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Home , Arnside and Silverdale, Cannock Chase, Dedham Vale, Forest of Bowland, Howardian Hills, Kent Downs

EUROPEAN COMMISSION

Brussels, 16-X-2006 C(2006) 5001

Subject: State aid / United Kingdom () Aid No N 454/2006 Areas of Outstanding Natural Beauty: Landscape Protection and Enhancement Aid Scheme (England)

Madam,

I have the honour to inform you that, having examined the information supplied by your authorities on the aid scheme above, the Commission has decided to raise no objections to the state aid scheme in question.

In reaching this decision, the Commission based itself on the following considerations:

1. PROCEDURE

(1) The measure was notified by letter of 5 July 2006, registered on 5 July 2006, by the Permanent Representation of the United Kingdom to the European Union. Additional information was submitted by letter of 16 August 2006, registered on 17 August 2006.

2. DESCRIPTION

2.1. Title

(2) Areas of Outstanding Natural Beauty: Landscape Protection and Enhancement Aid Scheme (England)

The Rt Hon Margaret Beckett MP Secretary of State for Foreign and Commonwealth Affairs Downing Street SW1A 2AL United Kingdom

Rue de la Loi 200, B-1049 Bruxelles/Wetstraat 200, B-1049 Brussel - Belgium Telephone: exchange (+32-2)299.11.11. Telex: COMEU B 21877. Telegraphic address: COMEUR Brussels.

2.2. Beneficiaries

(3) Over 1000 farmers in England

2.3. Budget

(4) Annual amount: £4 million Overall amount: £24 million (€ 34.7 million)

2.4. Duration

(5) 1 November 2006 until 31 March 2012

2.5. Measures

(6) Under this scheme each Area of Outstanding Natural Beauty (AONB) will provide investment aid for conservation of the productive and non-productive heritage features on agricultural holdings. An AONB in England is a public body and is governed by a committee of relevant local authorities.

(7) The aid scheme is funded through the general budget of the Department for Environment, Food and Rural Affairs (Defra).

(8) Areas designated as Areas of Outstanding Natural Beauty within England are: and Silverdale; Blackdown ; ; ; ; Cranbourne Chase and West Downs; ; ; East Devon; East ; ; High ; ; ; ; Downs; Wolds; ; ; Nidderdale; Norfolk Coast; North Devon; North ; Coast; ; ; Hills; ; South Devon; Coast and Heaths; Sussex Downs; Hills; Tamar Valley; and (part of this boundary falls within ). During 2006, block exempted aid is given for the Chilterns and the AONBs (State aid Nos XA 04/06 and XA 08/06). They become part of this scheme only from 1 January 2007 onwards.

(9) The investment scheme pursues the objective of preservation and improving the natural environment.

(10) The following measures can be distinguished:

a) The renovation of boundary features: dry stone walls, hedges, wrought iron railings and gates, and dry and wet ditches; b) The removal of scrub; c) The planting of hedges; d) The fencing of woodland of high environmental value to prevent grazing by livestock; e) The pollarding of trees;

2 f) The planting of small copses and feature trees; g) The provision of ponds and other wet landscape features; h) The management and renovation of archaeological sites; i) The renovation of historic agricultural buildings using traditional materials; j) The provision of water troughs to enable improved management of rich grassland by livestock.

(11) Eligible costs:

Measure a): Dry stone walls: skilled contracted labour, appropriate stone, top wiring; hedges: skilled contracted labour, whip/transplants, stakes and binders, rabbit guards, post and wire fencing, sheep netting, rabbit netting; wrought iron railings: skilled contracted labour, metalwork; gates: skilled contracted labour, wooden field gate, kissing gate for disabled access, kissing gate, bridle gate, dog gate, supporting wooden wings, stone gate post; dry and wet ditches: skilled contracted labour to clear vegetation, machine hire; Measure b): Skilled contracted labour to clear vegetation, machine hire, chemical treatment (one-off treatment); Measure c): Planting hedges: skilled contracted labour, whips/transplants, rabbit protection, plastic mulch, protective fencing (one-off activity); Measure d): Fencing of woodland of high environmental value: post and wire fencing, top wiring, sheep netting; Measure e): Pollarding of trees: skilled contracted labour, large scale restorative pollarding (one-off payment); Measure f): Whips and transplants, skilled contracted labour, rabbit guards, plastic weed mulch, tree tubes, metal tree guards, wooden tree guards (one-off payment); Measure g): Skilled contracted labour, machine and tool hire (one-off payment); Measure h): Skilled contracted labour, post and wire fencing, stock netting, tree felling, scrub clearance and chemical treatment (one-off payment); Measure i): Skilled contracted labour, machine and tool hire, scaffolding hire, building materials, traditional materials e.g. sandstone blocks, oak timbers, etc.; Measure j): Skilled labour, metal water trough, water supply piping, machine hire.

(12) The aid intensity depends on the classification of the measure. A measure – depending on the circumstances of the investment – may fall under more than one classification. The UK authorities have given assurances that an individual assessment will be made in each case that the conditions of the chosen classification are fulfilled.

a) Measures a), b), c), d), e), f), g), h), i): 100% of costs for the conservation of non-productive heritage features located on agricultural holdings; aid may occasionally be granted to compensate for the farmer’s own labour (subject to a limit of €10000 per year); b) Measures a), b), c), g), h), i): 60% (75% in less-favoured areas) for investments or capital works intended to conserve the heritage features of productive assets on farms without increase in capacity;

3 c) Measures a), b), c), g), h), i), j): 40% (50% in less-favoured areas) for investments or capital works intended to conserve the heritage features of productive assets on farms with increase in capacity; extra costs incurred as a result of using traditional materials will be funded at a rate of 100%.

(13) For eligibility, farmers and producer groups must manage land within the statutorily designated area or be in close proximity to its boundary or in some other way be capable of affecting the AONB. The aid must further the purpose of the AONB as a Category V Protected Landscape as specified in that AONBs management plan.

(14) The AONBs will either offer a cash grant on completion of agreed works or will provide labour and the necessary materials to carry out the works.

(15) The UK authorities haven given assurances that simple replacement investments are excluded from support.

(16) The UK authorties have given assurances that sufficient checks are in place to guard against any possibility of double funding.

2.6. Legal basis

(17) Part II section 11 and Part IV section 87 and section 88(2) of the National Parks and Access to the Countryside Act 1949 and Part IV section 82 and 84(4) of the Countryside and Rights of Way Act 2000

2.7. Aid intensity

(18) Up to 100%

3. EVALUATION

(19) Under Article 87(1) of the EC Treaty, aid granted by a Member State or through State resources in any form whatsoever which distorts or threatens to distort competition by favouring certain undertakings or the production of certain goods is prohibited, insofar as it affects trade between Member States. It is obvious that there is substantial crossborder trade in agricultural products.1

(20) The aid measure is financed through the general budget of the government and local authorities. Therefore, it has to be qualified as being granted through State resources.

(21) It favours certain enterprises in England. It is therefore liable to distort competition and to affect trade between Member States.

1 Trade in agricultural products of the United Kingdom with other Member States in 2004: imports €24 075 million, exports €10 015 million (source: Eurostat).

4 (22) Therefore, Article 87(1) of the EC Treaty applies.

(23) According to Article 87(3)(c) of the EC Treaty, aid to facilitate the development of certain economic activities or of certain economic areas can be regarded as compatible where such aid does not adversely affect trading conditions to an extent contrary to the common interest. Concerning this aid, the Community guidelines for state aid in the agriculture sector2 (hereinafter: Community guidelines) apply.

(24) Commission Regulation (EC) No 1/2004 of 23 December 2003 on the application of Articles 87 and 88 of the EC Treaty to State aid to small and medium-sized enterprises active in the production, processing and marketing of agricultural products3 does not apply as the UK authorities have not limited eligible beneficiaries to small and medium-sized enterprises.

(25) The UK authorities have given assurances that AONBs are government- controlled public bodies. The AONBs will use its own staff for providing technical support if possible.

(26) However, this decision in no way prejudges any further analysis by the Commission as far as the respect of public procurement rules is concerned.

(27) Aid for investment in agricultural holdings is meant to contribute to the improvement of agricultural incomes and of living, working or production conditions. The present scheme pursues the objective of improving the natural environment (point 4.1.1.1 of the Community guidelines) by providing support for maintaining traditional landscapes. Eligible for support are farmers in AONBs in England.

(28) The applicants must demonstrate occupational skills and competence (point 4.1.1.3. of the Community guidelines). The holdings must comply with minimum Community standards regarding the environment, hygiene and animal welfare (point 4.1.1.3. of the Community guidelines). These conditions are met.

(29) The scheme respects the maximum rates of aid for the conservation of traditional landscapes (point 4.1.2.2 of the Community guidelines). The aid intensity is limited to 100% for investments or capital works intended for the conservation of non-productive heritage features located on agricultural holdings; 60 % (75% in less-favoured areas) for investments or capital works intended to conserve the heritage features of productive assets on farms without any increase in the production capacity of the farm; and 40% (50% in less- favoured areas) for investments or capital works intended to conserve the heritage features of productive assets on farms with an increase in the production capacity of the farm. These conditions are met.

(30) For those investments having as their objective increased production, the UK authorities have given assurances that the existence of normal market outlets will be checked (point 4.1.1.4 of the Guidelines). Further, any restrictions on

2 OJ C 232, 12/8/2000, p. 19. 3 OJ L 1, 3/1/2004, p. 1.

5 production or limitations of Community support under the common market organisation must be taken into account. Besides, the aid is in conformity with the rules under the common market organisations.

(31) The aid therefore complies with the conditions in point 4.1 of the Community guidelines.

(32) The Commission reminds the UK authorities that the Community guidelines for State aid in the agriculture sector are currently being reviewed by the Commission. Once the new rules enter into force, Member States will have to take appropriate measures to bring their existing aid schemes into line with the new provisions.

IV. DECISION

(33) The measure complies with point 4.1 of the Community guidelines for State aid in the agriculture sector. The Commission has accordingly decided that the aid is compatible with Article 87(3)(c) and (d) of the EC Treaty.

(34) If this letter contains confidential information which should not be disclosed to third parties, please inform the Commission within fifteen working days of the date of receipt. If the Commission does not receive a reasoned request by that deadline, you will be deemed to agree to disclosure to third parties and to publication of the full text of the letter in the authentic language on the Internet site http://ec.europa.eu/community_law/state_aids/index.htm. Your request should be sent by registered letter or fax to:

European Commission Directorate-General for Agriculture and Rural Development Directorate H Office: Loi 130 5/94A B-1049 Brussels Fax No.: 0032.2.296 7672

Yours faithfully, For the Commission

Mariann FISCHER BOEL Member of the Commission

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