Getting Building Fund: Government publishes £900m allocation for “shovel ready projects”

Objective of the Getting Building Fund

The aim of the £900m Getting Building Fund is to deliver jobs, skills and infrastructure across the country, whilst also using public funding to help the economy recover urgently from the impact of the Covid-19 pandemic.   As covered in our earlier Article on this subject,  the  Secretary of State for Housing, Communities and Local Government, Robert Jenrick, wrote to England’s Local Enterprise Partnerships (LEPs) and elected Mayors requesting lists of  “shovel ready” projects by Thursday 18 July.  These lists were considered by the Ministry and investment allocated towards the parts of England which have faced the greatest economic challenges as a result of the pandemic. A list of the individual allocations is set out below. 

Application of State aid law to the Getting Building Fund

EU State aid rules regulate how Public Sector bodies, including local authorities, can use the assets and powers in their disposal to support businesses.  Unlawful State aid can result in the European Commission ordering recovery of the State aid from the beneficiary and carries significant reputational issues for Public Bodies.  

The allocation of the £900m funding to each LEP (as set out below) will normally be “no aid” to the LEPs themselves.  However, subsequent funding to developers or other undertakings and where public bodies such as Councils might use the funding for their own “direct development” projects, then State aid will need to be carefully thought through. 

Measures such as open access cycle lanes will normally be considered as general infrastructure and therefore “no aid”.  However it is likely that proposals involving the creation of commercial units, support for SMEs, housing, film studios and business parks will need to be designed to meet the terms of one or more block exemptions. 

The General Block Exemption Regulation (“GBER”) is the most common route for such awards to achieve compliance and has been utilised for around 96% of State aid awards since 2014.  For projects such as this, it is likely that the Regional Investment Aid (Article 14) and Aid for Local Infrastructures (Article 56) exemptions will be of particular interest.  However in applying GBER it is important to be aware of the strict compliance requirements and put in place an appropriate audit trail (including an assessment as to how each compliance requirement is met at the time of the award of aid).  

Case law such as the German Land Scheme can also provide a route forward for public bodies.  Under this decision the GRW was able to undertake certain measures, including remediation and removing buildings on brownfield sites, to revitalise land which were considered to be “no aid”.  

Local Enterprise Partnership Allocations of the Getting Building Fund

Conclusion

The Getting Building Fund provides very important and significant public investment in infrastructure at a time of the greatest economic turbulence.The fund will need to be carefully administered by the Local Enterprise Partnerships in order to avoid State aid difficulties, especially important as these organisations will want to show they are a “safe pair of hands” whilst decisions are being made about the delivery of the UK Shared Prosperity Fund.  

DWF Law LLP has a breadth of expertise in State aid law matters. We are able to draw upon a team of leading experts who have extensive experience in this area, including working within the UK Government on high profile funding matters, defending projects from recovery and designing projects to meet the rules.