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Written Answers - Rural Development

Tuesday, 7 February 2012

Dáil Éireann Debate
Vol. 754 No. 3

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 348.  Deputy Brendan Griffin Information on Brendan Griffin Zoom on Brendan Griffin  asked the Minister for the Environment, Community and Local Government Information on Philip Hogan Zoom on Philip Hogan  further to Parliamentary Question No. 453 of 31 January 2012, if there will also be an increase in capping; and if he will make a statement on the matter. [6886/12]

Minister for the Environment, Community and Local Government (Deputy Phil Hogan): Information on Philip Hogan Zoom on Philip Hogan I assume the question refers to the €200,000 maximum grant aid currently allowable under the Rural Development Programme (RDP). Up until recently community projects could apply for grant aid of up to €500,000; however a State Aid issue identified in late 2011 resulted in the suspension of grant aid for any project with grant amount of €200,000 or more.

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, to submit a notification to DG Competition in the European Commission (EC) 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 EC 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 EC 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 the EC now require Ireland 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.

The documentation for the State Aid notification has been submitted through the relevant EU notification systems. As soon as my Department receives the Commission decision we will notify all Local Development Companies.

Question No. 349 answered with Question No. 305.

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