The SIC is hoping to inject £2.9 million into Shetland businesses over the next two years without falling foul of EU competition rules. The now-infamous restrictions on state aid have been relaxed suddenly in a bid to help countries tackle the credit crunch.
The council’s plan is to set up a Shetland temporary business support scheme for approval by the European Commission under EU attempts to boost consumer demand, save jobs and help restore confidence. The EC is allowing governments to give a higher level of public funds to industry before state aid restrictions kick in (the so-called de minimis threshold) as well as permitting subsidised loan guarantees, subsidised interest rates on loans and aid for producers of green products. No help can be given to companies that were in difficulty prior to July last year.
Unfortunately for Shetland, the fisheries sector is ineligible, as is agricultural production, export aid and aid which favours domestic products over imports. The scheme will run until the end of December 2009. It does not involve the SIC spending extra funds but allows it more freedom in deciding how to use its economic aid budget to help companies.
A report to councillors by SIC agricultural development officer Jon Dunn stated the scheme would give industry “the best possible chance to weather the current poor economic climate”. The relaxed state aid rules are intended for use by national governments but according to the SIC the Scottish government has yet to take up the opportunity, prompting the council to take the “prudent” step of getting in with its own proposal before the deadline at the end of July.
The head of economic development Neil Grant told the development committee yesterday: “We need to get out of the gates quickly on this.” The council’s scheme would be shelved if the government does eventually submit one in time, if it includes all the measures proposed by the SIC.
The council has been plagued with difficulties over state aid rules during the past five years since complaints to the EC about its use of reserve fund cash to help local industry.
Meanwhile, the council’s economic development unit is to be asked to draw up a new grants scheme to try to stimulate innovative economic activity and diversification in Shetland. Councillor Alastair Cooper said: “We need to make sure what we’re coming up with is what folk are wanting.”