The UK notified the "State Aid SA.56841(2020/N) – United Kingdom - COVID-19 Temporary Framework for UK authorities" on 6th April 2020.
This "umbrella" notification allows UK public sector bodies (e.g. local authorities, combined authorities, LEPs etc), as well as other organisations distributing public funds on their behalf, to make use of six of the ten options under the extended Temporary Framework, these being:
(i) Small amounts of compatible aid
This exemption allows grants (and other awards of public funding, for example repayable advances or tax advantages) of individual benefit up to €800,000 per undertaking. In order to be used, certain key conditions must be met:
- ensuring the recipient of aid has sufficient headroom to receive the funding (i.e. cumulated with any other COVID-19- related benefits under the Temporary Framework up to a maximum of €800,000);
- the aid must only be granted to undertakings that were not "in difficulty" on 31 December 2019;
- the final part of the aid is granted no later than 31 December 2020; and
- if aid is granted to undertakings active in the processing and marketing of agricultural products, the award is conditional on the aid not being partly or entirely passed on to primary producers / not fixed on the basis of the price or quantity of products purchased from primary producers or put on the market by the undertakings concerned.
The maximum aid which can be provided under the cover of the Temporary Framework is €800,000 per undertaking, or €120,000 for undertakings in the fishery and aquaculture sector and €100,000 for those in the primary production of agricultural products. The aid must be granted between 1 February and 31 December 2020.
The Commission in approving this aid measure has taken into account representations that the aid provided will be necessary, appropriate and proportionate to remedy a serious disturbance in the economy. Public sector bodies awarding aid should be mindful about establishing a clear connection to the need for funding and the coronavirus, as well as seeking to only award the minimum aid necessary. We would expect government guidance to be issued on how to do this in due course.
(ii) Aid in the form of guarantees for bank loans
This exemption allows public sector bodies to provide liquidity support to undertakings through the use of guarantees. To support this, the Commission has published generous guarantee premiums (for both investments and working capital loans) which it shall regard to be compatible with the Common Market, provided other conditions are met.
(iii) Aid in the form of subsidised interest rates for loans
As with the above, the Commission has approved a more generous credit risk rating for loans, again with the aim of improving liquidity during this challenging time.
(iv) Support for coronavirus related research and development (R&D)
Public funded grants may be offered for up to 100% of the costs of fundamental research and 80% of industrial research and experimental development into coronavirus and other relevant anti-viral products. A 15% uplift for industrial research and experimental development is available where it can be shown there is cross border collaboration with research organisations or other undertakings.
(v) Investment aid for testing and upscaling infrastructures
Public funded grants may be used to cover 75% of the costs of constructing or upscaling testing facilities (rising to 100% provided certain bonuses are present). This includes funding for medical products (including vaccines) and equipment (including ventilators, protective clothing and diagnostic tools) which help fight the spread of the virus.
(vi) Support for the production of products relevant to tackle the coronavirus outbreak
Public funding of up to 80% of the investment costs of setting up production lines / facilities to manufacture Covid-19 related products may be awarded (rising to 100% if certain technical bonuses are added). Aid shall not be awarded to undertakings which were 'in difficulty' at 31 December 2020.