2 and 3), the Finance Act 2007 (Sections 49 and 50) and the Finance Act 2008 (Sections 26 
to 29 and Schedules 8 and 9).  The legislation was rewritten in clearer language, but not amended in 
substance, in the Corporation Tax Act 2009 (CTA 2009).  It is now in Chapter 2 of Part 13 of 
CTA 2009. 
 
 The R&D Tax Credit Scheme applies to "larger SMEs" – companies that meet the normal conditions for an SME, except that they may have up to 500 staff, turnove r up to €100m and balance 
sheet total up to €86m – in relation to ex penditure incurred on or after 1 August 2008. 
 
4. Form of the subsidy
 
  Tax relief (see below)  5. To whom and how the subsidy is provided
 
 
 The incentive is given as an increased tax relie f for spending on qualifying R&D.  Small or 
medium-sized companies, including 'larger SMEs', are able to claim relief equal to 175 per cent of 
their qualifying R&D expenditure (on or after 1 Augus t 2008;  previously 150 per cent), comprising a 
general deduction available to all companies unde rtaking R&D of 100 per cent and the enhanced 
R&D tax relief of a further 75 per cent.  A comp any paying tax at the 2008 small companies' rate 
(21 per cent), therefore saves in tax a total of 36.5 per cent of the cost of the qualifying R&D, 
comprising a deduction available to all companies of 21 per cent and the subsidy of 15.75 per cent.  G/SCM/N/186/EEC/Add.27 
Page 38  
 
   A company not yet in profit may surrender the relief to the Government in return for a 
payment representing 24.5 per cent of the cost of the R&D.  This represents a discount of around 
33 per cent on the cash value of the tax credit if u sed against profits, where the company is taxed at 
the small company rate of 21 per cent.  The am ount surrenderable is limited to the lower of: 
 
• the proportion of the unrelieved loss attribut able to the qualifying R&D expenditure; 
and 
• the gross employment and social security taxes (Pay-As-You-Earn tax and National 
Insurance Contributions including equivalent contributions in other EEA states) 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 remune ration (excluding be nefits-in-kind) 
plus national insurance contributions payable by the company, plus contributions to a pension scheme paid by the company;  plus 
• the cost of consumable or transformabl e materials used directly in the R&D 
activity;  plus 
• the cost of computer software, power, water and fuel used 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 gene ralised measure of the costs above).  
Alternatively, the company may claim the actual costs it incurs within the 
above categories.  This latter rule is  the only option where the principal and 
subcontractor are connected. 
(b) the qualifying expenditure must exceed a threshold minimum.  This is set at an 
annualised rate of £10,000 a year.  Spending at or above £10,000 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 is not available on R&D sp ending that has been met by a grant or 
subsidy.  No R&D expenditure will qualify fo r the tax credit if incurred in relation to 
a project in receipt of any other notifiable State aid; 
(d) the credit is only available to a company if it is a going concern; 
(e) There is a cap of €7.5m on the total amount of R&D tax credit and vaccine research 
relief that can be claimed in respect of any particular R&D project. 
 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.   G/SCM/N/186/EEC/Add.27 
 Page 39 
 
 
  6. Total amount budgete d (in millions of £)  
  Estimates of the number of claims made for R&D tax credits and the cost of support claimed 
are published as National Statistics on the HM Reve nue and Customs website , broken down by type 
of scheme.  The latest figures were published in December 2008 and cover years up to 2006-07.  The 
statistical tables, including backgr ound information, can be found at:  
http://www.hmrc.gov.uk/stats/corporate_tax/randdtcmenu.htm.   The expected costs of R&D tax credits in 2007-08 and 2008-09 are also published on the HM Revenue and Customs at:  http://www.hmrc .gov.uk/stats/tax_expenditures/table1-5.pdf. 
 
 The expected cost of the SME scheme is estimated to be £200 million in 2007-08 and 
£220 million in 2008-09.  It should be noted that th ese are forecast estimates and the actual cost of 
support will depend on the claims actually made  by companies relating to those years. 
 
7. Duration of programme
 
  Indefinite  8. Assessment of trade effects
 
 
 No assessment of the impact of the R&D tax cr edit is currently available.  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 qualifying for tax credits, but the incentive does 
operate by reducing UK corporation tax, so there ma y be some impact on decisions to locate R&D.  
However the measure applies only to SMEs, and it is larger companies that tend to operate 
internationally, particularly when it comes to the location of R&D.  Therefore, the impact of the R&D 
tax credit on such location decisions is likely to be small.  
XXXIII.  REGIONAL SELECTIVE ASSISTANCE 
1. Period covered by the notification
 
 
 2006/07 and 2007/08 
 2. Policy objectives
 
  To assist economic development in areas of special hardship 
 
3. Background and authority for the scheme
 
  The Industrial Development Act 1982  4. Form of the subsidy
 
 
 Mainly grant (also loan, guarantee and shares)  5. 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.  G/SCM/N/186/EEC/Add.27 
Page 40  
 
   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).  6. Total amount budgete d (in millions of £)
 
 
 2006/07 £156.1 
 2007/08 £147.6  7. Duration of programme
 
 
 Scheme closed in England to new app lications on 31 March 2004 and in Wales on 
1 July 2008.  8. Assessment of trade effects
 
 
 This scheme is designed to help areas of special difficulty to compete on level terms with 
more advantaged regions.  
XXXIV.  RENEWABLES OBLIGATION ORDER 2006 
 [Since its introduction in 2002, the Renewables Obligation (RO) has been amended in 2004, 
2005, 2006, 2007 and 2009.  The  information provi ded for the notification period for 2007 and 2008, 
is the Renewables Obligation Order 2006 for the firs t three months of 2007  and the Renewables 
Obligation Order 2006 (amendment) Order 2007,  from April 2007]  1. Period covered by Notification
 
 
 2007 and 2008 
 2. Policy Objectives
 
  To deliver increase electricity generation from eligible renewables sources  
3. Background and authority for the scheme
 
  The Scheme was set up as the Government's  main mechanism for supporting renewable 
electricity generation.  It imposes an obligatio n on licensed electricity companies to source an 
increasing percentage of their electricity sales fro m eligible sources.  The Renewables Obligation 
Order 2002. 
 4. Form of the subsidy
 
  Recycling of buy-out payments  
5. To whom and how is the subsidy provided
 
  Licensed electricity suppliers who have met their Renewables Obligation through Renewables 
Obligation Certificates (ROCs) - Monies are then  passed on to electricity generators generating 
electricity from eligible renewable sources y way of power purchase agreements etc. 
 
 Buy-out fund recycled in autumn of each year.   G/SCM/N/186/EEC/Add.27 
 Page 41 
 
 
  6. Total amount budgete d (in millions of £)  
  2007 £216.77  2008 £278.78  
7. Duration of programme
 
  To 2026/27 but UK authorities will renotify the Obligation in 2012.  8. Assessment of trade effect
 
 
 Development and improvement of the Renewable electricity generating sector 
 
XXXV.   SCOTTISH RESEARCH AND DEVELOPMENT SCHEME 
1. Period covered by the notification  
 
 2007 and 2008  2. Policy objectives
 
 
• To encourage enterprises in Scotla nd to undertake innovative research and 
technological development with commercial potential in order to stimulate growth, 
strengthen competitiveness, and bo ost employment in Scotland. 
• Provide an incentive for enterprises to unde rtake research, development and technical 
innovation (R&D&I) activities in addition to  their existing R&D&I activities and to 
encourage enterprises that are not currently doing so, to carry out R&D&I.  It is not 
intended to subsidise a firm's existing R&D&I activity. 
• Help contribute towards a climate whic h encourages investment in innovative 
technology by individuals, companies and fi nancial institutions and which stimulates 
a market in technological advancement. 
• To strengthen the scientific and technological bases of industry. 
• Encourage best practice throughout business. 
3. Background and authority for the scheme  
  Enabling legislation for the Scottish Execu tive is the Science and Technology Act 1965, 
while for Scottish Enterprise and Highlands & Isla nds Enterprise it is the Enterprise and New Towns 
(Scotland) Act 1990, as amended by Scottish Statut ory Instrument 2001 No. 126, which reduced the 
operational area of Scottish Enterprise by removi ng parts of The Moray Council area previously 
covered.  4. Form of the subsidy
 
 
 Grant support  5. To whom and how the subsidy is provided
 
  Businesses undertaking eligible R&D projects G/SCM/N/186/EEC/Add.27 
Page 42  
 
   
6. Total amount budgete d (in millions of £)
 
  2007 £16.77  2008 £18.93 
 
7. Duration of programme
 
  30 September 1998 to 31 December 2013  
 Scheme replaced the Scottish R esearch and Development Scheme 
No. 66 2006 and the Highlands and Islands Enterprise Research and Development Innovation Scheme 
No. 385 2001.  The scheme was itself superseded by the Scottish Research and Development and 
Innovation Scheme No. 369 2008 from 1 October 2008.  
8. Assessment of trade effects
 
  External benefits or spill over effects fro m supported projects accrue most frequently to 
Award recipients' customers, but their suppliers and competitors also benefit.   Not all supported firms have direct competitors for the outcomes of their projects and this in 
part explains why evaluations have shown displ acement rates (i.e. negative effects on other, 
unsupported firms) to be low.  
XXXVI.  SELECTIVE FINANCIAL INVESTMENT FOR ENGLAND 
1. Period covered by the notification
 
 
 2006/07 and 2007/08  2. Policy objectives
 
  To assist economic development in areas of special hardship. 
 
3. Background and authority for the scheme
 
  The Industrial Development Act 1982  
4. Form of the subsidy
 
  Grant  5. To whom and how the subsidy is provided
 
 
 The scheme is available to eligible projects in the manufacturing and service sector and 
encourages companies to invest in the Assisted Areas.  The scheme also offers support for SMEs that 
are based in non-assisted areas in England.   Financial assistance is on a discretionary b asis, in the form of a grant phased against 
achievement of progress on the project (jobs & capital costs). 
  G/SCM/N/186/EEC/Add.27 
 Page 43 
 
 
  6. Total amount budgete d (in millions of £)  
  2006/07 £78.9  2007/08 £81.6  
7. Duration of programme
 
  The SFIE scheme closed to new applications on 22 October 2008.  8.  Assessment of trade effects
 
 
 This scheme is designed to help areas of special difficulty to compete on level terms with more advantaged regions.  
XXXVII.  VACCINES RESEARCH RELIEF 
1. Period covered by the notification
 
  2007 and 2008  2. Policy objectives
 
 
 The objective of Vaccines Research Relief (VRR ) is to encourage companies to increase 
research spending into specified diseases.  Becau se demand for drugs and vaccines to treat diseases 
which mostly affect people in poorer countries is low compared with demand for medicines for people 
in affluent countries, there is less incentive for ph armaceutical companies to devote resources to these 
diseases.  Vaccines research relief is therefore not primarily aimed at boosting UK productivity, 
though there may be some incidental benefits. 
 3. Background and authority for the subsidy
 
  VRR was introduced in 2002, but took effect  for expenditure from April 2003.  It was not 
formally consulted on, however it used the already successful model of research and development tax 
credits for small or medium-sized enterprises, and so the basic architecture of the scheme was already 
well known to companies.   It was notified to the European Commission as a State aid and approved by them under reference N228/02.  Amendments have been no tified and approved under references N245/2003 (on 
4 September 2003), N293/2004 (on 6 December 2004) and N34/2007 (on 15 January 2007). 
  Legislation governing the scheme was introdu ced in the Finance Act 2002 (Schedules 13 and 
14) with effect from 15 April 2003.  The VRR sch eme was subsequently amended in the Finance 
Act 2003 (Schedule 31), the Finance Act 2004 (secti on 141), the Finance Act 2007 (Section 49) and 
the Finance Act 2008 (Section 30).  The legislat ion was rewritten in clearer language, but not 
amended in substance, in the Corporation Tax Act 2 009 (CTA 2009).  It is now in Chapter 7 of Part 
13 of CTA 2009.  4. Form of the subsidy
 
 
 Tax relief (see below) 
 G/SCM/N/186/EEC/Add.27 
Page 44  
 
  5. To whom and how the subsidy is provided
 
  The incentive is given as an increased tax relief for certain spending on R&D into vaccines or 
drugs for the prevention or treatment of specifi ed diseases.  The diseases specified are HIV/AIDS, 
tuberculosis and malaria.  The scheme differs for small or medium-sized companies (SMEs) and other 
companies.  Both SMEs and non-SMEs are able to  claim relief equal to 40 per cent (for expenditure 
on or after 1 August 2008, previously 50 per cent) of their qualifying R&D expenditure as an 
enhancement to the general deduction that they wo uld otherwise get for R&D spending.  However, 
loss making SMEs are further entitled to claim a paya ble credit from the Government equal to 16 per 
cent of the enhanced relief for spending on the speci fied diseases (although they must then give up the 
enhanced relief claim). 
  Taking as an example a SME company in profit paying tax at the 2008 small companies' rate (21 per cent), the company would be entitled to cl aim the normal R&D tax credit of 175 per cent and 
then on top of this a further 40 per cent for qualifyi ng spending on R&D into  the specified diseases.  
Thus for £100 of qualifying spending it would recei ve £21 of general tax relief available to all 
companies, £15.75 of enhanced tax relief under the R&D tax credit scheme for SMEs and a further 
£8.40 of enhanced tax relief under the VRR scheme .  If this same company was loss making it would 
claim up to £24.50 of repayable tax credit under th e general R&D tax credit for SMEs scheme and up 
to £6.40 of tax credit under the VRR scheme.  
 As with the SME R&D tax credit scheme, the amount surrenderable for a cash repayment is 
limited to the lower of:  
• The proportion of the unrelieved loss attri butable to the qualifying VRR expenditure; 
and 
• the gross employment and social security taxes (Pay-As-You-Earn tax and National 
Insurance Contributions, including equivalent contributions in other EEA states) paid 
by the company for the period of the claim. 
 The availability of VRR to a company is subject to the following criteria: 
 
(a) the qualifying expenditure for the VRR 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 remune ration (excluding be nefits-in-kind) 
plus national insurance contributions payable by the company, plus contributions to a pension scheme paid by the company;  plus 
• the cost of consumable or transformabl e materials used directly in the R&D 
activity;  plus 
• the cost of computer software, power, water and fuel used directly in the 
R&D activity;  plus 
• contributions to independent research carried out by a charity, university or 
scientific research organization (onl y for expenditure incurred before 1 
August 2008);  plus  G/SCM/N/186/EEC/Add.27 
 Page 45 
 
 
  • if the company subcontracts all or part of the R&D then 65 per cent of the 
payments due to the subcontractor (representing a generalised measure of the costs above).  Alternatively, the comp any may claim the actual costs it incurs 
within the above categories (except any contributions to independent research).  This latter rule is the only option where the principle and 
subcontractor are connected;  plus 
• if the company subcontracts all or part of the R&D to a charity, university or 
scientific research organisation then the whole sub-contract expenditure qualifies for relief. 
(b) the qualifying expenditure must exceed a threshold minimum.  This is set at an 
annualised rate of £10,000 a year.  Spending at or above £10,000 qualifies for VRR in 
full.  No VRR is available if the spending does not meet this threshold; 
(c) VRR is not available on R&D spending that h as 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; 
(d) VRR is only available to SME companies if they are going concerns; 
(e) A large company receiving VRR must provide a declaration of the incentive effect of 
the relief; 
(f) There is a cap of €7.5m on the total amount of R&D tax credit and vaccine research 
relief that can be claimed in respect of any particular R&D project. 
 R&D spending by joint ventures and consortia w ill be eligible for VRR, but only insofar as 
the tax credit can be limited to companies.  
6. Total amount budgeted
 
  Estimates of the number of claims made for R&D tax credits and the cost of support claimed 
are published as National Statistics on the HM Reve nue and Customs website , broken down by type 
of scheme.  The latest figures were published in December 2008 and cover years up to 2006-07.  The 
statistical tables, including backgr ound information, can be found at:  
http://www.hmrc.gov.uk/stats/corporate_tax/randdtcmenu.htm.   The expected costs of R&D tax credits in 2007-08 and 2008-09 are also published on the HM Revenue and Customs at:  http://www.hmrc .gov.uk/stats/tax_expenditures/table1-5.pdf. 
 
 The expected cost of the VRR scheme is est imated to be less than £1 million in each of 
2007-08 and 2008-09.  It should be noted that these are forecast estimates and the actual cost of support will depend on the claims actually made  by companies relating to those years. 
  http://www.hmrc.gov.uk/stats/corporate_tax/randdtcmenu.htm. 
 
7. Duration of the programme
 
  The notification to the European Commission limited the scheme covered by the notification 
to ten years.  This limit applies to new projects and not to taxpayers in respect of tax relief for relevant 
R&D commenced within this period.  Once a taxpayer had embarked on the project that is eligible for 
tax relief, it would be entitled to the relief for the remainder of the project. G/SCM/N/186/EEC/Add.27 
Page 46  
 
   
8. Assessment of trade effects
 
  No assessment of the impact of the VRR scheme is currently available.  The aim of the VRR 
scheme is to increase R&D expenditure  into vaccines for certain diseases.   There is no territorial limit 
to R&D qualifying for tax credits, but the incentiv e does operate by reducing UK corporation tax, so 
there may be some impact on decisions to locate R&D.  The small scale of the relief, however, 
suggests that any such impact is likely to be small.  
XXXVIII.  WASTE RESEARCH AND INNOVATION PROGRAMME AND WASTE 
DEMONSTRATOR PROGRAMME 
1. Period covered by the notification
 
  2007 and 2008  
2. Policy objectives
 
  The focus of the scheme is:  
• To facilitate the developmen t and implementation of new technologies for treating the 
biodegradable fraction of municipal solid wast e, where these have yet to be proved to 
be technically and commercially viable in the UK.  As a consequence, it would 
reduce the amount of biodegradable waste disposed of to landfill in England; 
• to encourage the development of technology, which reduces the costs and 
environmental impact of waste management; 
• to promote the implementation of new t echnology that can recover and recycle 
material rather than merely stabilises it. 
 The scheme addresses the lack of R&D funding for new technology in England and aims to 
develop better, faster and cheaper ways of trea ting biodegradable municipal waste and other waste 
streams.  It should put the United Kingdom closer to the course required to achieve the Landfill 
Directive targets.  3. Background and authority for the subsidy
 
 
 The UK faces challenging targets to meet th e EC Landfill Directive requirements for limiting 
the disposal of biodegradable wastes to landfill an d increasing the rates of recovery and re-use of 
wastes.  The legal basis of this programme is head (1) of section 153(1) of the Environmental 
Protection Act 1990, according to which:  "The Secr etary of State may, with the consent of the 
Treasury, give financial assistance to, or for the purposes of […] (l) the environmental protection 
technology scheme for research and developmen t in the United Kingdom in relation to such 
technology." 
 4. Form of the subsidy
 
  The subsidy will take two forms: 
 
 The grant aid instrument:  the same Adviso ry Committee as the one assessing the bids under 
WRIP will assess a short outline summary of the projects, including details of the technology, time-scales, funding requirements and outcomes, an d will submit its recommendations to DEFRA.   G/SCM/N/186/EEC/Add.27 
 Page 47 
 
 
  Following a decision by DEFRA based on the advi ce of the Committee, successful bids will be 
worked up into full-scale proposals.  Full scale pr oposals will be reviewed externally by at least 
three members of the Committee and a final decision will be taken by DEFRA.   All projects will be subject to audit on completi on to ensure public funds had been spent in 
strict accordance with the contract. 
  A programme management contractor will ma nage the WDP.  This contractor will be 
appointed by competitive tender following normal pr ocurement rules and will be advertised in the 
OJEC.  The contractor will report to DEFRA incl uding compliance with state aid rules and reporting 
requirements. 
  The co-investment instrument:  the co-investment aid would only be available to private 
companies or suitable consortia, which would be able  to quickly take forward a demonstration project 
to a profitable commercial activity and where, becau se of the perceived risk of the technologies, the 
projects would be unable to proceed without such fi nance to help lever manufacturers and suppliers.  
This aid approach would be targeted at high risk projects which if successful would have a large market potential, which can be quickly exploited.  The aim of this instrument is to help attract private 
sector investment in the projects.  The criteria for co-investment projects would include:  a clear 
business plan which identifies the market potential a nd anticipated financial returns from successfully 
commercialising the technology to be demonstrated ;  confirmation of how the intellectual property 
rights of the project will be protected;  financial viability including confirmation of other sources of 
investment income;  an agreed timetable and thresh old for repayment of the investment made by the 
programme.  5. To whom and how the subsidy is provided
 
 
 Bids will be accepted from companies, universities and research establishments without restriction on the size of beneficiaries.  The scheme is being run on a general basis but, because of the nature of the scheme, waste management companie s, their equipment suppliers and local authorities 
are expected to be a significant percentage of those making use of the scheme.  Projects involving 
cooperation between firms, universities and research in stitutes will also be eligible, but there are no 
special terms for such bids.  The final award de cision will be taken by the Department of the 
Environment, Food and Rural Affairs ("DEFRA" ) on the basis of the advice received from the 
Committee.  Funds would be paid in accordance with a contract on the basis of achieving key 
milestones.  
6. Total amount budgete d (in millions of £)
 
  2007 £5.03  2008 £6.04  7. Duration of the programme
 
 
 Waste Research & Innovation Scheme is for a duration of three years.  The Waste Demonstrator Programme will run until 2009.  8. Assessment of trade effects
 
 
 The Waste Demonstrator Programme's research  findings will be disseminated through case 
studies written about the projects in all cases.  Site visits by end user decision-makers will also be 
organized.  The associated Data Centre will also assure access for the general public to information 
and data on the projects.  The Waste Research a nd Innovation Programme will ensure that findings G/SCM/N/186/EEC/Add.27 
Page 48  
 
  will be widely disseminated through the research  and waste communities, including articles in 
technical journals and other publi cations and conferences.  The associated Data Centre will also 
assure access for the general public to information and data on the projects. 
 
XXXIX.  WELSH RESEARCH AND DEVELOPMENT SCHEME 
1. Period covered by the notification
 
  2007 and 2008  2. Policy objectives
 
 
 SMARTCymru will help individuals, small and medium-sized enterprises (SMEs) by 
providing grant support to research, design and deve lop technologically innovative products and 
processes.  
 "The overall objective is to aid better exploita tion of industrial potential through innovation, 
research and technological development."  3. Background and authority for the scheme
 
  Legal basis: Science & Technology Act 1965. 
   Industrial Development Act 1982. 
  Scheme notified and authorized by the Commission on 14 March 2003 under State Aid number N 28/2003, by letter referenced SG(2003) 228962.  
 Administration of the scheme transferred from the Welsh Development Agency to the 
National Assembly for Wales and extended notifi cation until 31 March 2009.  Scheme alterations 
notified and authorised by the Commission on 9 March 2006 under State Aid number N 150/2006, by letter referenced C (2006) 1606.  4. Form of the subsidy
 
 
 Grant  5. To whom and how the subsidy is provided
 
 
 Companies through grant payments 
 6. Total amount budgete d (in millions of £)
 
  2007 £4.88  2008 £21.39 
 
7. Duration of programme
 
  Ongoing  
8. Assessment of trade effects
 
  Information on the safeguarding/creation of jobs and private sector investment in innovation and research and development is colle cted upon completion of the project.  G/SCM/N/186/EEC/Add.27 
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XL. YORKSHIRE AND HUMBER - PROLONGATION OF YH R&D SCHEME FOR 
LARGE COMPANIES 
1. Period covered by the notification  
 
 2007 and 2008 
 2. Policy objectives
 
 
• Provide grant support, in line with the EU  State Aid Framework for R&D, to large 
firms; 
• accelerate the commencement of R&D activity by large companies; 
• allow large companies to invest in project s that would otherwise be considered too 
risky; 
• enhance the region's ability to support R& D in harmony with existing incentives. 
3. Background and authority for the scheme  
  The scheme is operated by Yorkshire Forward as  a response to low rates of R&D expenditure 
in the region - the intervention was approved by the European Commission. 
 
4. Form of the subsidy
 
  A grant against defrayed R&D expenditure  
5. To whom and how the subsidy is provided
 
  Large companies in the Yorkshire and Humb er region whose applications are assessed and 
approved and who have submitted claims  against defrayed R&D expenditure. 
 6. Total amount budgete d (in millions of £)
 
 
 1 April 2008 - 31 March 2013 £24.2  7. Duration of programme
 
 
 Five years 
 8. Assessment of trade effects
 
  To be evaluated.  
__________