The Executive Director for Economic Development and Communities submitted a report that sought approval for additional funding of £576,524 (over a 15 year period) to account for the interest which needed to be charged to and paid by the TWI Project scheme to ensure the project was state aid compliant.
In September 2013, Executive approved the concept of the development of the Teesside Advanced Manufacturing Park (TAMP) at Riverside Park. This was to enable significant research and development opportunities to be realised for small to medium sized enterprises (SMEs) in Middlesbrough and Tees Valley. The site was subsequently designated as an Enterprise Zone.
In November 2014, Executive went on to approve the construction of the Offshore Wind Validation Centre in partnership with TWI. TWI Ltd is a one of the Worlds foremost independent research and technology organisations, with expertise in materials joining and engineering processes that are applied by industry. TWI Ltd has a global membership of over 2000 industrial members and 5000 professional members, including many of the Worlds biggest and most successful companies.
This was for a £10.8m facility, of which £2.4 million was to be funded from the European Regional Development Fund (ERDF), managed by the Department for Communities and Local Government (DCLG). The building is complete, TWI are commencing occupation. This has been organised concurrently with SGS purchasing and moving into Aurora Court where TWI are currently operating.
Following this, the issue of State aid arose. State aid is very strictly applied to ensure that public funding does not give financial advantage to other organisations. State aid can occur whenever public resources are used to provide assistance that gives organisations an advantage over others. Current state aid legislation is based on the activities that can be traded within an organisation. The status of the recipient organisation (public, not for profit etc) is not a consideration when determining eligibility for exception from state aid. If the organisation is in breach of state aid there are financial penalties on top of the withdrawal of funding.
The report advised that the TWI building had been subject to a recent audit from DCLG in respect of the European funding element of the project. The audit found that the scheme was not in conformity with state aid rules and therefore the Council needed to consider alternative options to ensure compliance.
Having looked at all options, the preferred option was for the Council to accept the interest charge payable to TVU as part of the payments for the loans over a 15 year period at an additional cost of £576,524. Further details of which were outlined in the report.
Detailed discussions were undertaken with TWI to request them to carry the additional cost. TWI were very clear that this was not something they would accept and would have to seek alternative accommodation. This solution seems to be the only viable option.
That the additional funding of £576,524 (over a 15 year period) to account for the interest which needs to be charged to and paid by the scheme to ensure the project is state aid compliant be approved.
The decision was supported by the following reason:
If the organisation is in breach of state aid there are financial penalties on top of the withdrawal of funding.