From 1 January 2021, all subsidies provided by public authorities in Northern Ireland must comply with either the EU State aid rules or Chapter 3 of the EU-UK Trade and Cooperation Agreement and any other international subsidy commitments.
The EU State aid rules
From 1 January 2021, the EU State aid rules only apply in respect of measures which affect trade in goods and electricity between NI and the EU when aid is within the scope of Article 10 of the Northern Ireland Protocol. The State aid provisions of Article 10 will, in practice, primarily apply to aid for manufacturers and sellers of goods located in NI that trade with the EU.
State aid may be present whenever state resources are used to provide assistance that gives undertakings (organisations that are engaged in economic activity) an advantage over others.
State aid can distort competition, which in turn can be harmful to consumers and companies in the EU, so it is generally discouraged by the European Commission.
However, where there is a genuine market failure and a policy objective of common interest State aid might be necessary and justified, and the European Commission’s State aid rules provide the procedural and regulatory framework through which Member States can award State aid legally.
The intention/aim/objective of a proposed policy/scheme/project is not material, and assistance can be State aid even if it is designed to benefit society generally and not just specific undertakings.
Articles 107 and 108 of the Treaty on the Functioning of the European Union (TFEU) provide the legal basis for the rules on State aid.
State aid rules promote a level playing field between Member States and help to ensure aid is targeted to address market failures and avoid negative effects on competition. Reading, understanding and applying the rules takes time and resource, but will ultimately help you ensure Value for Money, and avoid the extremely negative consequences of awarding State aid illegally.
DfE State aid Unit
SAU will continue to liaise with BEIS, the UK Permanent Mission to the European Union (UKMis) in Brussels in respect of aid measures which fall under the Protocol to help Northern Ireland Departments and their ALBs to register, notify or modify Northern Ireland State aid schemes through BEIS, UKMis and the European Commission.
DfE SAU will continue to provide advice and guidance to Northern Ireland Departments and their Arm’s Length Bodies (ALBs) on whether State aid may be present in their plans for public funding or assistance, and how measures can be designed so that they comply with the European Commission's (EC) industrial State aid rules. This includes:
- providing advice, at an early stage, on whether State aid might be present in a policy or funding/assistance proposal
- advising on what aid is allowed under the EC's State aid rules
- working with people in Northern Ireland Departments and their ALBs to make sure that any assistance they provide is in compliance with EC State aid rules
SAU has produced State aid: A Beginner's Guide for Public Bodies in Northern Ireland which provides an introduction to the concept of State aid, how to assess whether State aid is present, and how to make sure you comply with the EU State aid rules. Further advice on State aid can be found in section 4.8 of the Northern Ireland Guide to Expenditure Appraisal and Evaluation (NIGEAE), and Annex 4.9 of Chapter 4 of Managing Public Money Northern Ireland.
The Department for Business Energy and Industrial Strategy (BEIS) has also provided guidance which covers the interpretation of Article 10 of the Northern Ireland Protocol on the EC's State aid rules.
Training and Awareness Raising
SAU provides training and awareness-raising activities for people in Northern Ireland Departments and their ALBs, helping them to identify when State aid might be present in their projects/plans and how to deal with it.
If you think your organisation would benefit from a training/awareness raising session please contact firstname.lastname@example.org.
Contacting DfE State aid Unit
Please see State aid Contacts page for information about how to contact SAU.