92002E3255

WRITTEN QUESTION E-3255/02

by Daniel Hannan (PPE-DE) to the Commission

(19 November 2002)

Subject: Pressure on greenfield sites because of EU top-up subsidies rules

The EU has banned top-up subsidies which might allow housing on so-called brownfield sites to be profitable. This is leading to enormous pressure on greenfield sites in Great Britain. Do practical considerations surrounding the very real impact on the way towns and cities can be improved and developed not make a mockery of ideas of EU rulings in this case? Would the Commission please comment on the specific case of the Manningham Mills regeneration project in Bradford? A fine nineteenth century building will remain dilapidated because the Commission has failed to comprehend the nature of gap funding system (where public money can make up the difference between the cost of reclamation and development and the project's final value) as opposed to state aid.

Answer given by Mr Monti on behalf of the Commission

(9 January 2003)

The Commission has, at several occasions and by virtue of several decisions in the past, underlined and accentuated the importance of the improvement of the physical environment, the provision of affordable housing, as well as the regeneration of urban areas in the current Member States and especially in the United Kingdom (UK) (Scotland and England)(1).

By doing so, the Commission has always assessed the existence of state aid as well as the compatibility of the proposed measures with the provisions of the EC Treaty within the framework of the policy objectives set by the Member States. This is particularly reflected by the fact that the regeneration and land development measures notified to the Commission by the UK authorities encompass the redevelopment of brownfield sites as well as the supply of additional housing on greenfield sites in disadvantaged regions of the UK.

Furthermore, the Commission has acknowledged through its decisions that the gap-funding instrument as applied by the UK authorities can serve as a valuable approach in tackling the needs for regeneration and the accomplishment of social policy objectives as defined by the Member States. In the case of gap funding granted to developers for the provision of affordable housing, the Commission has stated that, whereas direct government intervention in favour of individuals in order to allow them to buy more affordable housing does not constitute aid within the meaning of Article 87 of the EC Treaty, the fact that the gap-funding instrument delivers incentives to developers can be viewed as favouring certain undertakings and can constitute state aid within the meaning of Article 87. However, the Commission has also pointed out that these measures can be compatible with the common market.

The Manningham Mills regeneration project mentioned by the Honourable Member is in the area eligible for support under the 2000-2006 Objective 2 Programme for Yorkshire and Humber.

The programme has five strategic objectives:

1. To stimulate a stronger business dynamism by assisting in the creation and survival of more and better business start-ups;

2. To improve the competitive performance of existing businesses by increasing the value-added of goods and services produced and by increasing sales and turnover;

3. To reduce levels of deprivation in the parts of the region most excluded from economic activity by using targeted, local community economic development initiatives as a key regeneration tool;

4. To increase business investment and economic growth by maximising the competitive edge of the objective 2 region's locational assets;

5. To enhance the achievement and sustainability of these aims by underpinning them all with excellent skills and human resource actions.

The various types of activities that are supported in the programme to underpin the above strategic objectives are described in the Programme Complement Document. Support for housing projects is not strategically aligned with any of these objectives and activities and thus housing projects are ineligible for support under the Objective 2 Programme.

As a derelict but listed building, Manningham Mills has been the subject of much activity in the region to find a continued, constructive use for it. It is understood that Yorkshire Forward is working with Urban Splash to rescue part of the complex for loft/housing. As already explained this type of project would not be eligible for European support. The Managing Authority for the programme (Yorkshire and Humber Government Office) are however, currently examining the possibility of co-financing a GBP 600 000 feasibility study on the prospects for using part of the Manningham Mills complex for community space and conversion for commercial use. They also expect a bid early 2003 for a GBP 6 million project to develop commercial space within Manningham Mills. As these are in line with the strategic objectives for the programme, they may well be co-funded under the programme.

The Commission endorses the initiative of the Yorkshire and Humber region to regenerate such brownfield sites like Manningham Mills. While housing projects are not eligible for support, it is clear that there are other projects coming forward that would be eligible for European funding support. The Commission is convinced that some of these will be successful and thus enable the building to be used in a manner that will create employment and wealth in line with the objectives of the programme.

(1) See, among others, the Commission decisions on the cases N 497/2001 Grants for Owner Occupation (Scotland), N 680/2001 Property Support Scheme (Scotland) and N 230/2002 Partnership Support for Regeneration (England).