Éamon Ó Cuív (Galway West, Fianna Fail)
Link to this: Individually | In context

Question 154: To ask the Minister for the Environment, Community and Local Government the discussions that have taken place between him and the EU Commission in relation to the decision by the EU Commission that non-commercial projects under the Leader programme require State aid approval if grants in excess of €200 are to be paid; and if he will make a statement on the matter. [36812/11]

Phil Hogan (Carlow-Kilkenny, Fine Gael)
Link to this: Individually | In context

State aid refers to any aid granted by a Member State which distorts or threatens to distort competition by favouring certain undertakings or goods. EU Member States are required, under State Aid rules that originate in the Treaty of Rome, to submit a notification to DG Competition in the European Commission when they propose to provide state support for schemes and programmes that could be considered to distort competition in any way. Commission Regulation EC 1998/2006 allows for aid of up to €200,000, known as de minimis aid, to be provided from public funds to enterprises over a period of three years as this amount is considered too small to have an effect on economic activity between competing forces.

In the original Rural Development Programme (RDP) document approved by the European Commission in July 2007, Ireland outlined that, as the aid to be granted under two of the Axis 3 measures of the RDP would not in any way distort competition, it would not constitute State Aid and would, therefore, not require notification to DG Competition. The measures concerned, Basic services for the economy and rural population - €49.61m and Village renewal and development - €54.2m, provide support for non-commercial community based projects and focus particularly on community infrastructure.

Recently Ireland was notified by the Commission that only DG Competition has the competence to judge whether or not state support can be deemed to be State Aid, and that a State Aid notification in the context of these two measures should have been submitted when the original programme was being prepared in 2006/2007.

The notification process was not undertaken at the time of programme design and Ireland is now required to complete the notification process as soon as possible and obtain the necessary state aid clearance in order to proceed with projects requiring grant aid in excess of €200,000. As the consequences of non-compliance with State Aid rules are significant, particularly for project promoters, it is necessary to suspend the allocation and approval of projects with grant amounts of over €200,000 in order to avoid non-compliance.

I am aware of the importance of addressing this issue as soon as possible and my Department is in the process of submitting the necessary State Aid request to DG Competition. As soon as the issue has been resolved we will notify all Local Development Companies.