Kerry, Kells, Athy and Arklow added to list of areas fully eligible for
Government aid to support investment and employment
Map represents significant win for Ireland in context of original proposals
25th April 2014
The Minister for Jobs, Enterprise and Innovation, Richard Bruton TD today
(Friday) published the new Regional Aid Map, providing details of areas of
the country in which the State can provide investment aid to businesses in
order to support new investment and employment, under EU rules.
The new Map, agreed by Government recently, is expected to take effect from
1st July 2014. It has been drafted by the Department of Jobs, Enterprise
and Innovation under the new Regional Aid Guidelines adopted last year.
It represents a significant win for Ireland in the context of the original
proposals from the EU Commission. Ireland, through Minister Bruton and the
Department of Jobs, Enterprise and Innovation, engaged intensively with
like-minded member-states and the EU Commission in order to deliver changes
which are reflected in the Map published today.
Under the new Map,
· areas accounting for 51.28% of Ireland’s population will be eligible
for State Aid. This represents a substantial increase from the 25%
originally proposed by the Commission, and an increase from the 50%
under the 2007-2013 Map. This means that Kerry,Kells, Athy, and
Arklow can be added to the areas covered;
· aid to large enterprises is permitted for new economic activities,
expansions which involve new products or services, and product
innovation. Under the original proposals aid to large enterprises was
to be banned entirely in Ireland;
· aid intensity rates (30% for small enterprises, 20% for medium-sized
enterprises and 10% for large enterprises) are maintained at current
levels. Original Commission proposals would have involved a reduction
in aid intensity rates
State aid to enterprises in more disadvantaged areas of the country is an
important part of the Government’s jobs strategy. Typically in Ireland,
such aid takes the form of capital grants from the Exchequer through the
Department of Jobs for initial investment in new buildings or extensions,
and employment grants linked to initial investment, paid to enterprises by
IDA Ireland or Enterprise Ireland. Investment aid is also provided under
schemes such as Údarás na Gaeltachta enterprise development, for tourism
grants, marine tourism, urban and rural renewal and other tax-based
development schemes.
The proposals from the EU Commission to reduce the levels of State Aid
permissible in countries like Ireland follows enlargement of the EU as well
as concerns about anti-competitive practices by national Governments
providing very high levels of investment aid to ‘national champion’
companies.
Minister Bruton made today’s announcement at Dairymaster, a highly
innovative Irish manufacturing company based in Causeway, Co. Kerry.
Dairymaster is a client company of Enterprise Ireland, and provides an
example of a large company which will from 1st July be able to receive
Investment aid which has not been permitted to do so since 2007.
Making the announcement today, Minister Bruton said:
“Central to our Action Plan for Jobs is supporting jobs growth across all
regions of the country, and it is very encouraging that over the past
twelve months every region has seen increased employment. The important
thing is that regions are supported to build on their existing strengths,
and as part of Action Plan 2014 we are putting in place new measures
including new IDA advance buildings in various locations, local enterprise
offices in every county and a county-based X-Factor style competition to
find the best young entrepreneur in the country.
“Government-supported exporting companies play an important part in this
plan. I am very happy to announce today that following hard negotiations
with the EU Commission we are in a position to increase the proportion of
the country that is eligible for the full range of Government investment
aid to businesses. Areas which have been badly affected by the employment
collapse of the past decade including Kerry, Kells, Athy and Arklow have
been added to the eligible areas, meaning in effect that only Dublin, Cork,
and areas directly bordering Dublin are excluded. In the context of the
original proposals from the EU Commission this represents a significant win
for Ireland and I wish to pay tribute to all involved in the negotiations,
particularly officials from my Department.
“Most importantly, today’s announcement will make it much easier to go into
boardrooms of multinational and Irish exporting companies and convince them
to create jobs in regional locations”.
NB It is important to note that all of the Country, including those areas
not entitled to Investment Aid, can qualify for other forms of State
support e.g. Research & Development Aid, SME Investment Aid, Training Aid,
and Aid for Environmental protection etc
NOTES FOR EDITORS
The Regional Aid Guidelines enable the State to grant State Aid, at
enhanced rates, to businesses in order to support new investment and new
employment in productive projects in Ireland's most disadvantaged regions.
This helps the convergence of these regions with the more advantaged
regions of the Union. All such grants come from the exchequer, i.e. there
is no EU or other external funding.
The Guidelines specify rules for the selection of regions which are
eligible for regional aid and define the maximum permitted levels of this
aid. In line with EU cohesion policy, the Guidelines continue to focus
regional aid on the most deprived regions of the enlarged European Union.
The current Regional Aid Guidelines, which govern the level of State aid
which may be granted by Government Departments and development Agencies as
regional aid, expire at the end of June 2014. Typically, regional aid in
Ireland is given in the form of capital grants for initial investment in
fixed capital for new establishments or extensions and employment grants
linked to initial investment. Regional aid is also provided under schemes
for tourism grants, marine tourism, urban and rural renewal and other
tax-based development schemes. Ireland's Regional Aid Map for 2014-2020
will cover 51.28% of the country's population, a slight rise on the current
coverage of 50%.
Implication of new Guidelines for 2014-2020
The initial Regional Aid Guidelines proposal from the Commission, published
in May 2012, presented significant challenges for Ireland. This proposal
prohibited aid to large enterprises, reduced our population coverage from
50% to 25% and reduced aid intensity rates.
Regarding population coverage, following sustained engagement with the
Commission and likeminded Member States at Ministerial and official level,
Ireland secured entitlement to maintain regional aid qualification for
areas accounting for 50% of the country’s population, with coverage
actually slightly increasing to 51.28%.
The Commission initially proposed a complete ban on aid for investments
made to large enterprises in the more developed assisted areas, known as
‘c’ areas. The revised guidelines assert that large enterprises tend to be
less affected than SMEs by regional handicaps for investing or maintaining
economic activity in a less developed area. The Commission believes these
firms would make the investment concerned even without financial support,
rendering such support both ineffective and costly.
This proposal presented significant challenges for Ireland and the
implications could have been very serious in terms of our enterprise
agencies being able to attract investment into disadvantaged regions in
Ireland
Following significant engagement by Ireland, at both official and political
levels, the final proposal represents considerable progress from the
initial
Commission proposal in December 2012. The compromise agreed with
the Commission will allow Member States to provide investment aid to large
enterprises for ‘new economic activities and diversification of existing
enterprises into new products or new process innovation’.
Aid intensity rates were also maintained at their current levels. Both the
current 2007-2013 Regional Aid Guidelines and the upcoming 2014-2020
Guidelines outline that the aid intensity in Ireland must not exceed 30 %
for small enterprises, 20 % for medium-sized enterprises and 10% for large
enterprises.
The compromise agreed with the Commission will allow Member States to
provide investment aid to large enterprises for new economic activities and
diversification of existing enterprises into new products or new process
innovation. In essence, the final version of the Regional Aid Guidelines
negotiated by Ireland and likeminded Member States represents an important
step in ensuring Ireland, and the EU in general, maintains the ability to
strengthen the EU economy and to promote cohesion between regions.