HM Insights

Funding for coastal communities vitally important, but don't forget about State Aid rules

Coastal communities throughout Scotland are set to benefit from significant funding from the Scottish Crown Estate. In the Highlands alone, coastal communities will be eligible for £3 million of funding and for fragile, remote communities suffering from lack of tourism, the impact of coronavirus and depopulation, these funds are vitally important.

This funding comes from the revenue generated by the Scottish Crown Estate's marine assets, and is allocated to local authorities which have coastlines.

Coronavirus-legal-updates-2020v5.jpg

State Aid considerations – keeping it legal to avoid repayment

An issue for any grant applicant to consider (and for those allocating the grants) is competition law and particularly the rules around State Aid. Grant funding and other forms of public assistance have the potential to distort competition and favour particular activities/ beneficiaries over competitors. If public assistance is deemed to be State Aid, it is in principle illegal and the European Commission can require repayment of the assistance, with interest.

The State Aid rules are part of EU competition law and continue to apply until the end of the Brexit transition period. State Aid is hugely topical at the moment being a critical part of any possible UK-EU trade deal and there will be regulation in some form of this issue even after 31 December.

Given the serious consequences of receiving/ granting illegal State Aid, grant applicants and funders should consider this issue at an early stage when designing and structuring projects.

Get in touch

If you would like to discuss the implications of applying for and receiving funding, please get in touch with Jill Fryer.