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State Aid Rules

Volume 450: debated on Tuesday 10 October 2006

2. What recent discussions he has had with Government Departments and EU member states on the effect of future state aid rules on Scotland. (92536)

I have regular discussions with Cabinet colleagues on a range of issues, although as Secretary of State for Scotland, I have not discussed future state aid rules with representatives from other member states.

The Secretary of State is aware of the great anxiety in Shetland because of the complaints being investigated against various economic development projects that are claimed to have breached state aid rules. I hope that he and his Department will do all they can to work with the Scottish Executive and others to allow a satisfactory resolution of those complaints. Looking to the future, does he agree that what is needed is a system that allows for clarity in the prior approval of schemes and that recognises the economic fragility and peripherality of communities such as Shetland?

The hon. Gentleman is right—I am aware of the concerns on the islands at the moment, given the ongoing disputed state aid issues, and I know that as the local representative he has taken a close interest in those matters. Indeed, I understand that I even featured in The Shetland Times this week, such is the level of his concern. As he said, those matters are being explored in detail with Shetland Islands council, the public body concerned, the Scottish Executive and our Department for Environment, Food and Rural Affairs. Discussions are ongoing with the Commission to try to resolve the outstanding issue, but I should be clear that the principal responsibility lies with the public body in question—in this case Shetland Islands council, which is why I hope that we can find a resolution to these matters.

Does the Minister agree that the Chancellor is to be commended for many things, one of which is his view that EU state aid rules and regional aid rules are best repatriated, and that this is a classic example of where very little is added by having state aid rules and regional aid handled by Brussels? Far better to have it returned to member states.

Clearly, the whole House is minded to pay tribute to the work of the Chancellor of the Exchequer.

A review of EU state aid is under way. I am glad to say that the thinking not just of the Treasury, but of the whole British Government—and, indeed, the Lisbon agenda—figures prominently in the ongoing review by the Commission. We want to see less but better targeted state aid and I believe we are making real progress in Europe towards that end.

As state aid was the given excuse for the restructuring of Caledonian MacBrayne, does the Minister feel that the £16 million currently being wasted on restructuring would have been better spent on fare reductions, especially considering that some articulated lorries spend £1,000 on a return fare to the outer Hebrides? Should not every opportunity be taken during the restructuring to relocate Caledonian MacBrayne’s headquarters to Stornoway, Tarbet, Lochmaddy, Lochboisdale or Castlebay, or all those ports? [Interruption.]

A very strong case for Gourock has just been put by my hon. Friend the Minister. Whenever I buy tickets for the MV Isle of Mull, I tend to buy them from Gourock and not from Lochmaddy, so I have a certain sympathy with his view.

On the hon. Gentleman’s substantive point, this is of course primarily a matter for the Scottish Executive, who are aware of the strength of feeling both on the outer and the inner isles on the future of Caledonian MacBrayne.

Given that the UK is the member state, is the Secretary of State satisfied with the existing arrangements with the Scottish Executive in relation to state aid rules, in particular their compliance? Is not this yet another example of a failure to have clear working arrangements in place between London and Edinburgh?

I feel that the hon. Gentleman is stretching the point to return to a familiar theme at Scottish questions. As I sought delicately to suggest, responsibility lies primarily with Shetland Islands council, but of course we stand ready to work both through DEFRA and Scottish Executive Ministers to find a resolution to the dispute.