LEP It Rain: Flood Prevention Schemes

LEP It Rain: Flood Prevention Schemes


person photo

David Owens


Although the rain has stopped – at least for the time being, floods are back in the news with the Commons Select Committee on the environment  reminding us all that austerity cuts have had an impact on the budget for  flood defence activity and seeking to put pressure on the Secretary of State to maintain or improve spending. However,   there is always more that can be done and  some schemes may be looking for funding elsewhere. Is there scope for grant aid from LEPs to support flood prevention schemes?

There are two broad questions which will need to be asked in connection with any such proposal:

  • Is the making of the grant permissible under state aid rules?
  • Even if it is, are there constraints on the source of money?

The most obvious route to avoid  funding for  flood prevention to be characterised as unlawful state aid is  ensure that it can properly be regarded as infrastructure expenditure. This will be the case  where a grant is made to a landowner,  to put in place flood prevention measures which benefit a wide area; it cannot just  benefit the  recipient of the grant alone if they are in business, as that then becomes aid to a selected undertaking. This can also arise where an undertaking is  able to commercially exploit state investment even if there is also a wider public benefit through that investment. The recent case of Leipzig Flughalle illustrated this where building a new runway may have boosted the wider economy and benefited public travellers, but clearly directly benefited the airport operator. Market Investor Principles are unlikely to apply.

If the infrastructure route is not open, as may be the case where the flood prevention is directly aimed at protecting a specific business, then are there other routes to validate a grant? Clearly very small scale works may fall within the De minimis limit of under €200,000 over 3 years ( assuming no other de minimis aid )  but beyond that it is difficult to bring the funding within any of the  categories of the General Block Exemption. The new  version of the regulation does codify commission decision making on relief from natural disasters including floods, but the focus is on making good the damage caused by the nationally recognised disaster, and the amounts are restricted to difference in value before and after the problem. This could be used to part fund  replacement of failed flood prevention works, but this is likely to be of little help in seeking to prevent the flood in the first place. Similarly the environmental protection provisions address the protection of the environment from the activities of the grantee, not the protection of the grantee from the environment!

SME investment aid is also unlikely to apply as it is tied to new development or moving into new products, rather than preservation of the existing production capacity.

The second problem may also arise, particularly for LEPs or other bodies who are administering funds such as the Regional Growth Fund. These funds are  restricted in the way that they can be used, and in the case of some RGF schemes may be restricted to de minimis or GBER complaint funding. Care needs to be taken as to using the ' right ' money for the right purpose.

This can be a complex area, and the  risks for failure are not just the  need to recover the funds from the  recipient, but also the potential for civil law claims from competitors who may have been affected.

Related Insights

Authority Update 2/3/18

by Claire Booth

Brief details of recent policy and legal developments relevant to those involved in local government work

Waste Watch - February 2018

by Nadeem Arshad

Government and EU publications, legislation, cases and other developments in England and Wales relevant to those interested in...

Public Procurement and GDPR in practice

by Susie Smith

Procurement Byte

Authority Update 16/2/18

by Claire Booth

Brief details of recent policy and legal developments relevant to those in the local government sector

The Haringey ruling and local authorities' duty to consult

by Judith Barnes

Commentary on governance issues

Stop Press: Lawfulness of using LLPs for local authority joint...

by Richard Hiscoke

The Peters v Haringey LBC judgment

Employment Eye

by Julian Hoskins

Alert! Government responds to the Good Work Review

Keep up to date With Bevan Brittan

What interests you?

About you?