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
DfE State aid Unit (SAU) is part of the Department for the Economy’s Strategic Policy Group. SAU provides advice and guidance, on industrial State aid matters to NI Departments and their Arm's Length Bodies. The role of SAU is summarised below:
Advice and Guidance
SAU provides 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 their proposals 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 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.
Northern Ireland State aid liaison
SAU liaises regularly with the lead Department on State aid matters the Department of Business Energy and Industrial Strategy (BEIS), the UK Permanent Representation (UKRep) in Brussels, and the State aid teams for the Devolved Administrations in Wales and Scotland to represent the interests of Northern Ireland. This includes:
- helping Northern Ireland Departments and their ALBs to register, notify or modify Northern Ireland State aid schemes through BEIS, UKRep and the European Commission
- representing the Northern Ireland perspective on Commission consultations to BEIS
- taking part in discussions on State aid issues pertinent to the UK, with BEIS and counterparts in the Welsh and Scottish Devolved Administrations
The State aid rules following EU Exit
In the UK Government White Paper, "The Future Relationship between the United Kingdom and the European Union", which was published in July 2018, it was proposed that the UK would commit to a common rulebook on State aid, and this would be enforced and supervised in the UK by the Competition and Markets Authority (CMA).
It should be noted that the CMA’s State aid role is subject to parliamentary approval of the draft State aid ‘no deal’ Statutory Instrument (The State Aid (EU Exit) Regulations 2019).
You can read more about the CMA's proposed role if there is no EU Exit deal on the CMA website.
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.