Regional Selective Assistance
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Transcript of Regional Selective Assistance
Purpose Of The Grant
Aims to improve job opportunities provided in the Assisted Areas of Scotland
• Supporting investment projects which create/safeguard jobs
• Open to limited companies, sole traders or partnerships
• Discretionary grant dependent on a number of factors……..
Key Features
Based on specific projects based on:• Expansion• Reinvestment
Can be used more than once for different projects as long as separate assets and jobs, and this separation is verifiable
Grant calculated with reference to either:• Capital expenditure (fixed assets); or • Creation of new jobs (2 years’ wages for new jobs)
Directly create/ safeguard
employment
Serve more than just local market
Capital expenditure
Funded mainly from private
sector
Require RSA to
proceed
The project must:
Criteria Jobs
Ideally projects should create new jobs.
Increase in jobs not to be offset by job losses elsewhere (job displacement)
Can assist if a real threat of jobs being lost in the near future if a project does not proceed – safeguarding
Only jobs directly created by the applicant are eligible
We look for at least 2-3 new jobs in the first year of the project
Criteria Capital Expenditure
Expenditure on ‘capital’ items – those that the business will own for a long time:
• Land & buildings
• Plant and machinery
• Computer equipment
Does not include general running costs of the business:
• Marketing costs
Criteria Need for assistance (1)
Demonstrate RSA is necessary to:-
Fill a funding gap
Satisfy parent company investment criteria (e.g. payback, ROC, IRR)
Reduce gearing and risks to an acceptable level
Make the project happen in an Assisted Area
Criteria Need for assistance (2)
Prior Commitment - companies seeking grant assistance should not proceed with projects or enter into expenditure commitments until the appraisal process has been completed
Criteria Viability
Proposals must make sound commercial sense
Applicant and the project must be financially viable
We will share risks but the venture must have a good chance of success
Sectors We Cannot Support EC Legislation
Fisheries and aquaculture Growing agricultural products Coal industry Steel industry Shipbuilding Synthetic fibres Purchase of transport equipment in the transport sector
Sectors We Are Unlikely To Support
Mining and construction Tourism Charitable organisations Public sector e.g. health service, colleges/schools, defence etc Energy generation Tobacco
Types Of Businesses We Do Not Support (1)
Businesses operating in a ‘local market’ – where customers come from the nearby area and have a wide choice of where to buy the product/service:
• Retail• Restaurants, hotels, cafes, bars• Nurseries, soft play, crèche • Joiners, plumbers, electricians, double glazing, garages• Hairdressers, newsagents, bakers
Types Of Businesses We Do Not Support (2)
• We consider the following to be well served markets: Printing sector Basic metal fabrication Double glazing Leisure and tourism Retail Professions (lawyer, accountant, doctor, dentist)
These markets are highly competitive and it is hard to differentiate between businesses. The project would likely lead to significant job displacement – no point in supporting one project if it just moves businesses/jobs from another company.
Types of businesses we don’t support (3)Charitable Organisations
The grant scheme is not really designed for charities/social businesses
We can only support a commercial activity i.e. the part that aims to make a profit and does not rely on donations. This may only be a small part of the charity’s activities.
In general, it is difficult to show that the commercial activity aims to make a profit and is a viable business in its own right.
Often, the commercial activity operates on a local basis (e.g. shop) or is in a well-served market (e.g. training) and would therefore be ineligible.
Assisted Areas - 2014 to 2020
Tier 2 (sparsely populated areas may be eligible for an additional 5% funding)
Tier 2
Tier 3
.
Company Size
Tier 2 Tier 3
Small 30% 20%
Medium 20% 10%
Large 10% 0%
Large Companies Summary
• Large companies can only receive regional aid for “initial investment in favour of new economic activity” in the area concerned. This means large companies are only eligible where they are:
Setting up a new establishment in a different NUTS 3 region from any existing operations of the firm; or
Diversifying the activity of an establishment to one that is not the same or similar to that previously performed
Large Companies (2) “Initial Investment in new economic activity”
Initial investment relates to: Setting up of a new establishment, or Diversification of the activity of an establishment under the condition
that the new activity is not the same or similar to the activity previously performed in the establishment
‘the same or similar activity’ : activity falling under the same class (4digit code) of the NACE Rev 2 statistical classification of economic activities.
If the project is “the same or similar activity” in the same NUTS 3 area then it cannot be supported.
NUT 3 areas generally follow local authority boundaries, with a few exceptions.
Large Companies (3)New establishment
If the project is by a business not already in Scotland then it is “new establishment” and “new economic activity in the area concerned”.
If a project is proposed by a business already in Scotland but in a different NUTS 3 area then it can also be regarded as new economic activity in the area concerned if is it related to setting up a new establishment. There is no requirement to show that this is not “the same or similar activity”.
The exception to this is relocation
Large Companies (4)Relocation
What about a relocation from one NUTS 3 to another – is that eligible?
• No - If the project is an outcome of a closure of the same or similar activity anywhere in the EEA in the previous 2 years it cannot be supported. Also, if, at the time of the application for aid, there are concrete plans to close down such an activity within 2 years following the initial investment, this would also mean a project is ineligible for support. This will mean most relocations will be ineligible for support.
Company Size
Enterprise Category
Headcount Annual
Turnover
Net Assets
Medium < 250 < €50 million < €43 million
Small < 50 < €10 million < €10 million
OrAnd
Example - Aid for Investment (“traditional method”)
£’000
Capital expenditure 500
Aid limit (small co in Tier 2) 30%
Maximum RSA grant available 150
Aid For Job CreationExample
£’000
Gross salaries over 2 years
(35k salaries x 20 jobs x 2 years)
1,400
Aid limit (small co in Tier 2) 30%
Maximum RSA grant available 420
Level Of SupportFactors Considered
Need for assistance
Quality of jobs (qualifications, pay, etc)
Quality of Project (R&D, headquarters, etc)
Timing of jobs, capex, draw down of grant
RSA Project Appraisal Process
Initial enquiry• High level review of project against scheme criteria
Appraisal of application• Size and impact of project• Market assessment• Financial viability• Need for assistance
Decision (Approval group for grants >£500k) Turnaround 10-40 working days depending on size of grant
Appraisal Teams
RSA team handles• Scottish companies• UK companies already established in Scotland
SDI team handles• New inward investment cases• Overseas owned companies• UK companies setting up in Scotland initially
Payment Of Grant
Paid in instalments, in arrears, over the life of the project
Need to meet conditions to trigger instalment:
• Capex
• Jobs
• Gross wages (AfJC only)
Standard conditions include provisions that assets and jobs are maintained for a period of time after final payment (3 to 5 years - there are specific EU rules)
RSA Annual Results 2013-2014
117 offers of RSA in Scotland were accepted, totalling over £52.5 million.
These offers relate to projects with planned capital expenditure of over £267 million and the expected creation or safeguarding of 6,161 jobs.
12 offers accepted of £1 million or more were accepted.
SMEs accounted for 85 (73%) of the accepted RSA offers, totalling almost £18 million.• These projects involve planned investment of over £66.6 million with the aim of
creating or safeguarding 2,368 jobs.• 32 of these offers, totalling over £6.2 million and aiming to create and safeguard
over 1,070 jobs, were for our ‘Tier 3’ RSA grant aimed solely at SMEs