Does SPUKIJZ violate the Dutch Market and Government Act?

At the beginning of October, the Interim Audit Report October 2022 of the Ministry of VWS was published. This report examines in detail how VWS operates and the various subsidies and advance payments involved.

The full report: http://lnnk.in/b8fH

The additional information used here comes from the Dutch central government website on the Market and Government Act (Wet Markt en Overheid): http://lnnk.in/eyfb

 Below you will find the text of chapter 3.3.3 on SPUKIJZ, along with additional information.

 Chapter 3.3.3 Points of attention, specific grants, Ice Rinks and Swimming Pools, and Sport Stimulation

Original text:

Under the specific grant for Ice Rinks and Swimming Pools, a municipality can apply for compensation for the operating deficit of a swimming pool or ice rink resulting from the measures taken to combat the further spread of COVID-19.

Additional information:

When SPUKIJZ was rolled out, VWS and the Association for Sport and Municipalities (interview with Andre de Jeu, Swimming Pool Sector) stated directly that this grant applied specifically to swimming pools owned by the municipality (real estate), even where these pools were operated by commercial, publicly listed companies. In addition to the normal annual municipal operating allowance from the municipality, these companies also received SPUKIJZ funding to cover further operating deficits. Many of these pools were able to close their financial year debt-free, and some even in the black.

 Original text:

The scheme pays insufficient attention to determining the operating deficits resulting from COVID-19. Besides the risk of state aid, this may lead to uncertainties regarding lawfulness.

 Additional information:

Based on how the SPUKIJZ grant was implemented, and viewed through the lens of the Market and Government Act, it can be said that serious shortcomings can be identified with regard to the subsidy awarded for operating deficits linked to the corona measures imposed on swimming pools. In other words, funding was made available exclusively for public pools, with the commercial operators receiving the subsidies. These operators did not have to adjust or raise their prices during, between, or after the corona crisis and lockdowns. In doing so, the government is breaching an important rule of the Market and Government Act.

 Prohibition of preferential treatment

Public authorities may not give their own government undertakings an advantage over competing businesses — for example, by offering cut-price rates.

 Original text:

The specific grant for Sport Stimulation expires in 2023. The new scheme takes effect in 2024. In previous audit years, we found material uncertainties and irregularities in the awards and the final assessments. Our sample of the awards will provide a picture of the extrapolated errors and uncertainties in the lawfulness for 2022, as well as insight into the underlying causes. Our work on the 2022 final assessments will show whether the uncertainties regarding lawfulness have decreased.

3.4 The scale of findings resulting from non-compliance with the state aid rules is expected to decline in 2022

 In 2021 we identified €301 million in errors and uncertainties relating to state aid, of which €207 million concerned subsidy schemes and €94 million concerned institutional and project subsidies. For the most significant subsidies, we examined the extent to which these errors and uncertainties — which originate in past years, when far less attention was paid to state aid legislation — carry over into 2022. The investigation into state aid is still ongoing.

When entering into new subsidy schemes, VWS consistently pays attention to the state aid rules, among other things by completing a standard form addressing the state aid criteria. It would be advisable to provide an explanation for all 5 criteria. VWS often limits this to the decisive criterion.

As of 1 July 2022, the “temporary framework for state aid measures to support the economy in the current COVID-19 outbreak” has expired. For subsidy schemes dating from after this date, such as Corona Jobs in Healthcare 2022, this is a point of attention.

State aid can also arise in connection with financial flows other than subsidies, such as specific grants and contracts. In audit year 2021, for example, it emerged that VWS had not carried out the state aid test for the specific grant for Ice Rinks and Swimming Pools, which led to uncertainties regarding lawfulness. In our 2022 audit, we will once again include the state aid test.