Sweden must get the way it gives grants to companies in order
During the pandemic, a lot of support has been paid to companies. The situation during the pandemic was exceptional but not unique. It is difficult to get a full overview, but in 2019 at least SEK 51 billion was paid out in state business support. Opinions vary about what the state aid should go on. Some believe that support is necessary to cope with the stresses that Sweden's economy suffers from at regular intervals. Others believe that this support has a critical role in the ongoing transformation of society.
Today, there is a plethora of different grants, micro-support, innovation support and loan guarantees that companies and organisations can apply for, all for different purposes. This involves support for everything from starting companies and climate-smart transport to support for the remediation of contaminated land and watercourses. The support is distributed by several different authorities, municipalities and regions. This is where the challenge lies. With so many parties involved in business support, it is difficult to bring the whole thing together. Added to that is the fact that incorrectly allocating state aid on a large scale can have a distorting effect on competition.
Fortunately, the problem is already being addressed on several levels. The EU wants to promote accountability among granting national authorities and has therefore set up the Transparency Award Module (TAM), where aid granted must be reported, and SARI2, where aid payments must be reported. However, these reporting nets have large meshes. The limit for reporting in TAM is 500,000 euros. In addition, the manual reporting system for the information does not support the provision of a complete and detailed analysis at national level.
What Sweden needs is a digital solution that compiles all company payments and provides an overview. We propose that a national building block1 be created - developed by the Swedish Agency for Digital Administration - with technical capabilities, services, standardized models and frameworks. The building block will support digital development in public organisations, that also includes dealing with common infrastructure challenges. The Swedish Companies Registration Office's "My agents", which is a national infrastructure for digital, standardised power of attorney management, is a concrete example of a building block.
We are talking about building blocks which, by gathering information from all contributing authorities, could provide information about support per industry, region and at the level of detail around each individual company. This would all be to achieve better control over the purposes for which state subsidies are granted, but also to minimize the subsidy fraud that today costs Swedish taxpayers several billion kronor a year.
The Swedish Environmental Protection Agency is a concrete example of a forward-thinking authority that, with more than a dozen different grants, such as Alvin's Bird Fund “Climate Life” and the “Home charging station grant”, aims to record all payments of grants in a database over the long term. The goal is to create a better basis for decision-making to support a more equitable distribution of grants between different areas over time.
There are several benefits:
- All payments can be coordinated
- Full control is achieved over how much has been paid to individual organisations
- Methods for processing grants can be coordinated and efficiency gains achieved
A transparent solution available to all authorities for coordinating payments to companies at a national level would be desirable. If this had been in place, grant fraud would have been detected earlier, while the problems surrounding incorrect payment of Corona support might have been avoided. Last but not least, such a solution would facilitate reporting to the EU.
The payments from authorities, municipalities and regions must be continuously analysed in order to ensure they contribute in the best possible way to enabling Swedish entrepreneurship to develop in the right direction.