UK Assisted Areas

University of Cumbria

Jon Pickstone

Assistant Director - Economic Geography

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(Right) Composite of all Assisted Areas Maps 1934 to 1984 weighted by level of policy designation

History – UK Map

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• 1934 Special Areas Act - West Central Scotland, West Cumberland, North East England and South Wales

• Those places essentially still on the Map now• So, does the status help? • Employment, yes; productivity less so, but not a panacea:• Over the long-term, economic development policy affects

flows of capital and labour, but the market remains a powerful driver

• Economic development – a relatively small % of long-term govt spending; other funding streams can target different geographies

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Assisted Area – current benefits• Assisted Areas are those locations where regional aid may

be granted under EU legislation (the Regional Aid Guidelines)

• A form of state aid that under EU legislation can be granted by public bodies in member states to promote development in certain less economically advantaged areas

• Regional aid – the only geographically limited state aid• Regional Aid typically capital investment in business (e.g.

plant and machinery). Also wage costs of new employees. • Pan-EU convergence policy & aid less likely to displace

private sector investment in economically poorer places

Max % regional aid that can typically be offered in England• Regional Aid granted should be the minimum to make the project go

ahead as planned and should not unduly distort competition• Table demonstrates that Assisted Area status can offer state aid

flexibilities that significantly support capital investment in business

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Type of Firm

Capital Investment - Maximum Aid Intensity (GGE): outside an AA

Regional Aid - Maximum Aid Intensity (GGE):non-predefined ‘c’ area

Regional Aid - Maximum Aid Intensity (GGE): ‘a’ area

Large Firms 0% 10% 25%

Medium Firms

10% 20% 35%

Small Firms 20% 30% 45%

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Other key benefits of AA status in the UK

• Business Premises Renovation Allowance (BPRA), administered by HMRC, gives an incentive to bring derelict or unused properties back into use, by giving an initial allowance of 100 per cent for expenditure on converting or renovating unused business premises.

• The Enhanced Capital Allowances permitted at some Enterprise Zones.

Assisted Area status does not offer:

• There’s no guarantee of funding• No pot of regional aid - it’s a state aid exemption• Not the only state aid exemption - most Govt

support is available outside AAs• Regional Aid ≠ Regional Growth Fund; the RGF

uses a range of state aid exemptions incl. Regional Aid

• Ineligible sectors for regional aid: steel, coal, shipbuilding, synthetic fibres, transport, energy production

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Updating the 2007-2013 AA Map• European Regional Aid Guidelines denote not only how regional aid can be spent, but also how the Map is drawn

• 27.05% of UK population can be covered (23.9% in 2007/13)

• Some Assisted Areas designated by the Commission

• Some designated by UK Govt working within the RAG (min contiguous pop 100k, built from wards);

• The UK Govt requires special exemptions from the Commission (Criterion 5 applications) to designate AAs within some areas of the UK (based on their relatively high productivity and low unemployment rates)

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Changes from 2006 to 2013

• Post financial crash led to a renewed focus on sectoral and geographical rebalancing

• Change of Government• Move from regional development to localism• RDAs and Govt Offices closed; LEPs opened• Austerity – reduced resources• Slight increase in UK % population coverage• Role of the European Commission

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Key Aims

• Target economic growth opportunities that can benefit less economically advantaged areas

• Sectoral and geographical rebalancing• Support and grow manufacturing (capital intensive

- suits capital investment e.g. regional aid)• More equitable and effective distribution of

coverage than in 2007/13, aided by a localised and digitalised consultation process

• Timely Commission and UK Parliament approval

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Role of the Devolved Administrations

• Population split between England, Scotland and Wales agreed by UK Ministers. Non-predefined coverage pro-rated up from 2007/13.

• N.Ire presently has 100% coverage • Maps for Scotland and Wales proposed by the

Devolved Administrations, using a joint UK method and process, and form part of a single coherent UK Map

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Stage 1 Consultation

• Open consultation, but gave LEPs a lead role (LAs in Scotland and Wales)

• Set out principles for developing the Map, including metrics of economic need

• Asked for prioritised suggestions of which wards should be included on the Map

• Evidence-based approach, balancing the ambitions of LEPs with and without 2007/13 coverage

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Stage 1

– Received 104 responses in Stage 1

– 89% ‘broadly agreed’ with on the principles BIS set out (4% did not answer the question)

– Good quality local intelligence gathered

– Almost all LEPs and Scottish and Welsh LAs followed the Guidelines well

What worked well? Communications• This is an analytical exercise, but strong messaging as important

• Develop a cross-Government consensus about approach at the outset

• Be clear about what the policy (AA status) can and cannot offer – anticipate misunderstandings

• Set out the limitations of your position e.g. UK must work within EC rules

• Set out the background – e.g. the UK Government influenced the EC on aspects of the RAG

• Tailor messages to the audience – quantity and nature of information

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What worked well? Communications 2– Convey why using a certain method (fairness, effectiveness) or

timetable (need to bring the Map into effect)

– Think across policy areas – synergies

– Expectations not analysis can dominate thinking – convey a national picture whilst recognising local differences

– Speak to stakeholders early to convey your message, avoid misunderstandings, and build relationships

– Try to shorten number of people in communication chains

– How to maximise the chances of positively engaging key stakeholders in a consultation?

Developing the Draft Map• Central team summary of the returns• Bring local returns to common starting points• Mesh with BIS’s economic intelligence and data• Test at LEP clinics (LAs in Scotland and Wales)• Balance with Commission rules and ‘spirit of the RAG’• Discuss with BIS Local & other Govt stakeholders• Balance local and national overviews and priorities• Government sign-off processes

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What worked well? Working in Govt• Understand broader policy environment and appreciate

local variations• Engage SCS, Ministers and OGDs early• Coordinate with legal, equalities, press and comms teams• Build networks and relationships, attract interest and

therefore information and updates• Like with many policy areas, no perfect solution • Employ pertinent but achievable and pragmatic analysis

(timescales and data availability)• Suitable project management for a complex project -

consider quality vs. timeliness vs. resources

Suggestions for local areas

• Appreciate existing industry, not just development sites

• Bring together local partners around a shared vision at an early stage

• Cross-border working is both effective and compelling when making representations to govt

• Speak to Government early – build relationships; get any help understanding the consultation requirements and policy drivers

• Consider your area within the national context

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Developing the final Map after Stage 2

• LEPs remained in lead in terms of local responses

• Balance of consultation responses, BIS analysis, national and local priorities, when adding or swapping coverage

• www.ukassistedareasmap.com offered more detailed mapping supporting more granular and better evidenced responses

• Ellesmere Port and parts of Portsmouth/Gosport included following successful Criterion 5 applications to the EC demonstrating serious relative economic decline and/or major structural economic change

• BIS, noting consultation responses, decided not to hold back a reserve of population for adding to the Map after 1 July 2014.

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Aims - Met– Map better supports regional and local growth, geographical and

sectoral rebalancing: more economic opportunities included e.g. industry; high value locations; and town and city centres

– Including development sites helps future-proof Map– A more equitable distribution of population coverage between

comparable places– Benefitted from the intelligence offered through the Localist

approach – Delivered to timetable and budget– Approved quickly and smoothly by European Commission & 2014

Assisted Areas Order passed UK Parliament without challenge– High level of cross–government and local satisfaction – Online webmap makes checking a site’s AA status easier across

2014-2020

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Resources

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- ‘Introduction to Assisted Areas’- Consultations and Responses on .Gov- www.gov.uk/state-aid/- www.ukassistedareasmap.com- www.sapu@bis.gsi.gov.uk

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Handouts

• The 2014/20 regional aid maps for France, Germany and the UK differ in nature due to the European Commission’s rules, but mostly because of different domestic development methodologies.

Resources

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- ‘Introduction to Assisted Areas’, Consultations and Responses are on .Gov

- www.gov.uk/state-aid/- www.ukassistedareasmap.com- State aid queries email: sapu@bis.gsi.gov.uk