[ARCHIVED CONTENT] Department of Trade and Industry - Guide to the Regional Selective Assistance Scheme

Regional Selective Assistance (RSA) is the Department�s main instrument of direct financial assistance to business. Delivery of the scheme in England is primarily through the Regional Development Agencies with Business Links playing a signposting role and also acting as advisers to applicants in some cases. Grants are discretionary on projects with fixed capital expenditure over �500,000, and which create or safeguard jobs in the Assisted Areas. Scheme criteria apply, such as the requirement that a company must demonstrate that without a grant the project would not go ahead.

Labour Market Trends
Details of offers of RSA can be found in the January, April, July and October editions. See tables G31 & G32

Evaluation of RSA (1991-1995) (428Kb)

Industrial Development Act Annual Report 2002-2003
(See Appendix 2 for RSA statistics - pages 30 to 37)

Enter the postcode of your proposed investment location for an indication of whether it is an Assisted Area.
This is a guide only.

Click here to enter postcode

In some cases, postcodes may be split between Assisted and non-Assisted Areas. You should therefore confirm details with the nearest Government Office before proceeding with your application.

Regional Selective Assistance - organisations

Regional Development Agencies
RDAs are the lead bodies at regional level for co-ordinating inward investment, raising people�s skills, improving the competitiveness of business, promoting sustainable and economic development, and social and physical regeneration. RDAs are responsible for administering RSA in the English regions, including appraising applications and awarding grants.

Business Links
Business Links will be able to advise you on the application process for RSA and may also (possibly for a charge) help you prepare your application. The Business Link Contact Centre is 0845 600 9006 where details of your nearest BL will be provided. You can also visit the Business Link website at www.businesslink.org

Investing in Assisted Areas

The Assisted Areas located in the English regions have considerable development potential, with an available workforce, competitive labour costs and high labour flexibility. They share the benefits the UK as a whole holds for investors, namely market proximity, good communications, economic stability, low taxes, the language of business, flexible labour markets, deregulated business environment, depth of capital markets, industrial infrastructure and a government that welcomes investment and enterprise.

By long-term investment in capital, employment and new skills, businesses can build on the commercial and industrial performance of the Assisted Areas. The Government recognises this and will consider giving grants to encourage such investment.

What is Regional Selective Assistance?

Regional Selective Assistance (RSA) is a discretionary grant which provides assistance towards projects with fixed capital expenditure over �500,000 and which will create or safeguard employment in the Assisted Areas.

Most businesses investing in manufacturing are eligible to apply for a grant, as are businesses in service industries that supply a national rather than local market where displacement of other similar employment is likely to occur, e.g. retailing, legal and accounting practices. Applicants can be companies, partnerships or sole traders. Grants are not available simply to transfer jobs from one part of the country to another.

Assistance can be provided to:

establish a new business;
expand/modernise/rationalise an existing business;
set up research and development facilities;
or enable businesses to take the next step from development to production.

All projects must meet the scheme criteria, below, and in each case the amount and terms of assistance will be negotiated as the minimum necessary for the proposed project to go ahead. The grant is normally payable in annual instalments based on agreed fixed capital expenditure and job targets.

Grants are individually assessed against the criteria. The amount depends on the needs of the project, the number of jobs created or safeguarded and the impact the project will have on the economy. Grants can be significant. The majority range between 5 per cent and 15 per cent of the fixed project costs. There is a minimum applications threshold of �75,000 assistance. The average cost per job is around �4,000. For exceptional quality projects, higher grants may be considered. Grant is normally calculated as a proportion of eligible capital investment. However, where this expenditure is insufficient, grant may be assessed against new jobs created.

European Commission restrictions apply in some sectors where there is European over-capacity, including synthetic fibre and yarn, vehicles, iron and steel, coal, fishery and agricultural products. Restrictions may also apply where projects are in sectors of the UK market which are already fully served and where support would simply displace or reduce existing jobs in similar businesses elsewhere. In such circumstances, an application would be unlikely to succeed. This is why information is required on the size of the market served, your existing and expected market share, your main customers and competitors, and their locations. However, where projects are likely to deliver new technology and processes, concerns over existing full capacity in the sector may be put aside, on a case by case basis.

The RDAs aim to process applications for RSA quickly and efficiently, and respond in a courteous and helpful way to requests for information or advice. The target time for case processing is shown on page 6. Applicants dissatisfied with any aspect of the service should write to the Head of RSA Appraisal at the RDA dealing with the application.

Location
The project must be undertaken within one of the Assisted Areas. If you are not sure whether or not you are in an Assisted Area, contact your nearest RDA. Do not complete an application before you are certain the proposed location of your project is in an eligible area.

Need
Applicants must demonstrate that a grant is necessary to enable the project to go ahead as planned. This may be to reduce the risks associated with the project, or to influence the choice of a mobile project�s location. It might also be to obtain parent company or shareholder approval by meeting established investment criteria; or for some other reason. Each case is considered on its merits.

Eligible investment
The project must involve capital expenditure of more than �500,000 on fixed assets, such as property, plant and machinery. Expenditure can relate to expansion, modernising or the establishment of a new company. Assets can be acquired outright or by finance lease or hire-purchase terms. Some property leases may also be eligible. Certain costs of a non-recurring nature (patent rights, professional fees) may also qualify. The working capital spent on a project does not qualify directly, but can be taken into account when determining the need for assistance. All projects must last at least five years. If the grant is to be assessed against net new jobs created, eligible expenditure is 2 years of gross wages.

Jobs
The project must create or safeguard jobs. The higher the skills and the more you are prepared to invest in improving your skills base, the bigger the value put on them in grant consideration.

Projects likely to create overcapacity, but allowing for technological changes, or which simply displace similar jobs elsewhere in the UK, or aim to relocate the same jobs from one part of the country to another, are not eligible for assistance.

Viability
Your business should be viable and the project should help the business become more competitive. The project will normally be expected to become profitable within three years.

Quality
The Competitiveness White Paper (CM 4176), announced the Government�s commitment to refocus RSA more on high-quality knowledge-based projects, providing skilled jobs. This has shifted the emphasis in the scheme from being mainly jobs creation and retention, more to one of raising productivity and gaining improvements in the skills base. This may come through new investment or as re-investment to meet changes in the market.

A number of factors may be assessed to help us determine the quality of projects. Some key features are:

National and regional benefit
All projects should contribute positive benefits to both the regional and national economy.

Prior commitments
There must be no prior commitment to the project otherwise there will be difficulty in establishing a need for assistance. Project appraisal must have been completed and a formal offer of assistance issued before the applicant enters into a commitment to proceed with the project.

Other funding
The greater part of the funding for the project should be met by the applicant or come from other sources in the private sector. These may include bank borrowings, hire-purchase or lease finance, equity and loan finance from existing or new shareholders, and loans from other organisations or institutions. Additional public sector assistance may be available from Enterprise Zones, Learning and Skills Councils or your local authority. However, finance from these sources will be cumulated with the RSA grant to ensure the total value of aid for the project complies with European Commision regional aid limits. Commercial loans direct from European Investment Bank (EIB) do not need to be cummulated.

If you consider your project needs financial assistance in order go to ahead in the Assisted Areas, you should first consult your nearest BL or RDA about eligibility. If, after this, you want to apply, you will need to submit a completed application form

(494 Kb) and financial appendices

(571Kb) along with the company's latest audited or management accounts (and Group's, if applicable) together with your business plan to the appropriate RDA.

(If you do not have Word or Excel, the viewers can be downloaded from the links below)

The business plan should expand on the information contained in the application form, including for example:

a description of the business and its ownership (including current employment level);
details of the company�s principal products and its share of the markets in which it operates;
cash flow and forward trading estimates for the project;
project description, rationale and expected benefits in terms of future production, sales, profits, time-scale and jobs likely to be created or safeguarded;
comment on the quality features of the project;
an estimate of the required project fixed and working capital expenditure;
a description of how finance for the project (and ongoing non project requirements if appropriate) will be raised;
the names and locations of the company�s principal customers and competitors, and any expected changes as a result of the project succeeding (to enable the likelihood of job displacement to be assessed);
an explanation of why RSA is necessary to enable the project to proceed, e.g. sharing risk, or how RSA would influence location, scale or timing;
an indication of the minimum amount of assistance required, and the likely consequences if RSA is not granted; and
the precise stage reached in terms of planning and/or commitment to the project.

Larger grant applications
Where assistance requested is �2 million or more, further information will be required in addition to the above in order to undertake a full economic appraisal of the project. Please contact your nearest RDA to discuss further.

The target time taken for decisions on applications, from the date of receipt of a fully completed application (including all specified financial information) is 30 days. Larger more complex cases may take longer than this to appraise. Where this is necessary, we will aim to take account of the commercial needs of the applicant.

Appraisal Officers may discuss the project with the applicant or their advisers to seek clarification on further details, and may wish to visit the project location. During the assessment other public bodies may be asked to provide advice on the application. Please confirm on the application form that you are content for the information you provide to be shared with other public sector bodies.

Grants are normally released in instalments upon achievement of capital expenditure and job targets which are set out in the formal offer of grant assistance. The targets will be agreed with applicants during the appraisal negotiation and are generally arranged to coincide with the expected progress of the project. All RSA grants are taxable.

Successful applicants will be allocated a Monitoring Officer in the RDA who will provide advice on the procedures for submitting a claim for payment of a grant instalment.

Fully documented claims will be processed within 30 days of receipt. Completed and signed claim forms must be accompanied by supporting documentation (i.e. an independent accountant�s report, documentary evidence of any preconditions to be met and a copy of the latest audited/management accounts).

Department of Trade and Industry
Regional Assistance Directorate
Bay 390
1 Victoria Street
London SW1H 0ET
Tel: 020 7215 2565
Fax: 020 7215 2562