OPINION - Jay Burbank: State aid rules vital for border regions like Derry

Unlike a largely symbolic issue such as fisheries, the grandstanding over state aid rules affects a much greater proportion of GDP and is important to the Northern Ireland economy.

On the face of it people may not object to flexible ‘state aid’ for a struggling firm - the argument goes that it is better to protect swathes of workers from the detrimental effects of a global market shift in prices or in the competitiveness of their given firm than it is to let it sink.

However, this is not actually what EU state rules are about. They were put into place not only to create a level playing field across the single market but also to protect workers within EU member states. Hypothetically it’s great for the worker to have his firm nationalised, subsidised or bailed out by government but this is no guarantee of her specific job, or the future competitiveness of her firm or of her local industry.

Put simply it is ‘robbing Peter to pay Paul’ - every firm is expected to contribute in taxation but then one favoured firm receives some of this back as a subsidy which puts them at a competitive advantage.

We know that in the past (particularly the 1960s) NI economic policies did this by excluding entire areas – would Craigavon project with its massive grants to foreign investors meet modern state aid rules?

What tends to happen with any economic protection is that those best placed with government gain the most. The genius of single market state aid protections is that it is much harder for big business to bargain and lobby every member state government to have rules fit their bottom line.

It is my solid belief that if the EU 27 relent on state aid, the London government and its Anglo-centric tendencies will use its resources to benefit favoured firms and individuals in England. Current state aid rules do not preclude the executive from pursuing policy to stimulate a sector or protect jobs but they do provide a legal check on the use of such public funds.

The RHI scheme fell within EU state aid rules, despite the scheme being an obvious subsidy to the agri-food sector in Northern Ireland. If the UK government are given complete free reign on setting these rules, or worse if the Executive are given this free reign, it could spell disaster for local (particularly small to medium sized) businesses who lack the clout with government ministers to seek support. RHI would likely pale in comparison to all manner of executive grants being hawked politically rather than within a state aid criteria.

State aid rules not only provide protection from market distortion, but actually provides more, not less, certainty for workers, and is vital for border regions like Derry. The north west knows well the bitter chill of political neglect, imagine an Executive not checked by state aid rules which currently provide some legal certainty for firms and sectors not within the Belfast bubble? If you think they’d look beyond nationalising the shipyard to providing support to Derry’s economy, then think again.