European and External Relations Committee

Meeting date: Thursday, September 20, 2012

Official Report 407KB pdf

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European Union Structural Funds

Agenda item 3 is to consider the response from the Scottish Government to the committee’s report on European Union structural funds. Jenny Goldsmith will give us a helpful briefing on that.

The Scottish Government has given quite a substantial response to the committee report, which was published in July. Members have the cover paper, EU/S4/12/12/1, which attempts to summarise the main points from the Government’s response. Overall, it seems that the Government is supportive of what the committee has recommended.

The main good news is that the Government has agreed to come and update the committee regularly on a large list of points. The first update will be in November and thereafter updates will be every six months, which will probably be useful as we go into the new round of structural funds in 2014. I will not go over the points that the Government has agreed to update the committee on—they are available in paragraph 2 of the cover paper.

Paragraph 3 of the cover paper highlights the fact that:

“The Scottish Government has not agreed to the Committee’s recommendations to instigate a common code of practice and a ‘champions list’”.

Those were recommendations from stakeholders during the inquiry. The idea was that they would help the third sector and anyone else who is applying for funding to have a gateway for advice. Instead, the Scottish Government has said that it will work with stakeholders to develop national rules and to clarify systems, roles and responsibilities. I believe that it is doing that through the working group that is already established.

The final point is highlighted in paragraph 4 of the cover paper. Members might recall that the committee was concerned about the loss of the 30 per cent advance payment and thought that it would make it difficult for the third sector to cope. The Scottish Government has given quite a lengthy explanation of the decision. Basically, the payment was discontinued to prevent various problems that the Government had in managing the programme. It seemed to create more problems than benefits in terms of overpayment, underpayment and the ensuing problems for the third sector. That is why the Government has not agreed to that recommendation.

The Government also feels that its new strategic approach, which primarily involves the use of the various strategic delivery bodies, will provide a better alternative and create a more stable platform for the third sector to engage with the 2014 programme.

Those are the main points.

Thank you. I see that the Government gave us quite a detailed response. There are some things in it that we probably need to have a close look at as regards our recommendations and how the Government is suggesting we take things forward.

I wonder, with reference to paragraph 3 of the cover paper, why

“The Scottish Government has not agreed to the Committee’s recommendations to instigate a common code of practice and a ‘champions list’ in order to assist both the third sector to deliver the funds and applicants for funding. Instead, Scottish Government officials will work with stakeholders to develop national rules”.

Why will the Scottish Government not agree with our recommendations?

I think that I summarised the reasons earlier, but the Government seems to think that its strategic delivery approach is better.

So the Government knows better than we do.

I cannot comment on that.

The evidence that we took from third sector groups and other organisations showed that they were pretty much split down the middle on the point about whether a champions list would work, how it would work and who would maintain it. Those are some of the problems that the Government is highlighting.

The Government does have its working group, and I think that it is talking about beefing it up a wee bit to make it more strategic in the sense of giving guidance and support to organisations. That may address the problems, but I think that Jamie McGrigor is right—it is something that the committee should monitor. We can get feedback from the organisations that called for a champions list to see whether the Government’s suggested new proposals work.

Can we get an explanation as to why the Government thinks that our recommendations are wrong?

In the first instance, we can probably take the Government’s response back to the stakeholders to ask them whether it satisfies their concerns. Once we have received their responses, we can write to the Scottish Government to ask it for further information or indeed to reinforce the original view of the committee, which was for those particular suggestions to be acted on. We can do it in that fashion if the committee is minded to do so.

09:15

I do not want to go too far; I just have concerns about the statement:

“The Scottish Government has not agreed to the Committee’s recommendations”.

We took quite a lot of time over that report.

Yes, we did. This is just the first stage in the feedback exercise. Ian Duncan is correct, and one of the things that I would like to do is to go back to all the stakeholders to see whether they are happy with what the Government has suggested. If they are, fair enough. If they are not, we might be able to go back to the Government and suggest that there are other ways to approach this.

Okay. I just wanted to bring it up because it was a diversion from the committee’s policy.

I appreciate that.

One of the challenges concerns the type of work that different people are doing. It would be extremely difficult to measure like for like. That difficulty itself is fraught with challenges. I think that that is why the Government feels that the exercise would be difficult. We are not sure whether that would provide value for money.

I am happy with your suggestion that we ask for the views of the people on the ground, convener. However, I think that it will probably come down to the question of value for money.

On paragraph 3, it would be useful if we could ask the Government what the timescales are for developing the national rules and responsibilities. It would also be useful to have an overall timescale for the strategic plan as well.

On paragraph 4, I came quite late to the investigation of what was happening but, for small organisations, the issues were the start-up costs and cash flow. Might it be possible to look at other partners that work in social enterprise areas to see whether there is some way of mitigating those issues, based on the decision of the Government?

That is a good idea.

Paragraph 5 talks about

“European funding that may be underutilised”.

I am not quite sure exactly what that means. I am trying to translate what the whole paragraph means.

Do you want an answer now, Jamie?

I just find it difficult to understand the point about the European funding that may be underutilised. What do we mean by that?

I think that I can help. You might remember, from our discussion on this matter, that there are certain strands of money that the Scottish Government is good at accessing and drawing down but that there are various other funds that are less well known and which the Scottish Government has less experience of accessing. It is almost euphemistic to say “underutilised”; it might be better to say “not really utilised at all”.

Given that there is money available, we are looking to encourage the Government to get the money that is due to Scotland. Paragraph 5 is concerned with getting money not only from the funds from which we are good at getting money but also from a range of other funds that are available to Scotland.

That would obviously be important.

Our forward work programme contains an examination of the other funding streams that exist and an attempt to find out whether they match projects that we have in Scotland. We want to expand the horizon a bit.

Yes, Ian Duncan has explained what was meant.

On paragraph 6, what timescale is involved?

It is every six months.

November is the first update. After that, there is an update every six months.

Paragraph 6 says:

“The Committee is invited to consider the Scottish Government’s response and note that the Scottish Government will send regular updates on progress regarding these funds.”

Yes. The first update will be in November, and there will be one every six months thereafter—every November and May, in other words.

Can I ask a question about my region, the Highlands and Islands?

You certainly can; let us see if we can answer.

The annex says:

“The Highlands and Islands is currently classed as a convergence region and is likely to be classed as a transition region in the future programme given its current GDP level of 83% of the EU average.”

My question is: okay, but when is that going to happen? Moreover, if an area is designated as a convergence region, does that not mean that its gross domestic product is less than 75 per cent of average GDP—or am I wrong about that?

Ian Duncan can update you on that as well.

This discussion is anchored in the next macro EU budget that will go live in 2014. You might remember from our discussion on structural funds that under the present system there are more or less two categories, one of which is that a region is below a given level of GDP and therefore has degrees of poverty. Scotland did not qualify in that category in the last round because the new member states from the east had lower GDPs and dragged down the average. As a result, the Highlands and Islands and the rest of Scotland were deemed to be above the level at which action would be taken. That frustrated not only the United Kingdom but almost all the western EU member states that had been recipients, and a new buffer category or band was created to help regions such as the Highlands and Islands—

This is the transition category.

In effect, yes. If you were being cynical, you might say that it seeks to ensure that the western countries get some of the money.

Money that the eastern bloc is now getting.

Yes, but according to the EU it is a sensible way of taking forward the policy. It all depends on whether you are a cynic or an optimist, but it all means that the Highlands and Islands will get more money. That is the important point.

Of course, but do we know when that is going to happen?

From 2014.

I think that that is everything, convener.

From my reading of paragraph 3—and as a new committee member—I wonder whether the “champions list” that was referred to earlier is a best practice list of practitioners and so on. After all, the Scottish Government suggests that best practice will be shared and, although I have not been part of the committee’s deliberations on the matter, I think that its intention will ultimately be delivered through that mechanism. The outcome will be the same and the committee will achieve what it set out to achieve in the first place.

Thank you for that helpful comment. Do members have any other comments?

I am afraid that I have one more.

On you go, Jamie.

Near the top of page 7 of the cover paper, it says:

“The advance payment was commonly used in ESF”—

or the European social fund for employment opportunities.

“It was decided at the start of the current programme period to cease advance payments because of the additional problems that they had caused in terms of managing the programme effectively.

Advance payments frequently resulted in overpayments”.

Have we any idea why that was the case?

I might, because I used to run an ESF-funded programme. If you received an advance payment but did not meet the outcomes—which sometimes just happened, especially with employment outcomes—you had to pay it back. Now the money is paid in arrears, which means that organisations are paid according to outcomes, not up front. Of course, that can lead to issues for the management of an organisation, but from an audit and monitoring point of view it is probably the best approach.

Is there a big delay in getting the funds?

There was a delay but the other challenge was claiming back overpayments to organisations. Any money that is not used is claimed back by the European Commission and there were knock-on problems all the way back to Brussels to the detriment of other projects that could have used the money. Is that right, Ian?

That is exactly right.

I had nightmares running that project.

Have you exhausted all your questions, Jamie?

Not entirely, convener. On page 9, the paper refers to the committee’s recommendation that

“the Scottish Government continues to be involved in key discussions at the UK level to ensure that Scotland’s particular needs and concerns are reflected in the negotiations, and provides regular updates to the committee”.

Are you saying that Scotland needs a seat at the table?

I suggest that a number of organisations said that, too, and I agree with them.

I was not asking for your personal opinion, convener.

I know, Jamie.

Do we say what I suggested in the report, or is it couched in different terms?

There are a couple of technicalities on which Ian Duncan can perhaps give a much more constructive answer.

I might not be much more constructive.

The wording is taken from our report. The recommendation’s purpose was to ensure that the Scottish Government participated in every possible way with the UK Government, which is the key negotiator on the issues. The important point was that we should learn the outcome of the discussions between London and Edinburgh, so that we can monitor them and comment when appropriate. The answer to the question is probably both that the UK remains the member state and that it is clear that Scotland has aspirations to be as involved as possible.

That is the end of my questions, convener. I beg your pardon for having asked so many.

Well done for doing your homework.

I found it quite difficult to understand what the paragraph on financial instruments meant. Is there an easy guide to what we are talking about?

Yes, but I suspect that it is about 40 pages long.

And full of acronyms.

One ambition of the current round of determination of the next EU multi-annual financial framework is to make understanding the position easier. However, as the Commission always says, the easier that is made, the more must be put in the annex. All the rules go into the annex, so we end up with an easy paper up front but a very big engine behind it that must be mastered, which defeats the point.

If the committee had an appetite for it, we could ask the Scottish Parliament information centre to produce a paper that clarified the position. Under the work programme agenda item, we will talk about work that we might do to understand the broad range of funds that is available from the EU. As part of that exploration, we might ask SPICe to produce material.

That might be helpful.

I thank members for all their input, which is always helpful.