Brussels

THE Government yesterday welcomed moves by European Union industry ministers to clamp down on billions of pounds of public money which is paid out in illegal state aid every year.

Under new rules, the European Commission will be able to order Government money that was paid out to businesses unlawfully to be repaid. It will also be able to send in its own inspectors to check whether those state subsidies that are permitted are being used for their intended purpose.

British Minister for Trade and Competitiveness, Lord Simon, warmly endorsed the new controls, which will strengthen the commission's hand in enforcing EU state aid notification rules.

''High volumes of aid to industry across the EU are a big brake on our competitiveness. According to the latest commission figures, aid to industry across the EU totals #25bn a year.

''Too many governments flout the rules on how these subsidies can be paid. These new powers should help to clamp down on the worst abuses and excesses,'' he said.

According to EU statistics, state aid to industry in Britain is only 4% of the #25bn paid out annually by governments in the 15 member states. France, Germany, and Italy together accounted for 80% of the total. Britain's per capita figure of #173 per year is only a quarter of the EU average of #817.