Official Report 494KB pdf
Good morning and welcome to the 16th meeting in 2013 of the European and External Relations Committee. I make the usual request that all mobile phones and electronic devices be switched off.
I welcome Clare O’Neill, who is our new committee clerk. She has taken over from Lauren Spaven-Donn. We should put on the record our thanks to Lauren for her work. Members may be interested to know that she has taken up a post in the Scottish Government’s immigration department. She has gone from European and external relations to external relations in the Government, so she is delighted. We are really looking forward to working with Clare.
Agenda item 1 is evidence on European structural funds from our colleagues in Europe. The committee has a continuing interest in European structural funds, and on our business planning day we agreed to continue that work and have a round-table discussion with European officials and key Scottish stakeholders in November. This morning, we will take evidence from European Commission officials via videolink. Good morning, Brussels.
We welcome this opportunity to hear from officials from the directorate-general for regional and urban policy and the directorate-general for employment, social affairs and inclusion about the main changes to the objectives and operations of the new funds for the programme. I welcome Agnes Lindemans, who is the head of unit, regional operations in Ireland and the United Kingdom; Ieva Zalite, who is programme manager, regional operations in Ireland and the United Kingdom; and Dimtcho Tourdanov, who is programme manager, Scotland European social fund operational programmes.
I ask our colleagues in Brussels to make an opening statement.
Good morning and thank you very much for inviting us to this evidence session.
As an opening statement, I want to inform members where we are in the preparation for the 2014-20 programming period. First, there is the regulatory framework preparation, which means negotiations in the Council of the European Union and the Parliament on the European Commission’s proposal. In the timetable, it was initially foreseen that we would have the regulations approved by the three institutions before the summer so that they could be published in the Official Journal of the European Union just after the summer and we would have a formal regulatory framework ready that would allow us to enter formal negotiations with member states.
Unfortunately, that is not the case. There has been agreement on a lot of elements of the regulations, but there is still no agreement on the most difficult issues. The trilogue discussions between the European Commission, the European Council and the European Parliament are on-going in an intensive way. I just checked with my colleagues who are following them and they told me that further progress was made yesterday evening but there is still not a final agreement on the most controversial issues in the regulations, which are the performance reserve, the co-financing rate, the rate for pre-financing and the macroeconomic conditionalities. We can come back to those issues later, if the committee would like to do that.
That position does not mean that we have not started with the UK process for the preparation of the programming period, which, as you will know, starts on 1 January 2014. Two stages are foreseen in the process, the first of which is the agreement on the UK partnership agreement, which is a UK-wide strategic document in which the main principles of the structural fund intervention will be agreed between the Commission and the UK. That will be followed by the second stage, which is the discussions and negotiations on the operational programmes. We will conduct those discussions with the devolved nations of Scotland, Wales and Northern Ireland, and then with England. We expect that we will be able to conduct those discussions in parallel with the discussions that we will have with the UK on the partnership agreement.
Thank you for that. You will notice that there is a slight delay in the transmission. We move on to open questions, and the first question is from Helen Eadie.
My question concerns how the European Commission hands over pots of money to member states for their regions. I am eager to discover from the European witnesses whether that money will simply be passed on to the UK regions and sub-regions. If that is the case, there is likely to be a major shift in resources for economic development to the south of England. As we all know, that could mean that the south of England will gain nearly €1 billion compared with areas elsewhere in the UK that have particular needs, including not only Scotland but areas in the north of England, central England and Wales.
I understand that you negotiate with the UK Government on a complex formula that is based on a variety of aspects, but what we need to know from you today is the extent to which the south of England is likely to gain in all of this. How likely is it that you will be able to find ways of controlling how the UK disperses the funding? How can you help us to minimise losses to devolved regions, whether that is to Wales, Scotland or elsewhere, given that you have a strategy to follow at the European level? I would really be grateful for an answer to that question.
Your questions are mainly about how funds are allocated from the EU budget to different regions in Europe and particularly to the UK and Scotland. As you said, the process is quite complicated. It is not very easy to understand, but it has a rationale behind it.
The allocation process works in two stages. The first involves the allocation that the European Commission decides to make to each member state—so the UK has an allocation—from the total budget that has been approved in the context of the multi-annual financial framework. The allocation is communicated to the UK authorities in the summer.
That allocation is at the UK level, but it contains an allocation for each of the three categories of region in the UK. We have communicated three figures to the UK—the allocation for the less developed regions, which are only in Wales and England and do not concern Scotland; the allocation for the transition regions, with which Scotland is concerned because the Highlands and Islands qualify as a transition region; and the allocation for the more developed regions.
Once that has been communicated to member states, it is up to them to decide how to subdivide the three allocations in the regions that correspond to each category—the less developed, transition and more developed regions. The UK can use the EU criteria for that or it can use additional criteria if it thinks that they fit UK circumstances better.
We have been notified of the UK Government’s decision to spread the 5 per cent reduction in the total allocation equally among the devolved nations. The global UK allocation will be 5 per cent less than it was in the previous period, and the UK Government has decided that that reduction will be shared equally among the devolved nations and England. That means that the UK has provisionally given Scotland a 5 per cent reduction in its allocation.
The UK Government took that decision. We noted it, but it has not yet been discussed with the UK authorities. We will discuss it when we get the UK partnership agreement—we get an informal draft first and enter formal discussions later—because we will see in that context not only how the UK proposes to allocate the money to the devolved nations and England but what it intends to do on the priorities and thematic objectives on which it proposes to concentrate the money. We will negotiate with the UK not only on the distribution of the money but on what is behind it and how the UK intends to use it according to the priorities and the EU 2020 objectives.
In your further discussions with the UK Government, will you discuss the facts that north-east England will suffer a €500 million loss, that Scotland will suffer a €300 million loss and that it is suggested that the south of England will gain €1 billion? It would be helpful if we could have feedback on that, because there has always been a notion that the least developed areas of the UK should have priority for funding, which matches the European Commission’s overall strategy and thinking. I have continuing concerns about that matter and I would be glad to have feedback on it.
09:15
First, considering the restrictions on the allocations that we have given the UK, earmarked by category of region, I am not sure that the UK can afford to give a substantial increase in the allocation to the south of England. We still need to see the figures to try to understand how that would work out.
In any case, to consider the point in the abstract, it is a given that we will look at the socioeconomic situation of the different regions with regard to unemployment and gross domestic product per capita. We will see where the most important needs are in the UK, we will discuss that with the UK and we will ensure that the amount of money that is allocated to the areas corresponds to those needs.
Our policy is for the benefit of the whole territory of the European Union—that is true. On the other hand, we also have to ensure that the most deprived areas get their proportional share of the total allocation.
Thank you. I quickly add that we are aware that the UK has developed its own formula. The Deputy First Minister in Scotland is in negotiations with the UK Government because that formula gives us a bit of an uplift but, as you say, nothing is set in stone yet, so we need to wait. However, from the work that the committee has done, we have that bit of information that there is a UK formula rather than a Commission formula. We anticipate that the negotiations will be successful and that Scotland will not lose as much as we were expecting.
I am not looking for a response on that from the panel. We have a number of questions that will pick up on those aspects.
You mentioned in your introduction the failure to reach agreement on the legislative package. Will you give us some practical examples of what the impact of that delay might be?
Although we are already in early October, we still think that, with the on-going intensive negotiations at the highest level, it is possible that the region agreements can be consolidated by the European Parliament in its plenary session in October or November. That would allow the regulations to be published before the end of the year, which is crucial if we want to take the financing decisions on the different programmes early next year and allow the member states and the regions to officially submit their operational programmes to the European Commission. Even though it is tight, it is still possible to have everything decided and published before the end of the year.
In the meantime, we continue our discussions. They are not the formal negotiations, which we can have once we have decided the formal regulatory framework, but we are in what we call an informal dialogue with the UK and the devolved nations, including Scotland, in order to prepare everything that can be prepared. There is a lot that can be prepared and on which we have agreements in the regulations. We have agreements on thematic concentration, on the investment priorities that lie behind that and on the minimum share of the ESF in the total allocation. We have nearly all the elements that we need to be able to go as far as possible in the negotiation of the partnership agreement and the operational approvals.
We really hope that, despite the delays in getting the formal agreements, we can minimise the period that we will need after the formal agreement is reached to finalise the negotiations from a formal point of view, so we are extending the informal context as much as possible and we hope that the impact of the delays will be minimal. However, everything depends on an agreement at the highest level being reached quickly. If things are postponed until 1 January, we will have bigger difficulties because the starting date of 1 January might be jeopardised, and we will then be in a different context. For the time being, however, that is not yet on the agenda.
My next question is on youth unemployment, which of course is a huge concern across Europe. The most recent figures show that youth unemployment is running at 21.6 per cent for the whole of Scotland, although it is worse in particular pockets, such as the south-west. Can you give us more information on what funding might be available to tackle youth unemployment and whether there are any time constraints on spending the money?
I will pass that over to my colleague Dimtcho Tourdanov.
Youth unemployment is an issue for Scotland and for the Commission. We are analysing the situation in the whole UK within the 2020 semester. In our country-specific recommendations this year, we indicated that the UK could or even should take measures to increase the employability of young people. The situation in Scotland is similar as regards young unemployed people, and especially the so-called NEETs, or people who are not in education, employment or training.
To answer the second part of your question, the youth employment initiative foresees front loading, which means that member states could start earlier with all the initiatives. As far as I know, we are in contact with the Scottish Government, which has recently started different measures as regards youth unemployment, especially using the remaining moneys from the European social fund and, partially, from the European regional development fund, as well as new measures. Just one region in Scotland will be involved. I saw yesterday from a project on the partnership agreement with the UK that that is the west of Scotland.
There are other, technical issues, such as decisions on how the managing authority, which is the Scottish Government, will start all the policies to address youth unemployment and whether there should be a separate programme or priority access within the programme. It is up to the Scottish Government to make those decisions.
We know that the cabinet secretary has reached an agreement with the UK Government that means that, despite falling EU budgets, Scotland will see only a 5 per cent reduction in funds over the seven-year period. How does that 5 per cent reduction compare with the figure for similar regions in Europe?
It is very early days to compare the Scottish allocation with the allocation for other regions in the EU, merely because, as you will understand, we are still in discussion not only with the UK but with the other member states. It is difficult to make a comparison at this stage because allocation of national moneys to the different regions is still under discussion between the Commission and the member states, so I can comment only on the differences between the allocations to the member states, not on the differences between individual regions.
Every member state has the right to have its own criteria for how the country-wide allocation that we have communicated to them is then broken down among their different regions, but they all have the same constraint, which is that they must respect the allocation that we have communicated to them by category of region—transition, less developed and more developed.
There is perhaps one little nuance that I should mention, which is that the regulations foresee for the member states a flexibility for transferring money between the different categories of region, up to a maximum of 3 per cent. We have understood from the UK Government decision on breaking down the allocations for the regions and for the devolved nations that it has made maximum use of that 3 per cent flexibility. It has transferred money out of the more developed regions and transition regions to the less developed regions in order to ensure that the 5 per cent reduction can be spread out evenly among the devolved nations.
You have talked about the three pots for the transition, less developed and more developed regions. How has the relative size of those pots and the number of regions in Europe changed since the financial crisis? Are there parts of Europe that have moved down from transition to less developed, for example?
I do not have the global picture—the figures—for the whole of the EU in front of me. However, when we started with the new regulatory frameworks, when the regulations were put on the Council table in 2010-11, we made an estimation, or a simulation, of the different categories of region in the UK. Cornwall in England, for example, was one of the regions that would have qualified under the transition category. Now, more than two years later, we have more up-to-date figures, taking into account the figures from 2009, 2010 and 2011, and on the basis of those new statistical data we can see that there has been a shift from transition regions to less developed regions. Cornwall, which would have qualified as a transition region, is again a less developed region, and the number of transition regions in England has increased in comparison with the previous set of indicators. We have seen a trend in the UK towards more transition regions and less developed regions, and I would guess that the same trends will be found in comparable member states.
You talked about discussions with the UK Government about its partnership agreement. I appreciate that those discussions are probably at an early stage, but can you outline the specific issues in the UK partnership agreement that you will be looking at carefully?
We have agreed with the UK Government that the UK partnership agreement will have one covering chapter that concerns the whole of the UK and which sets out the challenges for the whole of the UK with respect to the EU 2020 agenda. Further details will then be given in separate chapters—on Scotland, Wales, Northern Ireland and England—where the particularities of the challenges facing each of the devolved nations will be further developed.
09:30We expect the UK partnership agreement to give us a clear picture of the challenges facing the UK with respect to the eight or so EU 2020 headline targets, such as those on research, development and innovation, tackling unemployment and meeting the low-carbon objectives. We expect that the document will contain indicators on how the UK will use all the structural and investment funds available—not only the regional development fund and the social fund but the rural development fund and the fisheries fund—in order to make progress towards the realisation of the EU 2020 agenda. In particular, we want to see how the UK will use our funds to respond to the country-specific recommendations that we addressed to the UK in the context of the EU 2020 strategy.
Good morning. My question is on information and communication technology. I know that, as part of the 2020 targets, it was intended that the connecting Europe scheme should provide money for investment in information technology infrastructure throughout Europe. However, the budget for that was significantly reduced, from €9 billion to €1 billion. What was the thinking behind that? What are the implications of that decision for those member states that still need to develop their IT infrastructure throughout their respective countries?
There was indeed a proposal from the Commission for a connecting Europe facility, which was to cover not only ICT but transport and energy. As you rightly point out, the allocation that we initially proposed for the facility has been reduced in the context of the discussions on the MFF, but the facility is still there. Some of the money that has been earmarked for the connecting Europe facility will indeed be used for ICT infrastructure.
In the partnership agreement, we want to see to what extent the UK will not only use our four structural and investment funds but complement those funds by making use of the connecting Europe facility to meet ICT development needs. In the same way, we would like the partnership agreement to indicate how other funds that are available from the EU—for instance, in the area of research and development under the horizon 2020 budget—will be used to complement what the structural and investment funds do. We expect to see that in the partnership agreement. We will then enter into a discussion to see to what extent funds are available from the connecting Europe facility—which operates under different rules from the subsidiarity rules that apply to structural funds—and to what extent there is a need to complement those with the structural and investment funds or cohesion funds.
To summarise, the connecting Europe facility exists, but the amount of money available is limited. Before we decide whether the connecting Europe facility or structural funds will finance investments in ICT, we need to see what co-ordination mechanisms are proposed by the UK Government to make use of both sources of funds.
I am surprised by the big cut in the infrastructure budget from €9 billion to €1 billion and the change in emphasis to e-services, because for an IT service to work it needs the infrastructure to support it and back it up. If the cut is to the physical infrastructure that allows communications to improve, I cannot see how it is wise to spend money on services that require that infrastructure for delivery. Why has the cut been made and how do the member states view it? I simply cannot understand how they could have agreed to such a move.
As you rightly point out, you can have ICT services only if the basic infrastructure is in place. We know that needs are huge all over Europe; there is still something of a need in the UK, but there are other member states where the ICT infrastructure is even less developed. In fact, the UK is well served from that point of view.
The budget negotiations led to what the European Commission has put on the table—the multi-annual financial framework—which takes into account the huge needs that still exist in the EU. As we all know, several member states were not in favour of such a high EU budget, given the fiscal consolidation difficulties that they were facing at home, and what has been made available is the result of very difficult negotiations. I am sure that you know the UK’s position in that context.
As a result, we will have to adapt our ambitions to our means as set out in the budget. The cut that has been agreed means that we will not be able to do everything that we wanted to do with, for example, the connecting Europe facility, and we will have to prioritise even more the money that we have to ensure that it goes to areas of highest need.
Thank you very much.
Good morning. I am an MSP for the Highlands and Islands region, which originally did very well out of infrastructure funds under objective 1 and now has transition status.
I have some questions about common thematic objectives. How will the objectives for European structural and investment funds for structural, rural development and fisheries matters operate in practice? For example, how will the managing authorities across the European Union adapt to the common thematic objective approach? Is there any scope for alignment between the structural funds and the funds for agriculture and fisheries?
I will respond on the question of the principle of concentration behind the thematic objectives and then pass over to my colleague Ieva Zalite to give a bit more insight into co-ordination between different instruments.
Through the structural fund regulations, there is an agreement among all the institutions that ensures that we know what the framework is. We have also agreed that the cohesion fund’s interventions should be assigned to 11 thematic objectives. The regulations also enshrine the principle of concentration and make it clear that the more developed a region is, the higher the concentration should be on the four key thematic objectives for realising the EU 2020 agenda.
For instance, in more developed regions, 80 per cent of the funding should be concentrated on research, development and innovation, support to small and medium-sized enterprises, the low-carbon economy and ICT investments, of which 20 per cent should be spent on the low-carbon economy. In transition regions, the concentration is a bit lower, with 60 per cent to be concentrated on the four thematic objectives that I have just cited, of which 15 per cent should be spent on the low-carbon economy. In less developed regions, I think that 50 per cent is to be spent on the four thematic objectives, so the concentration is less demanding.
The regulatory requirement is that the more developed a region is, the more it should concentrate resources on those elements that are key to increased competitiveness and increased employment. All the regions are to obey those requirements. At the level of the partnership agreement, we will need to verify whether those requirements are being respected in each of the member states and in each category of region.
Does that answer your question on the thematic objectives?
Yes, thank you very much.
Despite the fact that political agreement was reached in June, a number of common agricultural policy-related elements have not yet been finalised, such as those to do with interpillar transfers, the scope of the cuts to large direct payments and capping. The European Parliament appears to be unhappy that it is not being allowed fully to exercise its recently acquired powers of co-legislating with the Council on the CAP. Is that what is holding everything up?
No. Of course that is an additional element that makes the current informal dialogue more complicated, but it is not the main block to progress with the partnership agreement, if that is what you are asking about.
On the negotiation on the agricultural funds regulation, we do not have my colleague from DG agriculture and rural development at the table. I will need to verify with him the current state of play on the negotiations and what the blocking factors are. I am sorry, but I have no further information on that. I am looking to my colleagues, but I do not think that they have more information.
Are you satisfied that the thematic objectives are creating more employment, which is, after all, the objective?
I give the floor to Dimtcho Tourdanov.
Allow me a question in order to be sure that I understand your question. Did you ask how the thematic objectives contribute to creating employment?
I am not saying that they are contrary to creating employment; I am saying that when I look at the funds coming into agriculture, for example, I have seen less employment in agriculture over the years.
As Agnes Lindemans said, we would expect our colleagues from the relevant DG to speak about agriculture.
Let me add just one sentence in response to your first question. Under the investment priorities for thematic objectives 8 and 10, which are on labour market mobility and on education, lifelong learning and skills, support can be provided for agricultural and fisheries areas where there is a need to support unemployed people. That is part of the alignment of the funds.
09:45
On how we will ensure that the investments that are selected will deliver results, I can say something about results orientation and performance orientation, which are now embedded in the new regulations. We want to concentrate on thematic objectives. Once we have agreed those thematic objectives, for each objective and each investment priority within each thematic objective, we want to have a clear agreement on the results and outputs that will be realised through the investments.
Instead of considering what someone is going to do, we will consider what they are committing to achieve with the EU money. In each of the programmes, we will establish what we call a performance framework, in which, for each investment priority, we will agree the outputs and results to be achieved as well as the milestones towards the achievement of those results. Those will be regularly monitored throughout the implementation of the programmes.
There is one important rendezvous between the Commission and each of the regions. In 2019, we will do a complete review of the performance frameworks and the results that have been achieved by then. In cases where the results are not on track, the Commission will enter into a dialogue with the managing authorities and will determine to what extent remedial action must be taken to bring the programme back on track, by reinforcing other priorities and so on. We will enter that dialogue. We will not just wait seven years and see what the results are; we will have a midway, formal rendezvous with the managing authority, when a review will take place on whether the money has produced the agreed results.
There is still a question around the performance reserve. The Commission’s proposal was to set aside 7 per cent of the allocation to each priority until 2019. That 7 per cent would be released only if the dialogue and the implementation results showed that the targets set for 2019 had been reached. It is still not yet agreed that that additional reserve will be in place in order to give a premium to investment priorities that have fully complied and achieved the desired results. That is still under discussion.
However, we have agreed the principle of setting milestones, agreeing on results and checking halfway through whether the results have been achieved, and those measures will take place.
Good morning. What are the Commission’s objectives in shaping the structural funds programme? In particular, what types of projects are likely to be funded? What types of programmes are not likely to be funded in the current programming period?
It is perhaps important to remember that we as the Commission are not involved in the selection of individual projects. We are under shared management and under subsidiarity rules, so we agree with the regions the thematic objectives, the strategies, the investment priorities, the results and the outputs that should be realised, but we as the Commission do not intervene on how those agreements are ultimately translated into individual projects.
There is an exception for major projects above a certain threshold, where we are involved because we have to carry out certain checks, but for the rest we leave it very much to the region to design the way in which the projects are selected.
That being said, we know that the Scottish Government wants to make some changes to the way in which projects will be selected. Perhaps my colleague Ieva Zalite can say a few words on how the Scottish Government intends to change the way that it selects projects.
In the current programme, we see quite a lot of integration between the funds, especially between the ESF and the ERDF. In the next programme, the Scottish Government proposes to draw together the ERDF, ESF and maritime and rural funds into three thematic Scottish funds that will be aggregated around the following areas: competitiveness, innovation and jobs; environment, resource efficiency and low carbon; and social inclusion and local development. Part of the aim is to ensure that, as it were, the wiring behind the funds is hidden from project promoters, so that access to the funds is made much easier.
We understand that the Scottish Government also wants to work with the strategic delivery agencies, in looking at their plans for the next five or six years, to ensure that the European structural funds are aligned much more with the sources of match funding so that there is better and easier access to the funds overall. That could help to remove the burden from project sponsors and community groups and place it where there is better experience and understanding of audit needs.
Will that be more beneficial for groups that are starting up projects? Do you believe that it will be worth while for projects to use that approach rather than what was done historically? In Scotland, we have always had the problem that we have underapplied for funding and we have not succeeded in getting all the funds that we might have got. Do you believe that the new approach will be a better way of achieving that goal?
We will have to see how that works in practice. In the negotiations on the partnership agreement and in the operational programmes, we would like to see how the new approach will be delivered in practice. At the moment, we are speaking about a proposal from the Scottish Government about the future management of funds that would take a different approach from that of the current programme.
I understand that there is also a need to take into account the issue of match funding. In some instances in the past, small organisations perhaps had difficulties in ensuring the availability of match funding. Delivering programmes in a more strategic way will not exclude the smaller organisations from programme implementation and project delivery; it will take away from them the administrative burden of looking for match funding and creating those funding packages, which is the case in the current programmes.
We also understand that the proposal that is on the table is the result of wide consultation that has been done by the Scottish Government among different stakeholders. We know that it has been preparing the new programme periods for quite a while now. It has organised public consultations and working groups to discuss how the structural funds should be better delivered in future.
We understand that there is quite a wide partnership in support of the proposal; we appreciate that it is a result not just of the thinking of a couple of officials in an office but of a wide consultation among the different partners involved.
Match funding seems to be quite a serious burden on a lot of organisations. Is there any relaxation in the match funding requirement if there are unique programmes that could show a real benefit at the end of them and the only reason that they are not being taken up is the match funding implication? What options are there for people? Could they perhaps explore other avenues rather than just simple match funding?
Again, in the regulations, there is a differentiation between the categories of regions as regards what is needed in terms of match funding. The match funding level is higher for more developed regions than for transition regions, and the level is higher for transition regions than for less developed regions.
The principle of match funding—of co-financing—is very important for the European Commission. On one hand, it is the expression of the principle of shared management—that this is a co-responsibility between member states and the European Commission and everybody has to put money into the different projects. On the other hand, it is an expression of our wish for the additionality of our money with respect to what the member states are doing. We want our money to be used in addition to what is done at the level of the member states; we do not want it just to replace what the member states would have done otherwise.
What is the right balance between how much money should come from the European Commission and how much should come from the member states? That is something that you could discuss. I know that one of the critical points in the trilogue discussions is on the level of co-financing, in particular for transition regions. There is no agreement yet on what the level of co-financing should be in transition regions because all the partners around the table know the budgetary difficulties under which the member states and regions are operating.
You can discuss that issue, but the principle remains very important as an expression of the shared management principle and also to ensure the additionality of our funds to member states’ initiatives.
Thank you very much for that.
We have a brief supplementary from Clare Adamson, and then I have a final question.
My question goes back to the themes that were mentioned by my colleague Jamie McGrigor. You said that 80 per cent of the funding would be centred on those themes. I want to drill down on the research and development aspect.
Scotland’s universities perform very well in terms of world ranking and we are very proud of the research that they do. The UK spends 1.7 per cent of GDP on research and development and, although Scotland does slightly better than that with the Barnett formula, it tends to be very close to the UK figure. If we compare that with Sweden, which spends 3.7 per cent, there is obviously a huge disparity across Europe. Is there a target percentage of GDP that countries ought to spend on research and development? Is there any incentive to encourage countries that perhaps underperform in comparison with others to increase their percentage spend on research and development?
10:00
Research and development is one of the EU 2020 key targets in the European agenda. The headline target for research and development is 3 per cent. The European Union would like 3 per cent of its overall GDP to be spent on research and development. That said, we know that the member states qualify quite differently with respect to this target. Some member states are already above the target—for example, Finland and Sweden, which are, as always, the leaders in research and development.
The UK overall is regarded as an innovation follower, which means that it is around 3 per cent but just qualifies on average. There are quite a few member states that are well below that, even below 1 per cent of their GDP. I think of Romania and Bulgaria, where it is a big issue and where there are other needs to cover.
When we consider what the UK will spend on research, development and innovation, we will consider where it is now in respect of its target but we will also encourage it to do even more than the EU 2020 target in order perhaps to compensate for other member states that spend less. We think that there are quite a few opportunities throughout the UK to move on and to go beyond the minimal 3 per cent target.
That is one aspect of the issue, but I am glad that you have asked the question because it also gives me the opportunity to say something about the smart specialisation strategy that is now a precondition for all regions. We want member states that invest in research, development and innovation to come up with a smart specialisation strategy. The important word here is “smart”. Smart specialisation means that each region should develop a strategy for research and development but also for innovation, which is important in the collaboration between universities and SMEs.
The strategy should be designed according to the comparative advantages of one region over other areas in Europe, where it finds opportunities to create competitiveness and sustainable jobs that can be better placed there than in other areas. That is what we look for before we release funds in the area of research, development and innovation.
I am pleased to say that Scotland is quite advanced in the development of a smart specialisation strategy. Well before we spoke about ex ante conditionality, it invested in the development of such a strategy. Once developed the strategy is constantly monitored and adapted to new challenges. Scotland even takes part in the platform of a Europe-wide network in order to engage in a discussion with other regions on how to refine and improve the strategy, and to guide other regions on what a smart specialisation strategy should look like and how it should be developed.
Thank you.
A number of my colleagues in the Scottish Parliament take a particular interest in certain countries across Europe. For example, it is fair to say that Willie Coffey takes a particular interest in Serbia and Kosovo and I take a special interest in Bulgaria and Romania and, to a lesser extent, Hungary.
What forward thinking have Commission officials done to get better funding for closer political, social and economic union between countries such as Scotland, which are relatively well developed, and some other countries that have had to face particular challenges in recent history?
Part of the budget of the cohesion policy is set aside for what we call European territorial co-operation programmes. We have three types of programmes. Scotland is involved in some of the classical cross-border programmes, and we also have other programmes, which are about interregional and transnational co-operations.
Those programmes are designed to create networks in which different regions with similar problems or challenges can participate, exchange experience and be involved in joint actions in particular areas, such as research and development or support to SMEs. Although such programmes represent a small share of the available money, they create the possibility of engaging in interregional co-operation.
I have a very quick final question. I know that we are slightly overrunning, and we are grateful to you for persevering with us. I have the perennial question that we have been faced with from stakeholders for years. We always say that we will make audit and compliance much more streamlined, much easier to follow and much less bureaucratic. Can you give us some insight into the progress that has been made to make compliance and audit much less of a minefield?
Yes. I will pass you to my colleague, Dimtcho Tourdanov, who will give you some insight.
One of the more important issues for the future programming period is how to simplify the implementation of the funds and, in particular, how to reduce audit problems, which we have had in the past—including in Scotland, unfortunately.
There are concrete proposals for how member states can simplify the implementation of the programmes. We did our best in September to organise in Scotland, with the Scottish Government, a UK-wide workshop on simplifying costs for the future period.
The proposals have been accepted and they have been successful. The main idea is to introduce more opportunities for the member states to apply their own flat rates or to use other methodologies that already work in the member state to reduce the audit problems. For example, in the current programming period, the methodology of applying unit costs has been used in the lowlands and uplands. An ESF programme, which proved to be very successful, used the methodology of the Scottish Further and Higher Education Funding Council. There will be no obstacles to using similar simplifying methodologies in the future programming period.
Are there any plans to repeat the seminar in Scotland?
We would not mind. If we get a request from the Scottish Government or from our colleagues in the managing authority, we can organise one again.
Excellent. We would quite like to keep an eye on the topic with our Government and Parliament, and there is keen interest in this topic across all parties in Scotland.
We seem to have exhausted our questions for today. We will follow up with you on the seminar idea because it is always a good opportunity to share experience and understanding. On behalf of the committee, I thank you very much for answering our questions conclusively. You have certainly informed the work of the committee.
I will suspend the meeting briefly to allow our broadcasting officials to get sorted. We can grab a quick cuppa, but members should come back to the table as quickly as possible.
10:10 Meeting suspended.Previous
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