§ Lord Shore of Stepney
asked Her Majesty's Government:
Further to the Written Answer by the Lord McIntosh of Haringey on 8 December (WA 93), what were the particular features of the original scheme for granting small and medium firms in Northern Ireland 100 per cent capital allowances to which the Commission objected when the scheme was notified to Brussels on 30 September 1998; what reasons were given by the Commission to justify its ruling that the scheme was incompatible with the state aid rules; and in particular why the scheme was not exempted from those rules by the provisions of paragraph 3(a) and (c) of Treaty Article 87. [HL418]
§ Lord McIntosh of Haringey
As stated in the Written Answers given on 25 November (WA 15) and 8 December (WA 93), the European Commission decided on 25 June 1999 that the scheme to allow 100 per cent first year capital allowances to small and medium-sized enterprises in Northern Ireland was compatible with the state aid rules under Article 87(3) of the Treaty of Rome (as amended by the Treaty of Amsterdam).
In common with any regional aid scheme, expenditure on the purchase of transport equipment (moveable assets) does not qualify for aid under this scheme. Restrictions are also placed on aid for certain activities connected with agriculture and fisheries; in these sectors, 100 per cent first year capital allowances are available only on investments authorised by the Department of Agriculture in Northern Ireland.
All state aid must be notified to the Commission for approval in advance of its implementation. Article 87(3) EC provides the bases on which the Commission may approve schemes as being compatible with the state aid rules; it does not provide for exemption from the requirement to notify the Commission.