The first item for our consideration is a paper on European structural funds and their implementation in Scotland. There has been some discussion about additionality and structural funds, and whether an inquiry should be held. Following our previous meeting, the committee clerk and I met Bruce Crawford, Andrew Wilson and Mike Watson, the convener of the Finance Committee. The Finance Committee thinks that it should examine certain issues, such as the Barnett formula and the assigned budget, but I think that several issues are of legitimate concern to the European Committee. There may well be an overlap, but if there is, it is for others to determine how that should be resolved.
I am in favour of an inquiry. We should seek an undertaking from the respective ministers that they will provide information on certain issues. Part of the investigation will involve Treasury rules, regulations and procedures and those of other departments. As ministers always say, it is hard to get information from the Treasury. However, we need some support from the Minister for Finance and an assurance that he will try to encourage the provision of such information.
If we decide to proceed, we will write to the minister as a matter of courtesy. We would expect him to co-operate; there has been no indication so far that he would do otherwise. We would also seek his assistance in obtaining information from other sources, as appropriate.
You have done a good job in reflecting our discussions on the remit of the inquiry. It would be rather strange if I were to decide against the principle of having an inquiry at this stage. I am strongly in support of the inquiry.
If members accept that suggestion, we will find the appropriate form of words.
Presumably the appropriate form of words would be, "Do the funds, as they are applied, comply with European regulations?"
We might ask whether the funds are being applied appropriately in terms of the regulations.
At UK and sub-state level?
We will consider that during the inquiry.
We must also consider how structural funds impact on other budgets within the Scottish assigned budget. The Finance Committee might decide that it would be more appropriate for it to cover that point. I am not sure whether that has been made clear.
Can you be clear what you are talking about—I do not want the remit to be loose or open-ended.
I am trying to reflect the material that the Minister for Finance sent us, which explains that the assigned budget moves up and down depending on how much money comes in through structural funds.
Are you talking about the way in which the Scottish block is calculated?
No. Once the block has been calculated, it becomes the Scottish assigned budget. Thereafter, according to the evidence from the Minister for Finance, the Scottish assigned block goes up or down depending on the amount of structural funds that come into Scotland. Jack McConnell made that clear in a letter to the committee. I can find that letter.
Is your point that, depending on the ceiling that is set, the amount of structural funds coming into Scotland may affect other spending? That is the core question of the investigation.
We know that it affects the spend. That seems to be covered in the last two bullet points, which relate to how the structural funds programme became part of the assigned budget and what issues relate to the application of the Barnett formula.
I was going to make a similar point to Allan's. We have a list that covers the areas that we need to investigate. We are in danger of debating the matter in committee before we take any evidence.
Will anything in the paper prevent us from considering your point, Bruce?
I am happy with the suggestions in the paper, provided that the committee accepts that my point is implicit in the one that relates to the Barnett formula.
I would have thought so. I will ask the clerk to note your question and you can ask about it when we begin the investigation.
I want also to raise the issue of how the structural funds that are allocated to Scotland compare with the final outturn spend levels. We might make a useful comparison with other UK areas.
We might consider the situation in other European regions to discover how Scotland is performing.
Bruce Crawford's first comment is covered by the second question in the paper:
That is a different issue.
Yes, it is slightly different.
I, too, welcome the inquiry. I am concerned about the perceived—or actual—gap in funding between the end of the current arrangements and the start of the new funding packages. I want to investigate how that has come about.
That is a separate issue, on which we have started to receive representations from concerned organisations throughout Scotland. I would not want that important issue to be subsumed into the inquiry that we are discussing, which has a specific focus.
That would be satisfactory. I, too, have received representations and I think that the matter is of concern.
I want to express my support for the principle of the inquiry. As members know, I have lodged motions calling for such an inquiry. I thank the convener for taking on board members' representations.
As you know, Dennis, we always take seriously any suggestions that you make. You were not the only member to make representations—Bruce Crawford, Ben Wallace and David Mundell all wrote to me on the subject and other members spoke to me about it. It is clearly a matter for which there is cross-party support.
I am delighted, too.
That says a lot for your social calendar.
Quite. Members of the Finance Committee said that it was the lead committee; that is fine, but I would like to clarify each committee's remit.
Structural funds are felt to be a major issue for the Finance Committee. Members of this committee have expressed the view consistently that the issue is also of great interest to us. The Parliamentary Bureau will resolve problems such as clashes between the committees' remits, or whether there should be a lead committee.
I think that we would win in a pitched battle, if it came to that. We are much better fighters in this committee.
I see that the language of consensus is developing well.
Members indicated agreement.
I welcome Lex Gold, chair of the Scottish Executive's review steering committee. As members know, Lex has been reviewing the structural fund programme management executives and their relationship to the Scottish Executive.
I will bring the committee up to date on activity since I last appeared before it on 17 January.
Thank you, Lex. That was a concise overview of a detailed report. The work, which—as you said—has been undertaken in a short time, is commendable.
I am sorry to say that I am working from the draft report; from what I read of the Convention of Scottish Local Authorities paper, however, changes may well have been made to the final report. Lex will put me right if necessary.
I will start with the last question. Broadly, the approach that you mentioned is what we considered. We did not work on the detail of it, but we set out the goal. The criteria that you mention would certainly figure in that. The social impact would also need to be considered.
If issues can be resolved today, we should resolve them. That will help us to prepare for the meeting with the minister.
It is important that the business planning process should reflect the seven-year nature of the programmes. A significant amount of work will be involved in setting up the process and ensuring that the new systems work effectively. Most of that work will be done this year and next year. Once the system is properly in place, the key tasks of strategic review, effective project development and appraisal, and efficient programme management and monitoring can be carried out effectively. As part of that, we believe that there should be a regular opportunity to review the resources required through technical assistance and through matched funding for the partners.
Is there anything else, Sylvia?
That is fine. I will go through the document and read a bit more about that.
Yes. Your second question was about the role of the monitoring committee. We sought the Minister for Finance's guidance on that, because we did not regard it as our role to define the role of the monitoring committee. We discussed that the last time I appeared before the committee. Our approach was to build our proposals into the strategic model laid down by the minister, who will appear before the committee on 21 March to discuss the role of the monitoring committee. That will be an opportunity for members to raise the matter with him.
One section of the report seemed to suggest that the strategies were evolving, that the monitoring committees would feed back and that the programme was developing. I want to know a little more about what is meant by an area-based strategy and about how it will develop.
It is about considering the wider context rather than specific projects. That means not just area, but the national strategic aim to get lasting impact. The link is between area and national strategies.
What is the area? Is it the local enterprise company area?
In this case, it is the area covered by the programme management executive.
What will that be?
At the moment, there are five areas. One for the Highlands and Islands—
I see.
We will replicate what we have now.
That is fine.
I am interested in the single business planning process. Are the PMEs happy with that? Did you have any difficulty getting them all to agree, or was it all sweetness and light?
Curiously, I encountered a great deal of co-operation and good will, as was the case during the whole review. It should be a paradigm for how things work in Scotland. There was no objection to the process—indeed, it would be fair to say that the approach was broadly welcomed.
Like Sylvia Jackson, I have read only the draft report. The full document—with the blue cover—was on my seat when I arrived this morning and I have not had a chance to pore through it. Forgive me if some changes to the draft have been included in the blue book. Will you reflect on one of the comments that we received, which was that the fact that the role of the Scottish Executive is still relatively undefined in the report is a weakness?
I will take those questions in reverse order. The last one concerns an issue that the steering committee did not consider, so although it is an interesting point, I cannot offer any comment from the perspective of the steering committee.
What specifically did you not consider? Funding?
No. We did not consider whether certain initiatives could be brought within the ambit of the PMEs. That was Bruce's point, as I understood it.
Can we tease that out? Why was that either not part of the remit or not considered, given the significance of the role that those programmes play?
I am not sure that I have an answer to that. All I can say is that the issue did not figure. Perhaps that was an oversight on our part, but it did not form part of our review.
Perhaps we should raise that with the minister at a later date.
Bruce's first point was on the role of the Scottish Executive. We went over table 1 in considerable detail. We wanted to spell out the roles and responsibilities as we saw them. A balance had to be struck between the Scottish Executive taking a leadership role and that role not being seen as the Executive riding roughshod over the system. In a sense, what we have is a top-down, bottom-up approach. Table 1 tries to strike that balance.
I was glad to hear your reply to Sylvia Jackson about the strategic overview being spelled out—that is extremely important.
Yes. There is a detailed commentary on that, from paragraph 21 onwards.
I had not got that far.
It covers just those points and gives a strategic focus to them.
Thank you—super.
Does not that paragraph refer to area-based strategies, with specific reference to social inclusion partnerships? They would be different from the areas operated through project management.
That is correct—they could be different.
Therefore, it would be possible to have a successful project embedded in a social inclusion partnership.
Yes.
I was pleased to see that you have concluded that a South of Scotland management executive is worth while, and that the slight difference in management cost will be addressed.
To start with your latter point first, the tense is wrong. We made recommendations on how the interface might be tackled. We believe that that is important, and we have set out how it might be dealt with. There is potential tension, but we have addressed that in the report.
There is reference in the report to funding through the technical assistance top-slice. What would happen if the projected top-slice was not spent? How would you redistribute the money, given that money has to be spent on projects through PME within a two-year time limit? If you top-slice technical assistance, and use that as a working budget for running your administration, what will you do with the money left over from that?
I am not sure that I understand the question.
You are using technical assistance funding of 1.25 per cent maintenance or top-slice to run your administration. Is that correct?
Yes—but I think that the average at the moment is below 1 per cent across Scotland.
Because of the way in which the structural funds are pre-allocated, in a forecast, you will obviously have to budget for your administration costs at the beginning, will you not?
Are you referring to PMEs?
Am I not correct in saying that the PMEs are funded by the top-slice?
By the technical assistance approach, yes.
But that comes out of the total structural fund allocation: is that right?
Yes.
The 1.25 per cent comes out of European structural fund blocks, or grants—the technical assistance.
Yes.
What is it that you are trying to get to, Ben?
If the 1.25 per cent, which is effectively the working budget for the administration to run on, is not spent, or is, as you say, running at under 1 per cent, does the unspent money go back in?
It would not be there in the first place if the calculations were right.
The answer would be that that money should still be available.
We did not pursue that matter as a technical point as part of our review.
You point out near the start of your report that very few countries or regions in the European Union decided to follow the Scottish model. Is there a historical reason for that? Is there a continuing reason? Do you think that other countries and regions can learn from us now, or can we learn from them? Would it be fair to say that you are recommending a more decentralised approach, more in keeping with the principle of subsidiarity?
I am happy to give a very simple answer to that: yes. Such an approach is much more in line with the subsidiarity principle that is much preached in Europe, and it is being put into effect here. I am less well able to say why other countries are not adopting it.
I think that that reflects the comments which we heard previously from the officials from the Commission, about Scotland and the operation here being held in high regard. We can build on that strength.
I think that Graham Meadows made that point when he appeared before the committee.
Does anyone have anything to add? If not, I would like to thank Lex Gold. His contribution has been useful in our preparation for any comments and questions that we may wish to address to the Minister for Finance. I think that Bruce Crawford has already identified one that we can pursue with him.
Do we want to take up Lex's offer? If so, will we do that through the clerk or directly to Lex?
Which?
His offer to go over any of the individual details in the final report.
If members have specific questions, it might be easier for Lex if members went to Stephen Imrie so that the questions are sent together. Failing that, I would not want there to be a delay, and members could address points to Lex directly. However, I ask members to send queries via Stephen in the first instance.
As chairman of the Scottish Premier League?
No, not the SPL. We have enough problems without delving into the lack of European success there. That is slightly beyond our remit. I was thinking about your capacity as director of the Scottish Chambers of Commerce. I know that the chambers of commerce have been lobbying and presenting information to the Enterprise and Lifelong Learning Committee, and that they are making a valuable contribution.
I thank committee members for their courtesy in hearing me. I would also like to draw the European Committee's attention to the work done by the steering committee in very short order, and to the team that supported it. Producing a document of this kind has been one of the most enjoyable, if fraught, experiences that I have had. I hope that it helps all the running programmes, to the lasting benefit of the Scottish people.
Thank you very much.