Welsh Assembly Government Support for Entrepreneurship Scheme State Aid Reference No

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Welsh Assembly Government Support for Entrepreneurship Scheme State aid reference no:

1. Member State

United Kingdom

2. Region

Wales

3. Title of Aid Scheme

Welsh Assembly Government Support for Entrepreneurship Scheme

4. Legal basis

Powers of the Welsh Ministers which allow the Welsh Assembly Government to administer the scheme are contained in:

• the Welsh Development Agency Act 1975 (section 1) (as amended); • the Housing Grants, Construction and Regeneration Act 1996 (section 126); and • the Industrial Development Act 1982 (sections 7 and 8)

The legislation which gives effect to EC Law in Wales is:

• the European Communities Act (1972) (section 2 (1)) • the Government of Wales Act 2006 (section 80)

5. EC legal basis

All aid provided under this Scheme will be within the limits set out in Articles 14 or 16 of Commission Regulation (EC) 800/2008 (General Block Exemption Regulation)1

Summary information relating to the Scheme has been registered with the Commission under reference xx/xxxx

6. Definitions

In this Scheme, the following expressions have the meanings assigned below:

“Small enterprise” means an enterprise that falls within the criteria and parameters of the definition of micro and small-sized enterprises contained in the Commission Recommendation of 6 May 2003 concerning the definition of micro, small and medium-sized enterprises (2003/361/EC), which took effect on 1 January 20052

“Assisted Area” means any of the regions in Wales designated as an 87 (3) (a) or 87 (3) (c) area as identified in the Regional Aid Map 2007-2013 (please refer to Annex 1 for further information).

“The Regional Aid Map” means the map approved by the Commission for the UK and published in accordance with paragraph 101 of the Guidelines on National Regional Aid for 2007-2013 (2006/C 54/08).

“Non-assisted areas” means any of the regions in Wales not designated as an 87(3) (a) or 87 (3) (c) area as identified in the Regional Aid Map 2007-2013.

“Wage cost” means the total amount actually payable by the beneficiary of the aid in respect of the employment concerned comprising gross wage, compulsory contributions and child care and parent costs.

“Enterprise newly created by female entrepreneurs’” means a small enterprise where at least 51% of the capital is owned by one or more women or women are the registered owners of the enterprise and a woman is in charge of the management of the enterprise.

1 http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2008:214:0003:0047:EN:PDF

2 http://europa.eu/eur-lex/pri/en/oj/dat/2003/l_124/l_12420030520en00360041.pdf See also the New SME Definition User Guide and Model Declaration http://ec.europa.eu/enterprise/enterprise_policy/sme_definition/sme_user_guide.pdf

7. Objective of the scheme

The overall aim of the Scheme is to promote and encourage entrepreneurship and to improve the survivability of start ups created in Wales and also ensure they achieve growth potential through the provision of support to new start ups. Assistance will be provided to boost the levels of small company start ups in Assisted Areas of Wales and to encourage small company start ups by women in all areas of Wales.

8. Government body authorised to implement the Scheme

Welsh Assembly Government

9. Scope of the scheme

The Scheme will be open to all small newly created enterprises in Assisted Areas of Wales and to small newly created enterprises set up by female entrepreneurs throughout Wales excluding those operating in the following sectors3:

• Coal Sector; • Steel sector (see footnote 3); • Synthetic fibres (see footnote 3); • Shipbuilding (see footnote 3); • Fisheries and aquaculture sector; • Organisations from the Agriculture sector engaged in the primary production of Agricultural products; or • Organisations from the Agriculture sector engaged in the processing and marketing of agricultural products when (1) the amount of aid is fixed on the basis of the price or quantity of such products purchased from primary producers or put on the market by the small enterprise concerned or (2) the aid is conditional on being partly or entirely passed on to primary producers;

Definitions of the sectors are set out in Annex 2

In addition, aid will not be allowed for the following activities:

• aid to export related activities, namely aid directly linked to the quantities exported, to the establishment and operation of a distribution network or to other current costs linked to the export activity; or

• aid contingent upon the use of domestic over imported goods

3 Whilst the steel, synthetic fibres and shipbuilding sectors are excluded from aid for newly created enterprises (Assisted Areas) they can receive support for newly created enterprises set up by female entrepreneurs (all Wales)

Aid may not be given where the proposed recipient of the aid is:

• subject to an outstanding order for the recovery of aid which has been declared by the Commission to be illegal and incompatible with the common market; or

• “a firm in difficulty” within the meaning of Chapter 2 of the Community guidelines on State aid for rescuing and restructuring firms in difficulty (OJ C 244, 1.10.2004, p.2).

10. Date and period of the Scheme

Support under this Scheme may be granted until 31st December 2013

11. Budget for aid under the Scheme

The scheme will be administered by a number of Departments within the Welsh Assembly Government. Funding will be allocated on a discretionary basis from Departmental annual budgets and Structural funds as appropriate.

It is anticipated that the maximum annual budget for expenditure under this scheme will be £5million.

12. Form of aid

All aid awarded under the Scheme will be transparent and in line with criteria set out in Articles 14 or 16 of the General Block Exemption Regulation. Aid may be awarded by way of:

• grants; • interest rate subsidies; • loans; and • repayable advances

13. Eligible activities to be supported under the Scheme

The Scheme supports newly created enterprises in assisted areas of Wales and newly created enterprises set up by women in all areas of Wales. Detailed descriptions of the eligible activities that can be supported are set out in Schedules 1 and 2.

Schedule 1: support for newly created small enterprises in assisted areas

Schedule 2: support for newly created small enterprises set up by female entrepreneurs

Each schedule provides details of the eligible costs4, the relevant aid intensities and maximum amount of support that can be awarded under the Scheme.

14. Incentive effect

Aid recipients must demonstrate that the aid is required for projects to proceed. Funding will not be awarded where the activity has already started before an application for support is made.

15. Cumulation

In determining whether the individual notification thresholds and the maximum aid intensities are respected, the total amount of public support for the activity or project shall be taken into account, regardless of whether that support is financed from local, regional, national or Community sources.

Aid provided under this Scheme will not be cumulated with other forms of aid nor with aid classed as de minimis aid5 in regard to the same eligible costs if the result would breach the aid intensities set out in schedules 1 and 2.

16. Monitoring and reporting requirements

All recipients of aid under the Scheme will be informed that aid has been provided under the Scheme, registered under xx/xxxx pursuant to Article 14 or 16 of Commission Regulation (EC) No 800/2008 (General Block Exemption Regulation).

Records will be kept for 10 years from the date of the last award of aid under the Scheme. Records will be sufficiently detailed to establish that the conditions of the scheme are met, to include confirmation of enterprise status (newly created small enterprise) and eligibility of supported costs.

An annual report on the expenditure under this Scheme will be provided to the Commission.

Contact information:

Welsh Assembly Government Plas Glyndwr Kingsway Cardiff CF10 3AH United Kingdom

4 Eligible costs must be transparent and directly and exclusively related to the project being funded 5 Aid fulfilling the conditions laid down in Commission Regulation (EC) No 1998/2006 on the application of Articles 87 and 88 of the Treaty to de minimis aid.

Tel: + 44 (0)29 20 368061 Fax: +44 (0)29 20 368010

Schedule 1: Support for newly created small enterprises in Assisted Areas

This schedule sets out the objective of the aid, details of the eligible costs, the relevant aid intensities and the maximum amount of support that can be awarded under the scheme before direct notification to the Commission is required.

1. Support for newly created enterprises in Assisted Areas

This measure is aimed at increasing the number of new start ups in Wales by providing support in relation to their start up costs and running costs for the first 5 years after creation

2. Eligible costs

The eligible costs under the Scheme are the following:

Costs directly related to the Creation of the small enterprise:

- Legal, advisory, consultancy and administrative costs directly related to the creation of the small enterprise;

The following operating costs of the enterprise for the first five years after creation

- interest on external finance and dividend on own capital not exceeding the reference rate; - fees for renting production facilities/equipment - energy, water, heating, taxes (other than VAT and corporate taxes on business income) and administrative charges; - depreciation, fees for leasing production facilities/equipment as well as wage costs, provided that the underlying investments or job creation and recruitment measures have not benefited from other aid

3. Aid intensities applicable

The following aid intensities will apply:

Article 87(3)(a) areas Article 87(3)(c) areas

Maximum Allowable aid intensity:

First 3 years 35% of eligible costs 25% of eligible costs

Following 2 years 25% of eligible costs 15% of eligible costs

4. Individual notification thresholds

The maximum support that can be provided to any one project under this scheme is identified in the table below. Any grant awarded to an individual project exceeding these levels will need to be notified directly to the Commission.

Article 87 (3) (a) areas Article 87 (3) (c) areas Maximum aid to be awarded €2 million per enterprise €1 million per enterprise ` Maximum annual amount of aid that can be €660,000 per enterprise €330,000 per enterprise awarded

Schedule 2: Support for newly created enterprises set up by female entrepreneurs

1. Support for newly created enterprises set up by female entrepreneurs

This measure is aimed at increasing the number of new start ups set up by women in Wales by providing support in relation to their start up costs and running costs for the first 5 years after creation

2. Eligible costs

The eligible costs under the Scheme are the following:

Costs directly related to the creation of the small enterprise

- Legal, advisory, consultancy and administrative costs directly related to the creation of the small enterprise;

The following operating costs of the enterprise for the first five years after creation:

3. Aid intensities applicable

The following aid intensities will apply:

Small companies set up by female entrepreneurs in all areas of Wales

Allowable aid intensity 15% of eligible costs incurred in the first 5 years

4. Individual notification thresholds

Maximum aid to be awarded €1 million per enterprise

Maximum annual amount of aid that €330,000 per enterprise can be awarded

Annex A

Assisted Areas 2007-2013 The UK Assisted Areas for the period 2007-2013 have been determined in line with the criteria identified within the Regional aid guidelines. The UK map was notified to the Commission and subsequently approved under State aid decision N673/2006.

In Wales, West Wales and the Valleys continue to retain full Article 87(3)(a) status eligible for the higher levels of funding. Areas of Powys, Flintshire, Cardiff and Newport have been identified as Article 87(3)(c) areas.

Assisted Area: Article 87(3)(c)Wards

Area Wards Powys Aber-craf Cwm-twrch Ynyscedwyn Ystradgynlais Flintshire and Wrexham Aston Greenfield Bagillt East Gronant Bagillt West Halkyn Broughton North East Hawarden Broughton South Holywell Central Brynford Holywell East Buckley Mountain Holywell West Caerwys Mancot Cilcain Mostyn Northop Connah‟s Quay Central Northop Hall Connah‟s Quay Golftyn Queensferry Connah‟s Quay South Sealand Shotton East Connah‟s Quay Wepre Ewloe Shotton Higher Ffynnongroyw Shotton West Flint Castle Trelawnyd and Gwaenysgor Flint Cosehill Whitford Flint Oakenholt Flint Trelawny

Monmouthshire and Newport Gaer Graig Liswerry Llanwern Marshfield Pillgwenlly Tredegar Park Cardiff and the Vale of Glamorgan Pontprennau/Old St Mellons Trowbridge Creigiau / St Fagans Pentyrch

Annex B – Sector Definitions

• Coal Sector– enterprises which carry out an activity in connection with coal production where coal is defined as high, medium and low grade category A and B within the meaning of the internal codification system for coal laid down by the UN Economic Commission for Europe;

• Steel sector– enterprises which carry out activities related to the production of one or more of the following products: pig iron and ferro-alloys; crude and semi finished products of iron, ordinary steel or special steel; hot finished products of iron, ordinary steel or special steel; cold finished products; tubes as defined in Article 2 of the General Block Exemption Regulation;

• Synthetic fibres sector – enterprises which carry out any type of activity in connection with extrusion/texturisation of all generic types of fibre and yarn based on polyester, polyamide, acrylic or polypropylene, irrespective of their end uses or polymerisation (including polycondensation) where it is integrated with extrusion in terms of the machinery used; or any ancillary process linked to the contemporaneous installation of extrusion/texturisation capacity by the prospective beneficiary or by another company in the group to which it belongs and which, in the specific activity concerned, is normally integrated with such capacity in terms of the machinery used;

• Shipbuilding sector – enterprises involved in the building, repair or conversion of ships as covered by the Framework on State Aid to Shipbuilding Commission Regulation (EC) (2003/C 317/06);

• Fisheries and aquaculture - organisations covered by Council Regulation (EC) No 104/2000 of 17 December 1999 on the common organisation of the markets in fishery and aquaculture products as amended by Regulation (EC) No 1759/2006;

• Agricultural Sector – organisations dealing with agriculture products - activities listed in Annex 1 to the Treaty except fishery and aquaculture products covered by Regulation (EC) No 104/2000); cork products under CN codes 4502, 4503, 4504 and products used to substitute milk/milk products as referred to in Council Regulation (EC) No 1234/2007;