Information Bulletin
12 October 2006
Shetland Islands Council State Aid Case is submitted to Scottish Executive Officials
Following the rally of support received last week from local Industry representatives and politicians towards the case Shetland is taking forward with the European Commission, the Council can announce that it has now submitted its response to Scottish Executive officials.
Working in close partnership with the Scottish Executive, reports will be prepared by the Executive to submit to the European Commission in order for them to reach decisions on the state aid compliancy of the following investment schemes:
- First Time shareholders scheme
- Fishing Vessel Modernisation scheme
- Loan Assistance schemes
- Fish Factory improvement schemes
There is no indication as to the timescale for the European Commission to take decisions on the above investments under scrutiny. Meanwhile, the Scottish Executive has been granted an extension until the 10th of November by the European Commission on submitting the response on the alleged state aid investment into Smyril Line.
Adding to the political support to reach a resolution on this issue, Orkney and Shetland Liberal Democrat MP, Alistair Carmichael, on Tuesday called on the Secretary of State for Scotland to play his part in ensuring that state aid rules are clear and recognise the economic fragility of places such as Shetland.
Speaking in the House of Commons Alistair Carmichael said:
“The Secretary of State, I know, is aware of the very great anxiety that exists in Shetland at the moment as a result of various complaints that are being investigated against various economic development projects which are claimed to have breached state aid rules. I hope that he and his department will do all they can to work with the Scottish Executive and others in allowing a satisfactory resolution of these complaints.
“Can I ask him though, looking to the future, does he agree that what is needed is a system which allows for clarity and prior approval of schemes and also which can recognise the economic fragility and peripherality of communities such as Shetland?”
In response the Secretary of State for Scotland, Douglas Alexander, stated:
“The honourable gentleman is of course right. I am aware of the concerns on the islands at the moment given the ongoing disputed state aid issues. I know that he has taken, as the local representative, a close interest in these matters…”
“These matters, as he said, are being explored in detail with Shetland Island Council, the public body concerned, with the Scottish Executive and also with our Department for Food and Rural Affairs. Discussions, I understand, are ongoing with the Commission to try and resolve the outstanding issue. But I would be clear that the principle responsibility does lie with the public body in question – in this case Shetland Island Council. That is why I hope we can find a resolution to these matters.”
Convener of Shetland Islands Council, Sandy Cluness, said that it was essential that both the European Commission and the Scottish and UK politicians shared the Council's sense of urgency to find solutions to the islands unique set of circumstances. " Shetland's future prosperity lies in our ability to invest in infrastructure and the economy generally, " said Mr Cluness, " particularly in view of the clearly limited funding for these islands which we are increasingly being made aware of by both Europe and the UK. The solution to this current crisis remains the responsibility of all those concerned, and not just this small local authority."
The urgency to resolve these issues and get decisions from the European Commission on these investment areas was also shared by local industry leaders.
General Manager of Shetland Aquaculture, David Sandison said that “A number of member companies will be concerned at the implications of the complaints regarding commercial loan schemes and we are keen to see the EU investigations concluded quickly”
Chief Executive of Shetland Fisherman’s Association, Hansen Black also said there was “clearly worry amongst fishermen who had received grant assistance in the past under the investigated schemes. In reference to the First Time Shareholders scheme, the recipients of grant assistance would have built these monies into their business plans and for these monies to be reclaimed now could jeopardise the businesses financial security”
In addition to the Council’s response on the industry investment schemes, two additional responses have been sent to the Scottish Executive on the:
- Proposed pier extension at Sellaness
- Proposed investment into the Fishmeal plant/Sildarvinnslan HF
Following a successful meeting last Thursday between the Head of the European Commission Office in Scotland, Neil Mitchison and Council officials, work is now continuing to prepare for the visit in Shetland of Commissioner Joe Borg, and MSP Ross Finnie and the return of Neil Mitchison on the 19th of October.
Media release ends…
Notes to Editor
A specialist team of lawyers have been working with the Shetland Islands Council and Shetland Development Trust to develop a robust case to demonstrate to the Commission that the schemes were compatible with the common market. This case has now been given to the relevant Scottish Executive officials for the case submission to the European Commission.
Over 40 businesses and 82 local fishermen could be affected by the serious concerns raised by the European Commission within the following four scheme areas:
- First Time shareholders scheme
- Fishing Vessel Modernisation scheme
- Fish Factory improvement scheme
- Salmon Farming and Fish Processing Loan assistance scheme run by the Shetland Development Trust
No recipients have been asked to take any action at this time. The total monies which has been given by the Shetland Islands Council in grant assistance within these four schemes is £771,193.41.
The total monies given as loans with the Salmon Farming and Fish Processing Loan Assistance scheme operated by the Shetland Development Trust is £3,949,430.00.
The total monies repaid in full by recipients to the Shetland Development Trust were £1,897,981.00, with £281,084.40 still being collected. The remaining outstanding balances are either non recoverable or in the process of recovery through liquidators due to the significant downturn in the aquaculture industry and a number of companies subsequently going into receivership.
Whilst the investigation continues into the grant and loan schemes, the further state aid complaints against the proposed investment into Smyril Line and the proposed new pier investment at Sellaness have halted any investment into these projects whilst further investigations into these specific complaints are concluded.