EP Briefing 26-27 April 2006: State aid for innovation should be an exception, but has its place (Own-initiative)

April 24, 2006

Brussels, 21 Apr 2006

The use of state aid to promote innovation should remain the exception rather than the rule according to own initiative report from the Economic and Monetary Affairs Committee which will now be debated by the plenary session. The report, drawn up by Sophia In’t Veld (ALDE, NL), says state aid should be an instrument to correct imbalances that cannot be addressed by regular policy instruments. It highlights some areas where this might be the case.

MEPs in the committee, who are responding to a specific Commission consultation paper following on from the reform proposals for the whole range of state aid policy, say state aid for innovation should be complementary to the relevant EU policies and should have a clear measurable added value for the immediate beneficiaries as well as a secondary impact on the broader local, regional and national economy. Lessons need to be learned from past failures and successes in using aid to foster innovation. The new EU framework should avoid very restrictive definitions and arrangements, while providing for an interim review once the system is up and running.

The report welcomes the idea of transparent, non-discriminatory, practicable ex ante rules which would provide for legal certainty. §8 It says subsidies should be conditional on the characteristics of the economic sector, the market structure and the market power of the company concerned, among other factors.

Ms In’t Veld’s report also insists that state aid for innovation should be temporary, granted according to rational criteria, proportionate, strictly and effectively controlled and subject to periodic impact assessments. It notes that innovative processes as such do not merit state aid, which should only be granted for innovations which cannot be financed by normal commercial means.

MEPs in the committee also stress that SMEs should be allocated a larger share of the aid available. They call for financial support to be given by means of risk capital for seed and start-up phases, and for such support also to be available in the post-seed phase, though this is not an optimal option and should be for the short term only.

Calling for greater clarity on how state aid rules apply to universities and research establishments engaged in economic activities, the committee also calls for them to take part in regional public-private partnerships as ‘innovation intermediaries.’

Sophia IN 'T VELD (ALDE, NL)

Report: A6-0073/2006

Sectoral aspects of the State Aid Action Plan: aid for innovation

Procedure: Own-initiative
Debate: 26.04.2006

European Parliament
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