NextGen 2011 Workshop Michael Armitage BROADWAY PARTNERS
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Transcript of NextGen 2011 Workshop Michael Armitage BROADWAY PARTNERS
NextGen11 Reflec,ons on State Aid
BroadwayPartners November 2011
Agenda
n State Aid – a recap n What’s broken? n Some examples n What works
State Aid – BIS Beginner’s Guide
“Financial support granted to undertakings must also meet all the conditions set out in the European Community (EC) Treaty for it to be considered as state aid.”
1. Granted by the State, or via state resources? 2. Confers selective advantage to an undertaking? 3. Potential to distort competition? 4. Affects trade between Member States?
State Aid – What’s the Problem?
Article 87 1. Save as otherwise provided in this Treaty, any aid granted by a Member State or through State resources in any form
whatsoever which distorts or threatens to distort competition by favouring certain undertakings or the production of certain goods shall, in so far as it affects trade between Member States, be incompatible with the common market.
2. The following shall be compatible with the common market: (a) aid having a social character, granted to individual consumers, provided that such aid is granted without
discrimination related to the origin of the products concerned; (b) aid to make good the damage caused by natural disasters or exceptional occurrences; (c) aid granted to the economy of certain areas of the Federal Republic of Germany affected by the division of Germany,
in so far as such aid is required in order to compensate for the economic disadvantages caused by that division.
3. The following may be considered to be compatible with the common market:
(a) aid to promote the economic development of areas where the standard of living is abnormally low or where there is serious underemployment;
(b) aid to promote the execution of an important project of common European interest or to remedy a serious disturbance in the economy of a Member State;
(c) aid to facilitate the development of certain economic activities or of certain economic areas, where such aid does not adversely affect trading conditions to an extent contrary to the common interest;
(d) aid to promote culture and heritage conservation where such aid does not affect trading conditions and competition in the Community to an extent that is contrary to the common interest;
What’s Broken?
What’s Broken? #1 - Capitalism
What’s Broken? #2 - Not Spots
Financial ‘Fixes’
n Lower interest rates n Even lower interest rates n Bank rescues n TARP n Yet lower interest rates n Bail-out funds n Quantitative Easing n More Quantitative Easing n Cash-for-Clunkers
Telecom ‘Fixes’
n 50p levy n BDUK n £530m n Plus, £300m maybe n State Aid n Pilot Studies n PIA n Procurement Framework n £150m for mobile
The Result?
What Government does best
• Make laws • Set and collect taxes • Protect value of money • Defend the country
The Competitive Advantage of Nations
Conditions for change are clear
n Financial turmoil n PFI unaffordable – a new form of
partnership is needed n Move to localisation n BDUK n Demand is there n Long term, patient money is there
– but not being put to work
Some Ideas….
Create conditions for: n Improve tax efficient savings – EIS etc. n Extension of domestic mortgages, at 2.9% n ‘Shrink-wrapped’ community masts n Municipal bond markets n And others…..
What BroadwayPartners Brings
n Conventional logic says rural broadband is uneconomic
n Therefore, change the logic! q Raise returns (uptake and costs) q Reduce risk (lower discount rate, over
longer payback period) n Conclusion: returns are sufficiently
attractive if interests are properly aligned
BroadwayPartners
Thank you