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Entreprises en difficulté et initiative publique

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Anne-Marie Kumps
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Paul Grand-Jean
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Robert Wtterwulghe

Première partie. L'entreprise privée et l'État : vers une nouvelle philosophie

UK. government selective assistance to industry and criteria for assistance to industry

Edward John Field

Texte intégral

U.K. government selective assistance to industry

I. Powers

11. The Government’s powers to provide selective assistance to industry are defined by Sections 7 and 8 of the Industry Act 1972, which are set out in Annex A. Briefly, assistance can be provided:

2— for both Sections 7 and 8 only for the purposes described in Section 7(2);

3— for projects which create or preserve employment in certain depressed regions called the Assisted Areas (Section 7);

4and

5— where the assistance is in the national interest and will benefit the economy (Section 8).

62. Financial assistance under Section 7 takes account of the number of jobs created or preserved. The powers under Section 8 have been used, in addition to rescuing individual companies occupying major positions in important industries, for providing assistance to modernise and rationalise certain key sectors of industry and to encourage new major investment.

II. Criteria

73. The Criteria against which all applications for assistance are judged are set out in Annex B: these have been presented to Parliament originally in January 1976, and subsequendy by inclusion in the Industry Act Report for 1975/76. The essential rational is summarised conveniently in para 20, namely:

  1. The costs and prospects of the enterprise and/or project attaining viability are assessed on the basis described in Section II; and
  2. balanced against the economic and social consequences contained in Section III.

84. Of particular interest in the context of the seminar is the approach towards rescue cases described in Section V.

III. Procedures

95. The final decision in any case lies solely within the discretion of the Secretary of State (and hence the appropriate Department of Government). It was recognised that the assessment and negotiation of financial assistance would require commercial expertise not available in the public sector, and accordingly the Industrial Development Unit was formed, staffed substantially by experienced accoutants, bankers, industrialists, etc... on short (usually 2 years) terms of secondment.

106. Some of the activities have been devolved to Regional Offices, but all major cases are appraised by the IDU. In addition, all such cases are referred for advice to the Industrial Development Advisory Board (set up under Section 9), which includes eminent bankers, accountants, industrialists and trade unionists among its members. The Board advises both on the justification for assistance in each case, but also on the terms of assistance and on the line to be adopted in negotiation.

Annexes

ANNEX A: INDUSTRY ACT 1972—SECTIONS 7 & 8 FINANCIAL ASSISTANCE FOR INDUSTRY

7. (1) For the purposes set out in the following provisions of this section the Secretary of State may, with the consent of the Treasury, provide financial assistance where, in his opinion —

a) the financial assistance is likely to provide, maintain or safeguard employment in any part of the assisted areas, and

b) the undertakings for which the assistance is provided are or will be wholly or mainly in the assisted areas.

(2) The purposes mentioned in subsection (1) of this section are —

a) to promote the development or modernisation of an industry,

b) to promote the efficiency of an industry,

c) to create, expand or sustain productive capacity in an industry, or in undertakings in an industry,

d) to promote the reconstruction, reorganisation or conversion of an industry or of undertakings in an industry,

e) to encourage the growth of, or to proper distribution of undertakings in an industry, and

f) to encourage arrangements for ensuring that any contraction of an industry proceeds in an orderly way.

(3) Subject to the following provisions of this section, financial assistance under this section may be given on any terms or conditions and by any description of investment or lending or guarantee, or by making grants, and may, in particular, be —

a) investment by acquisition of loan or share capital in any company, including an acquisition effected by the Secretary of State through another company, being a company formed for the purpose of giving financial assistance under this Part of this Act,

b) investment by the acquisition of any undertaking or of any assets,

c) a loan, whether secured or insecured, and whether or not carrying interest, or interest at a commercial rate,

d) any form of insurance or guarantee to meet any contingency, and in particular to meet default on payment of a loan, or of interest on a loan, or non-fulfilment of a contract.

(4) The Secretary of State, in giving financial assistance in the way described in subsection (3) a) above, shall not acquire any shares or stock in a company without the consent of that company.

(5) Now repealed.

(6) In this section «industry», unless the context otherwise requires, includes any description of commercial activity, and references to an industry include references to any section of an industry.

(7) In this section «the assisted areas» means the development areas, the intermediate areas and Northern Ireland.

8. (1) For the purposes set out in subsection (2) of the last preceding section the Secretary of State may, with the consent of the Treasury, provide financial assistance where, in his opinion —

a) the financial assistance is likely to benefit the economy of the United Kingdom, or not any part or area of the United Kingdom, and

b) it is in the national interest that the financial assistance should be provided on the scale, and in the form and manner, proposed.

(2) Financial assistance under this section may, subject to the following provisions of this section, be given in any of the ways set out in subsection (3) of the last preceding section.

(3) The Secretary of State, in giving financial assistance in the way described in subsection (3)a) of the last preceding section —

a) shall not acquire any shares or stock in a company without the consent of that company.

(4) Now repealed.

(5) Now repealed.

(6) The aggregate of —

a) the sums paid by the Secretary of State under this section, plus

b) the liabilities of the Secretary of State under any guarantees given by him under this section (exclusive of any liability in respect of interest on a principal sum so guaranteed),

less any sum received by the Secretary of State by way of repayment of loans under this section, or repayment of principal sums paid to meet a guarantee under this section, shall no at any time exceed the limit specified in subsection (7) below.

(7) The said limit shall be £ 150 million, but the Secretary of State may, on not more than four occasions, by order made with the consent of the Treasury, increase or further increase that limit by a sum specified in the order, being a sum not exceeding £ 100 million.

An order under this subsection shall be contained in a statutory instrument, and such an order shall not be made unless a draft of the order has been approved by a resolution of the Commons House of Parliament.

(8) The sums which the Secretary of State pays or undertakes to pay by way of financial assistance under this section in respect of any one project shall not exceed £ 5 million, except so far as any excess over the said sum of £ 5 million has been authorised by a resolution of the Commons House of Parliament:

Provided that this subsection shall not apply where the Secretary of State is satisfied that the payment or undertaking is urgently needed at a time when it is impracticable to obtain the approval of the Commons House of Parliament; and in that case the Secretary of State shall lay a statement concerning the financial assistance before each House of Parliament.

Criteria for assistance to industry

1. Financial assistance to industry has in the past usually meant public money provided to the private sector. But the economic criteria for assistance to private industry are equally relevant to support for the growing number of companies in which the Government holds or part of the shares, and to the aircraft and shipbuilding industries now being taken into public ownership, all of which are potential canditates not merely for investment capital directly from the Government or through the National Enterprise Board, but also for assistance involving a geater or lesser degree of subsidy under the Industry Act 1972 or other powers. The same principles are in fact applicable to any subsidies paid to the older established nationalised industries though these are not specifically dealt with in this paper.

2. The major extension of the public sector which is now taking place, as well as the problems encountered in resolving some recent proposals for putting money into particular enterprises, suggest that the time is ripe to take stock of the underlying economic and social principles which are involved. This paper sets out the conclusions reached by the Government on the criteria for assistance to industry in the light of such a stocktaking.

3. A further now development is the transfer to the Scottish and Welsh Offices of responsibility for assistance under Section 7 of the 1972 Industry Act. It is an important part of the arrangements that there should be consistancy in the treatment of selective assistance throughout Great Britain and the considerations set out below apply equally to cases arising in Scotland and Wales as well as in England.

I. General principles

4. Our over-riding objective in this field must clearly be that British industry should compete more successfully in meeting the requirements of home and overseas markets. Otherwise there can be no solution to our problems of inadequate growth and adverse balance of payments. This is a key theme of the White Paper on the Regeneration of British Industry.

5. It is for the State to establish the broad social and economic framework within which industry operates—by, in particular, macroeconomic policies to regulate the level of aggregate demand; by measures at home and in international institutions to check monopolistic practices; by distribution of income policies; and by allocating resources to the social services, defence etc... through processes other than those of the market economy. Within this framework we are concerned with the allocation of resources to industries, public or private, which produce goods and services of a kind bought and sold for money and which thus have to give consumer satisfaction—in other words, industries operating in a market economy.

6. By and large, profitability and return on capital, measured in financial terms, remain the best prima facie indicator of an industry’s or company’s efficiency in using resources and in giving consumer satisfaction — the term consumer being employed to cover both individual consumers and industrial and commercial purchasers at home and abroad. Thus, if we are to achieve the over-riding objective of improving our industrial performance, available resources should go into those industries and companies which have the soundest performance and/or the best prospects as regards viability and rate of return.

7. The process of resource allocation through the price mechanism does not ensure an adequate level of aggregate demand and employment nor produce an acceptable distribution of income, or cause resources to be set aside for public services. All these are mainly functions of Government rather than of the market.

8. But this in itself does not invalidate the role of money as a measure of relative costs and efficiency in the production of goods and services of a kind which are bought and sold for money. Neither the fact that it is the State which is allocating funds for industry, nor that particular industries or companies are owned collectively instead of privately, means by itself that benefit will be maximised through supporting these which have higher money costs or give a lower return on capital.

9. There are circumstances in which company profits and losses are not a wholly accurate measure of ressource costs and benefits, because there are costs (e.g. pollution or congestion or unemployment) and benefits (e.g. getting a better-balanced regional distribution of industry and employment) which accrue to the community as a whole and not to the individual enterprise. In these situations there are grounds for setting out to redress the divergence between money costs and benefits and social costs and benefits, whether by taxation, planning controls or subsidies.

10. The most clear-out illustration of this is provided by the programmes, whether general or selective, for promoting employment in the Development Areas, which in one form or another have been the longest established and most continuous of all Government schemes for industry. The creation, maintenance or safeguarding of employment in the assisted areas, for which Section 7 of the Industry Act provides, in itself supplies the essential criterion for this «regional selective assistance», which can fairly readily be translated into standard guidelines. These are set out in Annex A to this paper.

11. In contrast, Section 8, which provides for «national selective assistance», is drafted in general terms of benefit to the UK economy and the national interest. There is thus no specific criterion inherent in Section 8 comparable to the employment criterion in Section 7; no guidelines for operating Section 8 have been drawn up in the past and each case has been dealt with on its merits.

12. This reflects the difficulty which has always been found in identifying any general class of case, other than cases involving jobs in the areas of high unemployment, in which there is a presupposition that resources costs and benefits will diverge from money costs and benefits. But, apart from the employment criterion, the balance of payments has provided the most clearly indentifiable reason for believing this to be the case in certain situations, and has been the most common reason for assistance under Section 8. Rationalisation schemes represent a particular type of situation in which the benefits of rationalising an industry have been held to accrue to the industry as a whole, and in consequence to the balance of payments, rather than to particular companies, and therefore to justify help from the Government, if the scheme could not be financed by the industry itself — though in practice the benefits of such schemes have not always materialised. Similar considerations have applied to industrial research programmes. Sectors of industry identified as of special significance to the economy or designated as of high priority in any strategic policy of Government should be given due priority in assessing the merits of applications for assistance.

II. Assessment of viability

13. The great majority of Industry Act cases are administrated by the Department of Industry on the basis of such inter-departmental consultation as is appropriate, or by the Department’s regional organisation where the expenditure is within agreed financial limits and in accordance with agreed criteria. An opinion on each case is obtained from the Industrial Development Advisory Board, the Scottish or Welsh Industrial Development Board or the Regional Development Board concerned. Some cases, however, require special attention either because of their intrinsic importance and interest or because they raise the problem of viability in acute form.

14. In ordinary parlance a viable company would mean one which can stand on its own without any special help; but in this context the term is taken to refer to a company’s ability, after receiving selective assistance on a once-for-all basis under Section 7 or Section 8, to achieve and maintain profitability without continuing subsidies other than those available to all eligible enterprise, in particular regional development grants and REP. By and large the Department of Industry applies to rescue operations the same guidelines for appraising viability as to other Section 7 and Section 8 cases, and there is no reason why they should do otherwise. An assessment of vialibity is a matter of facts, figures and commercial judgment, in which wider economic and social factors have no part to play. It is in the judgment of the amount of assistance which it is worth paying, and the degree of risk which it is worth taking, that account has to be taken of these factors.

15. An assessment of viability has to be made in all cases of selective assistance but is particularly necessary in what have come to be known as rescue operations. There are a good many factors to be taken into account in these assessments of viability, but the following require particular mention —

Financial and commercial data. Adequate and properly analysed financial and commercial data are basic to any such assessment. These should embrace the company’s past record, its current position, and its future trading estimates. The company’s borrowing requirements in relation to its borrowing limits should be shown.

Market prospects. A realistic appraisal of the market for the company’s products, at home and overseas, and of the company’s ability to sell in those markets at competitive prices, is essential.

Management. The quality of the management available is a further crucial factor in assessing the prospects of viability and in deciding whether the project should be backed.

Product development. Product development performance policy and plans should be probed, since complacency about a successful product is a common failing of work management and R & D expenditure tends to be curtailed when a company confronts liquidity difficulties.

Inflation. The extent to which inflation has been taken into account in preparing forecasts should be shown.

Non-Governmental finance. Although the willingness of private persons and non-Governmental bodies to put up a substantial part of the finance cannot be made a condition for rescue operations, as it is for ordinary cases, it should nevertheless have an important influence on the Government’s own willingness to contribute. People are more likely to take a hard-headed view of prospects when it is their own or their company’s money at stake.

The results of consultation. Departments will be at liberty to consult both management and workers in framing proposals for assistance. However, there must be no negotiations and no commitment to either party of any kind until a Government decision on assistance has been taken. This aspect is discussed further in Section XV of this paper.

16. In these assessments it is necessary to consider what is a reasonable timescale for the attainment of viability. On this we need to distinguish between, on the one hand, the problem of long lead times for major projects, such as nuclear power stations, which quite simply take a long time from planning to completion, but on which no problem of viability may arise; and on the other hand, in the present context, to the extent that we are talking about companies in difficulty, the length of time required to give them a reasonable chance of achieving solvancy.

17. On this a balance has to be struck. Valuable jobs could be lost if it was always insisted that enterprises should become profitable very quickly. But forecasts become more uncertain if they are for long period ahead, and an excessive lengthening of the period allowed for achieving viability could have the effect of undermining the requirement of viability completely. The time allowed must vary according to the nature of the enterprise, but it should be exceptional for a firm to be regarded as potentially viable in the ordinary sense if forecasts based on reasonable assumptions do not show profits and positive cash flow within three years. However, there will be some cases in which one would expect viability to be achieved, if at all, in a such shorter period — perhaps as little as six months — while in some exceptional cases, e.g. a major undertaking in which prolonged under-investment has to be made good, a high technology project, or certain proposals during a prolonged phase of unduly depressed demand, the Government would have to be prepared to consider a longer period than three years.

III. Assessment of social costs and benefits

18. Side by side with the assessment of viability, the Government has to consider the grounds for the proposed assistance and the social benefits to be taken into account of the kind discussed in the first section of this paper. These should be quantified so far as possible, e.g. as regards employment effects or balance of payments gains and resources required to achieve them. There may well be other factors, such as the importance of a particular firm to the growth potential of an area or to balance and types of employment in the area on which it is more difficult to put figures, in which case the assessment should be as specific as possible about the nature and relevance of these factors. Given that the cost of achieving viability has been established, these various social factors constitute the yardstick against which the case for meeting this cost has to be assessed. The public expenditure implications must also be an important element in the total evaluation, in view of the ever-present need for a judgment on priorities in allocating resources, and of the fact that the Government are accountable to Parliament, and to the community as a whole, when public funds are applied to helping some particular section of the community or to subsidising a product which may not benefit the community at large.

19. In the consideration of individual cases, full weight must be given to the wider industrial and regional framework and to the possible impact of industrial and social change. The question is what balance to strike between the whole range of consideration. The Government are conscious of the desire for job security and of the natural resentment of redundancy which require that all reasonable measures should be taken to provide the former and avoid or cushion the impact of the latter. At the same time, if we are to break through the balance of payments constraint and thus achieve more room for manoeuvre in the management of the economy, more and not less emphasis will be required on competitiveness in home and export markets. Failure to achieve this would in the end be the enemy of job security.

20. Much of the public discussion of these issues has revolved around the question of worker’s co-operatives. The Government’s approach is to apply the same basic criteria to these as to the other cases, that is, whether they are likely to be viable after the proposed assistance, and whether the amount of assistance proposed is justified by the economic and social benefits expected.

21. In considering an assessment of viability along with an assessment of the social costs and benefits involved, the Government have always been more prepared to give proposals for assistance to the benefit of the doubt as to the prospects of viability where the social cost of witholding assistance would be particularly high — in particular in areas of persistent high unemployment where the creation of new employment is especially difficult. In doing so, particular attention should be given to the assessment of risks, and those uncertainties which are the most dominant.

IV. Consultation

22. We are in a time of rapid change, not merely in technology and industrial organisation but also in attitudes within industry, and this applies in particular to circumstances in which redundancy or redevelopment may be involved. The response to these changing attitudes must essentially come from employers and management, on whom the prime obligation for consultation must rest. This has long been recognited by many employers, and the Employment Protection Act places responsibilities for consultation on employers generally.

23. Special considerations arise in those cases where the provision of public funds is at issue. It will obviously be necessary to receive representations from, and give appropriate information to, parties with a legitimate interest, including representatives of the workforce at local or national level and local authorities.

24. As regards the management of the companies concerned, in the nature of the case there must be discussions of various kinds with them, on a confidential basis where this is necessary to avoid disclosure of commercially sensitive information, particularly in rescue cases, but companies cannot be the judged of their own viability, nor can they in any way take part in the decision-making on whether assistance is to be provided. Similar considerations apply to any consultations with the workforce which cannot be taken to the point of, in effect, negotiations with them about the disposition of public funds. But both management and representatives of the workforce may legitimately be involved in various ways in negotiations or consultations on the implementation of these decisions.

25. Although adequate time has to be allowed for these processes they should be conducted as expeditiously as possible so that, where assistance is to be given, it is given in good time and, where it is not, expectations are not created only to be disappointed. Moreover, until firm conclusions have been reached on the future of the enterprise concerned, essential management decisions are hampered.

V. Rescue operations

26. Although the broad thrust of the Government’s selective assistance policy is to invest in success, and this will be the main emphasis in the industrial functions of the National Enterprise Board and the Scottish and Welsh Development Agencies, it will no doubt remain necessary for the Government itself to consider a number of problem cases involving actual or potential insolvency.

27. The number of bankruptcies every year runs into thousands (as does the number of new businesses) and it would certainly not be sensible to allow expectations to rise that the Government would step in regularly to keep loss-making activities going. A receivership or a liquidation does not necessarily involve the complete cessation of a company’s activities since the responsibilities of the receiver or liquidator towards creditors will often be best fulfilled by maintaining the business as a going concern in order to secure the highest price. The resources of manpower, premises and equipment of insolvent businesses are in many cases taken up in whole or in part by other enterprises expanding or starting up. In the assisted areas a new employer, if he purchases the assets from a receiver, is eligible for help under Section 7 of the Industry Act under the Category A criterion, since he is held to be creating new employment. This, rather than the propping up of failed enterprises, is and should remain the principal contribution that the Industry Act — although not primarily an instrument for dealing with redundancies as distinct from promoting development and employment — can make towards dealing with redundancies; and it is likely to have the advantage of involving new management and additional private sector resources.

28. Where, however, the Government does have to consider a rescue operation for a problem company, the cases are roughly of three types. First, there is a limited number of cases involving important undertakings, where it is immediately clear that — though a reconstruction and at least a degree of streamlining are likely to be required — the Government will wish to intervene to ensure that the capability and as much of the employment as is economically possible are retained. In these cases too, by averting the threat of a closure, the Government can limit though not necessarily eliminate redundancies. In these exceptional cases, where the case for intervention speaks for itself, the special features are not merely the scale of the social cost which would otherwise be incurred, but the strong presumption that it must be possible to reconstruct the enterprise on a viable basis. Often the essential need will be to introduce improved and proven management; the quickest and surest way to provide this will frequently lie in placing the business with another concern with a sound management and established disciplines. In these instances the decision whether any necessary reorganisation should be achieved by keeping the company in being, though possibly hiving off part of its activities, or by allowing it to go into receivership as a preliminary to a reconstruction is a matter of which is the most effective, economical and equitable method. In either event the handling of each of these special cases is likely to require a good deal of high level attention, and will differ in that respect from the general run of cases. Even so, after the initial holding operation, the basic principles governing assistance to industry should apply in determining the extent and character of longer term support.

29. Second, there may be a reasonable number of cases where, after an assessment on the lines set out above, the conclusion is reached that the company is capable of viability with a reasonable amount of assistance. In these cases receivership can be averted.

30. Where it is decided to allow a receivership to take place, it should be the normal presumption that there will be no Government assistance to the receiver. Nevertheless, there may be a third and exceptional class of case where assistance to a receiver should be considered. There may for instance be cases where a modest contribution by the Government towards a receiver’s working looses could make all the difference to the immediate sale of an establishment as a going concern, and the avoidance of unnecessary redundancies or, in some cases, the maintenance of supplies for other concerns; it may also sometimes be impracticable to carry out an adequate preliminary appraisal before a receivership, and it may therefore be desirable to provide for the business to be continued while its future prospects and the economic and social considerations are more fully examined. The number of these cases is expected to be limited.

31. In these cases, if a company has gone into receivership, there must be a strong presumption that the enterprise in its existing form is not viable in the immediate future. Normally some loss to investors and creditors is inevitable, and some loss of employment in that particular enterprise may have to be faced. Consequently, in the kind of case discussed above where the Government is prepared to consider providing a certain amount of money to the receiver, it can accept no commitment, overt or implicit, to enable him to pay off investors and creditors and to maintain the whole existing workforce, and assistance will be provided only where the following conditions are met —

i concrete measures are being taken to bring about a reconstruction of the concern either as a separate entity (but under now ownership) or as part of a larger existing enterprise;

ii there is a real risk that the reconstruction will not proceed unless the activity is kept going meanwhile and part of the workforce retained;

iii the receiver and the workforce will be informed at the outset that the period of support will be short and limited to a stated period.

32. It may be helpful to put these rescue cases in perspective in relation to the volume of Industry Act selective assistance as a whole. The following table sets out the number of cases up to 31 March 1975 where the Government has offered loans and grants and the sums of money involved:

The figures above for Section 8 assistance include 289 offers involving £ 22.5 m for the wool textiles and offshore supplies schemes. In addition guarantees totalling £ 70.3 m have been offered, of which £50 m was the original guarantee for BLMC.

VI. Conclusions

33. The main conclusions to emerge from this analysis of the issues are as follows:

a) All decisions on investment in and assistance to industry, in both the public and private sectors, should have regard to the objectives of enabling British industry to compete more successfully in meeting the requirements of home and overseas market, and of raising not merely the level but the return on industrial investment.

b) Profitability and return on capital should be taken as the prime test of the efficient use of resources. The amount of financial assistance needed to bring an enterprise to profitability should be measured against the social and other benefits to be gained.

c) Decisions on all cases, including rescue operations, which have to be referred to the Government, should be based on an assessment of the prospects of viability and of the grounds for assistance on the lines suggested in parts II and III of this paper.

d) The assessment of viability should have particular regard to the factors set out in paragraph 15.

e) In assessments of viability in rescue cases a period of up to three years, or longer when the Government considers that there are very exceptional circumstances, should be adopted as the time-scale within which the assessment should indicate the attainment of viability.

f) The prime responsibility for consultation with the work force should rest with the employer. However, the Government should be prepared to receive representations from, and give appropriate information to, parties with legitimate interest. Departments should be at liberty to consult both management and workers in framing proposals for assistance, but there should be no negotiation or commitment to either party until a Government decision has been reached. These consultations should have regard to the considerations set out in paragraphs 22-25 of this paper.

ANNEX A: GUIDELINES FOR REGIONAL SELECTIVE ASSISTANCE UNDER SECTION 7

The Government’s main aim and priority in providing assistance under Section 7 is to encourage sound industrial projects which will improve the employment prospects of the assisted areas.

Projects qualifying for assistance fall into two broad categories:

A. new projects and expansions which create additional employment.

B. projects, e.g. for modernisation or rationalisation, which do not provide extra jobs but maintain or safeguard existing employment.

There may be exceptional cases which fall into neither of these categories and these are decided in the light of circumstances.

In assessing applications for selective assistance under section 7 there are three essential considerations. They are:

(1) Viability.

An assessment is made of the viability of the undertaking seeking assistance.

(2) Employment Link.

Assistance is provided only where there is a benefit to employment. For Category A cases account is taken of the amount of new employment to be provided in determining the amount of assistance. Similarly, for Category B cases the employment implications are a relevant consideration in deciding the amount of assistance to be offered.

(3) Public Sector Contribution.

Applicants are normally expected to ensure that the greater part of the cost is provided from outside the public sector.

There are powers under Section 7 of the Industry Act to provide selective assistance by any description of investment or lending or guarantee. The normal forms of assistance are, however, as follows: —

Category A

Employment creating projects: these may qualify for:

(1) Loans at concessionary rates, in some cases with an interest free period.

(2) Interest Relief Grants. As an alternative to a loan at the concessionary level an interest relief grant may be offered for moneys obtained from commercial sources.

Category B

Modernisation and rationalisation projects which do not create additional jobs.

These projects are normally assisted only where finance cannot reasonably be obtained from commercial sources. Assistance is in the form of loans at broadly commercial interest rates.

However loans at concessionary rates or interest relief grants may be given in certain cases for modernisation schemes safe-guarding a number of jobs which would otherwise be at risk in the foreseeable future and where assistance of this nature is necessary for the success of the scheme.

Eligible Industries.

Broadly, these cover projects in the manufacturing, construction and mining industries.

Assistance to the service industries is concentrated on mobile projects i.e. projects which have a genuine choice of location between the development and intermediate areas on the one hand and the rest of the country on the other which will make a significant contribution to the employment needs of the assisted areas, e.g. potentially mobile service project which will provide 10 or more new jobs. Projects serving primarily local needs e.g. retail shops or similar local services are not assisted.

Projects are not normally assisted under Section 7 if adequate provision for Government assistance is made under specific schemes, e.g. the MAFT schemes for agricultural, horticultural and fishery projects and the provision for tourist projects under the Development of Tourism Act 1969, or if assistance is being sought under alternative schemes (e.g. from the Development Commission).

Procedures and delegation.

Regional Offices, with the assistance of their Industrial Development Boards, have discretion to decide cases falling within these guidelines up to certain limits. In the case of loans the limit is £ 1 million.

Table des illustrations

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Auteur

Assistant Secretary Department of Industry

© Presses de l’Université Saint-Louis, 1978

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