Dáil Éireann debate -
Tuesday, 16 Feb 1999

Vol. 500 No. 4

Written Answers. - EU Funding.

Brendan Howlin

Question:

92 Mr. Howlin asked the Tánaiste and Minister for Enterprise, Trade and Employment the implications of the Government decision of 17 November 1998, dividing the country in two for purposes of the next round of EU Structural Funds, on the level of support to enterprise in the two areas involved; the steps, if any, she will be taking to attract industries to unemployment backspots outside of the proposed Objective One area; and if she will make a statement on the matter. [4144/99]

Tánaiste and Minister for Enterprise, Trade and Employment (Ms Harney)

Government support to enterprise must conform to the limits set by the EU regional aid guidelines, the latest version of which will come into effect, generally, in January 2000.

At present the development agencies can offer assistance to enterprises of up to 57 per cent of investment costs in the non-designated areas, up to 71 per cent in the designated areas and up to 75 per cent in Gaeltacht areas. In practice the assistance offered is well below these limits.

Under the latest EU regulations, Ireland will be treated as comprising eight Article 92(3)(c) sub-regions – our regional authority areas– and each will have a ceiling on the aid which can be offered to enterprise. The limit for each area will depend on its GDP/unemployment rate, but may not exceed 20 per cent of investment costs, with a top-up of up to 10 per cent for SMEs. Not only is the Commission limiting aid payable across the Union to curb harmful competitive bidding between member states, but the new rules reflect Ireland's much improved economic status, that is, we are no longer one of the poorest areas of the EU.

If the EU regulations on Structural Funds are amended and there is to be a new Objective One region in the area comprising the three sub-regions of the west, midlands and Border, plus Clare and Kerry, that area will qualify for the highest regional aid status, known as Article 92(3)(a), at present enjoyed by the whole State. The aid limits in this case would probably be in the region of up to 40 per cent of investment costs, with a top-up to 15 per cent for small and medium enterprises.

The new limits are, of course, ceilings. In practice, the agencies will continue to operate on a value for money basis and to offer assistance at the appropriate level in each case.

With regard to unemployment blackspots, my Department's policy in relation to industrial location is to encourage investors, via the industrial development agencies, to locate their investments in areas which need them taking account of the investors' own requirements. The locational aspects of industrial development require a strong co-operative approach between the industrial development agencies, the local authorities and infrastructure-service providers. For their part, IDA Ireland, Enterprise Ireland and Shannon Development offer various incentives to accomplish this task including: enhanced grant packages, particularly in designated areas; stimulating construction programmes of modern advance factories and business parks at key locations with private sector involvement; working closely with local authorities to make available quality serviced sites; and working with local communities and development agencies to improve their areas so that these areas are more competitive and attractive to potential investors and capable of competing strongly against similar European locations for possible investment opportunities.

The industrial development agencies participate, as appropriate, in various local initiatives such as special task forces, details of which are furnished in reply to a separate question by Deputy Creed on today's Order Paper.