The Wales Council for Voluntary Action (WCVA) has called on the European Commission to increase the amount of state aid organisations can receive before the funding falls under competition regulation to £1m.
The de minimis regulation that was introduced in 2007 set the limit at £200,000 over three years. It was intended to simplify the granting of small amounts and make it easier for non-profit organisations to gain access to public funds by providing exemption from competition regulation.
The current regulation is due to expire on 31 December 2013 and the EC has launched a consultation to find out if the current level is still appropriate.
WCVA chief executive, Graham Benfield revealed that the reason the WCVA’s response argued the limit should be raised was because the EC is already considering setting a threshold of £500,000 for public authorities when purchasing social, health and education services, meaning that there would be fewer administrative requirements for contracts falling under that threshold.
He said: “So we believe the de minimis regulation should be raised to at least that, and there’s a strong argument that it should be closer to €1m for third sector organisations.
“It’s important that the EC recognises the philanthropic and community values of the third sector as opposed to private companies that have far greater potential to affect trade in the internal market when in receipt of public financial support.”
The review of the de minimis regulation is part of a wider programme of state aid modernisation.
In May 2012 the EC adopted a communication on the State Aid Modernisation initiative (SAM) which aims to reform state aid in the context of the current economy.
The main points are that aid should support sustainable growth, focus on cases with the biggest impact and procedures should be streamlined.
Joaquin Almunia, EC vice-president in charge of competition policy said: “I expect our state aid reform to help public authorities make more efficient use of scarce public resources.”
The reforms are expected to be implemented by the end of 2013. The full communication can be found here.
The deadline to respond to the de minimis consultation is 18 October. More information and the questionnaire can be found here.
European law concerning state aid is set out in the Treaty on the Functioning of the European Union which states that as a general rule that governments should not subsidise organisations to the extent that an organisations gains an unfair competitive advantage. If state aid is judged to be unlawful an organisation may be forced to pay it back.
