Official Report 299KB pdf
Item 2 is the first of two evidence sessions as part of the committee's inquiry into the Scottish Executive's plans for managing and delivering structural funds from 2007 to 2013. On 28 March, the committee agreed to hold the inquiry, which is linked to the work that we have done on the national strategic reference framework.
I am director of the Highlands and Islands special transitional programme. Between 1994 and 1999, I was director of the region's objective 1 programme. Together, those integrated development programmes, which comprise the regional development fund, the European social fund, the European agricultural guidance and guarantee fund and the financial instrument for fisheries guidance, invested about £450 million in the economic and social regeneration of the Highlands and Islands and contributed to expenditure totalling £1.2 billion.
I am from the west of Scotland programme and I have been involved in structural funds for almost 17 years, since the first programme of funding in western Scotland. I would like to make a few introductory statements concerning the questions that the committee raised in its inquiry into the Scottish Executive's initial proposals.
I am from the south of Scotland objective 2 programme. I will add to what Laurie Russell has said by carrying on in the same vein. I recommend that the committee consider a slightly broader perspective than it is currently being asked to consider, looking at present structures and at proposals for the future. The European social fund has been with us since 1958 and the European regional development fund since 1975, and those funds have been active in Scotland since 1975. During that time, the delivery mechanism for both funds has changed as the priorities that the European Union seeks to deliver have evolved in line with national programmes at United Kingdom or Great Britain level, as well as in line with Scottish priorities. It has always been a balancing act to find the right emphasis on national priorities as opposed to regional priorities.
As Donald MacKinnon said, the Objective 3 Partnership was the most recent PME to be set up. The PME was established in 1998 in preparation for the 2000 to 2006 programme. Unlike the objective 2 programme, the objective 3 programme covers what is now called lowland and upland Scotland—which means everywhere apart from the Highlands and Islands.
I am the programme director for the east of Scotland objective 2 programme and the chief executive of the East of Scotland European Partnership. As well as managing the 2000 to 2006 programme, the partnership also managed the 1994 to 1996 and 1997 to 1999 eastern Scotland programmes, which covered the east central belt from Arbroath in the north to the Lothians south of Edinburgh. However, in the 2000 to 2006 programme, the territory was extended to cover the former objective 5b programmes in north-west Grampian, rural Stirling and upland Tayside.
Can I ask you to wind up? I know that you are right into your subject, but time is moving on.
Thematic areas in the east are what we call designated strategic sectors such as biotechnology, life sciences, creative industries, digital media and food and drink, and they will all need to feature in the thematic areas of priority in any future programme.
I have a couple of things to say before I open up the meeting to questions from members. The purpose of the inquiry is to report on the Scottish Executive's plans for the implementation of the structural funds programme; it is not for us to decide what that should be.
I thank all colleagues for their introductory remarks. You bring a huge amount of collective experience to the committee today and I want to capitalise on that and pick your brains a little bit. I know that in the past, you have been kind enough to come along to the committee and inform its deliberations.
I suspect that we all accept that there has to be change, but let us not use a reduction in the structural funds as a pretext for centralisation—that is my warning. I think that that is what is behind some of the co-financing suggestions that the Executive has made. It is not showing any proposals to us in any detail, so I am not aware of the detail, but from discussions that have been held, it seems that the co-financing bodies that are in discussion with the Executive are quangos or central Government agencies. The current programme allows a much more partnership-based, bottom-up approach, whether on the basis of regions or across the wider objective 3 area. We need to think about change, of course, but let us build on success and look at ways of improving performance where we can.
Change is inevitable, however we look at it, and there is a need to look again at the current arrangements. There are certain fundamental principles derived from the Commission that we have embodied in a very significant way in Scotland and the Scottish experience. One of those is partnership, which has worked well. We are held up throughout Europe as a model for partnership working. Whatever happens and however the map of geographical and spatial targeting looks in future, there must remain a key role for partnerships, including sub-regional partnerships.
Scale is an issue, as an example that I have used recently demonstrates. The proposed figure for regional development funds for Highlands and Islands is £75 million, but in the current programme we committed £55 million to transport infrastructure alone.
I think that we all accept the need for change, but our plea is for evolutionary change rather than change that has unintended consequences and seriously damages the partnerships of regional players that have been built up. Community planning partners in different localities have bought into the process and spent significant, uncosted resources by committing time to monitoring committees, management committees and advisory and thematic groups, to make the approach work.
Does Christine Mulligan want to add to that?
No. I will not take up more time.
You are the only person who listened to what I said at the beginning of the meeting.
As the convener said, the committee has been presented with the Executive's view of how matters are shaping up. However, those of us who have been involved in European structural funds acknowledge—as does the Commission—how well the partnership model has worked in Scotland. It is probably one of the best models in Europe.
It is early days for community planning partnerships. My knowledge of western Scotland suggests to me that the situation is quite varied. However, they are a model that is bringing together agencies at a local authority level. It is not a delivery model, of course. It is important to get the strategic discussions through community planning partnerships. However, quite small-scale organisations, such as local development companies, voluntary sector organisations, colleges and so on, are still needed to deliver projects locally. All that happens within the broad context of Scottish Executive strategies and community planning partnerships. That is how it has worked in the past. In my 17 years in western Scotland, no project has been turned down by the minister or the advisers to the minister. That means that you can assume that everything that is currently funded is absolutely in line with Executive strategies. However, the delivery issue is important. We need to think about how that works at a local level.
Who could drive that at that decentralised level? If that were not done by community planning partnerships, would it be done by local authorities? At the end of the day, are we going to have to say that we need all of you again? Is that where we are going? Are there any other implementation or delivery mechanisms?
I will bring in Christine Mulligan at this point. She has been waiting patiently.
I echo what Laurie Russell said about community planning partnerships. In theory, they are the ideal bodies in this regard. I mentioned earlier that the eco-community initiative brought in quite different processes. One of the fundamental differences was that it sought development partnerships to deliver on a thematic basis. Initially, those development partnerships were fraught with difficulty and various organisations vied with one another to see who was going to lead on an issue because no organisation wanted to put itself in the firing line.
Unless anyone on the panel fundamentally disagrees with what Laurie Russell and Christine Mulligan have said, we will move on.
Do any of you have thoughts on the potential for accessing European Union funding under the new co-operation agreement, which will replace Interreg next year? I am thinking in particular of a cross-border co-operation programme with the Republic of Ireland, which could involve Northern Ireland as well.
There have been initial meetings between Scottish Enterprise and Scottish local authorities in Scotland and their equivalents in Northern Ireland and the area immediately to the south of the Northern Irish border. The last meeting that I heard about took place in Larne last month. I have not seen the minutes of it and I do not know what decisions were made, but I know that preliminary discussions are taking place. South Ayrshire Council and North Ayrshire Council were at the meeting and I think that Inverclyde Council was, too. Unfortunately, I could not make it that day, so I have only second-hand knowledge of the meeting.
Over the past four or five years, organisations, particularly in western Scotland, have been involved in what are called twinning covenants. That is not a particularly good title, but the idea is that we share expertise with the accession countries, some of which have since become new member states. We and other agencies that deliver structural funds have been involved in a number of contracts with equivalent agencies in a number of the accession countries and new member states.
If such a programme of co-operation with Ireland and Northern Ireland came about, would it be reasonable to think in terms of Scottish representation on the Special EU Programmes Body, which is based in Belfast and was set up by acts of Parliament in London and Dublin?
That seems to be a perfectly reasonable suggestion. The idea of co-operation programmes is that various regions and member states should work together because their doing so has a knock-on economic benefit, which needs to be the focus of programmes. We need to be aware of the danger of spending too much time on such matters without getting results for Scotland. At the end of the day, we should be creating the right environment for businesses to work together, as well as enabling public agencies, politicians and so on to co-operate.
The partners in the Highlands and Islands have been involved in a project called the northern periphery programme, which is funded through Interreg and has been extremely successful in introducing new partnerships between Scottish organisations and Swedish, Faroese and Norwegian bodies. That programme is significant. In fact, someone from the Scottish Executive chairs the monitoring committee.
There seems to be a problem in relation to core financing versus challenge funding. From the papers that have been submitted and from what I have heard today, it seems to me that challenge funding has helped to deliver some innovative projects and has allowed the development of smaller projects that might not otherwise have got through. We have had good value from that. The suggestion is that to move away from that will put us in danger of throwing the baby out with the bath water.
That is probably the view of the people who are here today.
Like Dennis Malone's organisation, the SEP has found innovative ways of managing parts of the programme. In western Scotland, we have what we call key funds, which are for small-scale projects for community groups and operate to a maximum of €50,000, or £30,000. Local authorities provide co-financing, so applicants have, in a sense, 100 per cent funded projects. Key funds have been evaluated by independent consultants and are working extremely well. For small-scale community-based projects, the decision making is devolved to sub-regional level throughout Strathclyde and it works well. There are different ways of managing funding.
Of all the submissions that the committee has received on the draft NSRF, there is only one that speaks favourably about co-financing, as it has been explained. There are many that say, "We really need to understand more about the detail of what's being proposed in order to understand whether it would deliver." Others say, "We don't think it can work on the basis of what's been explained." As I said earlier, something close to co-financing has been used in the past for delivery of the European social fund. I can see some attraction in that if a national priority were set such as existed then, which was to reduce unemployment.
The challenge funding has not only been successful for small projects. The objective 3 programme has funded a number of national—particularly Scottish Enterprise—projects, which have been delivered throughout the local enterprise areas. It is difficult for me to see where the key differences would be between Scottish Enterprise bidding into challenge funding and going through the same appraisal process as any other project, and Scottish Enterprise being one of the co-financers. There can be a halfway point—national programmes can still go through, but more comparison could be made with other projects. In particular, duplication and delivery in certain areas could be considered, where there is perhaps overtargeting of certain groups in certain geographical areas.
We talked about the inevitability of change. We are potentially looking at a hybrid model. For me, such a model can work if it is based on partnership.
That is useful. The witnesses have talked about different systems, mixed bags and hybrid models, but those normally mean increased administrative costs to me. A single co-financing model might, on the face of it, save cash and reduce the administrative burden, which is important as there will be less money. I want you guys to convince me that that is not the case, so that I understand the arguments.
I can provide comparisons on value for money and timescales that come out of work that the Scottish Executive initiated on the programme management executives at the beginning of the present set of programmes. The two easiest ways in which to consider the bureaucracy of a system are the timescale within which applications are processed and the cost of that. The timescale to which we work is 16 weeks from an application's coming in, to a decision. The other programme management executives have roughly similar timescales. Scottish Enterprise has a 35-week internal timescale for decisions about projects and the Heritage Lottery Fund advertises a 96-week timescale, which is six times longer than ours.
Mr McLaren talked about the complicated boundaries. I am grateful to whoever gave us the revised structural funds map, which shows the transitional areas and objective 2 areas. The map illustrates Mr McLaren's point in a rather worrying way and also confirms what I have always known, which is that the system is a wicked conspiracy to deprive my constituency of support from anybody.
The current objective 3 programme covers all such areas. There is only one measure in the programme that is specifically targeted on the postcodes that Gordon McLaren referred to.
We have spent a huge amount of time on the administration that is involved in simply advising partner organisations on whether they are eligible. On the map, we can see the Highland boundary fault, east of which there are transition areas and then ineligible areas before we come across to the central belt and the Moray firth.
We know that we will receive a lot less money—there is no avoiding that—but we have opportunities to make what money is left work more efficiently. That is what we hope to do, is it not?
It is for us collectively—the Scottish Executive and the wider partnerships—to determine the priorities and to maximise the impact when we invest the reducing structural funds.
Whenever lines are drawn on maps, some people will inevitably fall on the wrong side of them. However, I defend geographical targeting. Structural funds, especially ERDF, are primarily about increasing gross value added and gross domestic product in areas where they are relatively low. That focus is correct. We should not spend structural funds on further investment in the economy. There are poor areas in the north-east of Scotland, as the map shows, but if we consider overall GDP, it is something like 136 per cent of average GDP in the EU 15. In other areas, the GDP is less than 75 per cent of that average.
I would like to emphasise the point about targeting. We have to accept that, because the funds have been reduced, we must target them more carefully. That can be done spatially or geographically, or it can be done on certain themes. I am going to disagree with Gordon McLaren: I do not think that the structural funds were about offering the same service to every business everywhere in Scotland. Until now, they have been about offering businesses in certain parts of Scotland that have been lagging behind—whether those areas were rural or urban—additional support. If the Scottish Executive wants to change that, that will be fine, but there will be far less money available to spread around and the areas that are doing well economically will inevitably pick up more of the funds.
I am being provoked, here.
Do you wish another minute in which to be provoked? I am not going to let you back in otherwise.
Let us not make a meal of it, but there are parts of Strathclyde that are relatively well off. Equally, there are parts of Edinburgh and the Lothians that are seriously economically depressed. We have lived with that situation until now. Businesses that happen to be located in the Lothians have had to do without, while everybody in Strathclyde has had access to structural funds. Surely we have an opportunity now to target things more fairly around the country.
I will allow a quick comeback because I do not want to end up with a spat between Gordon McLaren and Laurie Russell, with John Home Robertson as the referee.
My comment about the location of businesses is still relevant, but I was talking particularly about thematic targeting. Let us leave geographic targeting to one side. Thematic targeting allows us to target businesses in strategic growth sectors such as biotechnology and the life sciences. We should not say to a business that is based in the centre of Edinburgh that we cannot give it assistance, while we tell another that is based elsewhere in the Lothians that we can assist it. That should be the same for renewable energy businesses within and outwith Aberdeen city. Businesses cluster where they need to be commercially and for access to research facilities. We must bear that in mind. It is not about getting into boundary issues.
I am happy with that.
I want to go back to a point that Bruce Crawford made earlier on administration costs, to which Laurie Russell helpfully responded. It appears to me that one of the drivers for reducing the number of partnerships that we have now in non-Highlands and Islands Scotland to two—one upland and one lowland—schemes is administrative costs. Does Laurie Russell want to venture a comment on that? We heard that the figure of 3.5 per cent for administrative costs is probably better than that for many comparable organisations. Could that be driven down even further to release more money for an organisation's primary purpose, if we were to accept what the Executive seems to be proposing?
If there is a case for reducing administrative costs to allow more funding for projects, we should consider it, but there is a balance to be struck, involving appropriate support for project applicants. The structural funds have been good at ensuring that voluntary and community groups, and other agencies whose staff may not have a great level of sophistication, are given support by our staff to think through how a project application should be developed.
We should not lose sight of the fact that the regulatory framework as required by the Commission will not change. We will still be subject to audit and tests on value for money, and we will still be asked for this, that and the next thing by the Commission. My one concern is that co-financing is presented as a wee bit of a carrot, but some of the organisations that regard co-financing as an opportunity have not yet recognised the financial cost of managing co-financing in their own organisations.
The other thing that must be borne in mind about costs under the existing model or arrangements is the degree of added value that we provide to the wider partnership. We undertook an exercise at the end of last year with the Scottish Executive to consider that in detail. I will give an example. The work that we have done collectively in Scotland on mainstreaming the horizontal themes of sustainable development and equal opportunities is held up as a model throughout Europe. It is important not to lose that legacy in delivering structural funds in the future. The Lisbon agenda is not the only issue—the Gothenburg agreement on sustainable development will feature strongly in any future structural funds programmes.
There will be additional costs in setting up a new structure because the five current programmes in Scotland will not close until June 2009 and the committees that are involved in managing those programmes—at least the monitoring committees—will meet until June 2009. The claims and monitoring process will be serviced and managed, and the current working assumption is that the five PMEs will do that. The costs of any new structure will therefore be in addition to the costs of that process. Costs will not suddenly be done away with.
I want to move on to another issue that has been discussed, but on which I would like greater clarity. We have heard about the importance of targeting. Laurie Russell talked about geographical and thematic targeting. To what extent is the situation an either/or situation? Would taking both approaches dilute the funds' impact too much? If there was geographical targeting—sub-regional partnerships have been mentioned—would you envisage particular areas being identified? Donald MacKinnon might wish to point out that if Scottish Borders and Dumfries and Galloway were a NUTS II area, they would almost have qualified for statistical effect funding. Could such a system be operated with areas that could readily be identified below the overall upland and lowland area?
I am delighted that Mr Wallace made that point about NUTS II because he has saved me from making it. The process of developing and delivering the programme has caused people in the Scottish Borders and Dumfries and Galloway, through considering areas on the basis of their socioeconomic characteristics, to realise the similarity of the issues that they face. Those local authority areas may be overdependent on certain industries; both areas urgently need to diversify their economies. Whether the distinct geographically spatially defined area of Dumfries and Galloway and the Scottish Borders should be focused on as a priority sub-regionally depends on how the Scottish Executive intends to target spatially. The Commission's guidelines clearly expect programmes to take cognisance of spatial cohesion issues, but the Scottish Executive's intentions have not been made clear.
In the light of the experience of the current objective 3 programme, I think that the new programmes will probably need to combine thematic and geographical targeting. The current ESF main priority is inactive individuals; the second main priority is upskilling people who are in work and growing them into better jobs. I do not think that that can be done on a geographical basis, although I accept the ERDF priority and that there is perhaps merit in some geographical targeting.
Are you content with that answer?
Yes.
In the Highlands and Islands, more or less all of our ERDF money has been fully committed. We are already talking to people about new projects, but all that we can say to them is that we do not know what the arrangements will be or even what the priorities for the new programme will be. There is a sense of being in limbo. People do not know when the new programme will start. Some have suggested that it will start on 1 January; others have suggested that it will be spring 2007 before it gets going. All I can say to people is that they should keep watching the press.
There is definitely a sense of being in limbo. We know from our experience of the same stage of previous programmes that there is usually a gap between one programme closing and a new one starting and that, as one might expect, some organisations are particularly vulnerable at that stage. The change between the current programme and the new programme will probably be the most significant change in the structural funds that there has ever been. Some activity will not be funded in the future and, as one might expect, the financial planning of some organisations is better than that of others. Some organisations are knocking on the doors of the Executive, local authorities and other bodies in a bid to find replacement funding.
The majority of objective 3 projects will complete at the end of this year, although some will run into 2007. We have committed all the funds, so no more funding is available for existing projects. More than 30 per cent of the funding for the present programme has gone to the voluntary sector and there is a big concern—which we hear every time we are with our partners—that capacity will be lost between the end of the present programme and the beginning of the next one.
Perhaps Donald MacKinnon has something to add.
Laurie Russell made the points that I wanted to make far more eloquently than I could have done.
Oh, well. That is praise indeed.
My question follows on from those of Bruce Crawford and Jim Wallace. I think that Mr Russell said that admin costs for the funds were running at 3.5 per cent. Does that figure relate to the administration of your organisation or does it take into account the administration costs of all the partners that are associated with the various projects? Can you give an overall percentage spend on administration?
I was referring only to the costs of our organisation in relation to the total value of the structural fund programmes. I could not give you a figure that adds in the administrative costs of all the organisations that make applications, submit expenditure claims and gather the monitoring information that we include in annual reports for the European Commission. In broad terms, I suspect that the figure would probably be double in that case, although I do not know. I cannot give you an accurate figure, and I do not think that anybody has calculated it.
I also had in mind such organisations as Scottish Enterprise and local authorities, which are on the periphery of the process. I wonder if there is too much of a proliferation of involvement in the distribution of funds.
Structural funds are not the only economic development funding that is available. Normally, a local authority or college will have one individual or a small team whose job it is to seek external funding. Part of that will be European funding, but it might also be a matter of seeking funding from the national lottery or other external sources. That is the nature of many organisations now. They will have small teams of people who do that job. Most organisations accept that that forms part of what they do. Sometimes, that will include developing public-private joint ventures; in other cases, it will simply involve seeking external funding from various sources.
As far as the administrative budget of my organisation is concerned, we take about 2 per cent of the total assistance that is available under the programme. The budget is set by the board. Like every organisation, we are required to seek best value and reduce costs at every opportunity. We have significantly driven down the administrative costs of the programme over the past five years.
Referring to that figure of 2 per cent, you mentioned that your current annual administration costs are £620,000. Will that cost reduce substantially as the funds reduce in the future?
I suspect that it will reduce. We are perhaps looking at a reduction in overall staff costs. Staff costs make up the vast majority of our expenditure, and we can consider reduced costs there.
I will ask Mr Russell about a totally different issue. In your written submission, you stress the view that structural funds should not be
I am not sure that I did express that view.
I might have got the wrong body. In front of me is an appeal to the convener headed "Response by West of Scotland European Consortium".
That was to the Department of Trade and Industry rather than to us.
It relates to the balance between ESF and ERDF.
That consortium is separate from Mr Russell's organisation.
That is the local authority consortium in western Scotland.
In that case, I will rephrase my question. Does your view differ?
So Phil Gallie's question is now, "Do you agree with the West of Scotland European Consortium?"
l tend to think that a 50:50 split between ERDF and ESF is about right. The structural funds aim to achieve a balance between support for infrastructure, support for businesses and support for people. Those are the three fundamental parts of economic development. The costs of the current objective 2 programme are roughly split into thirds in that respect. Objective 3 exclusively relates to training and support for people, although that covers people who work in businesses as well as people outside the labour market. In broad terms, there is a 50:50 split at the moment, which I think is about right.
I am interested to know that. I want to ask your colleagues about that. Does everybody support Mr Russell's view, or are there different views on the issue, bearing in mind the fact that, if economic development is enhanced, there will inevitably be a spill-over to support social aspects?
My preference would be for a leaning towards a greater amount of ERDF than ESF in addressing our priorities. I am not arguing against ESF being targeted at upskilling the present workforce and helping it to increase its average qualification level. The question is how we do that, where the delivery should be and whether that or investment in premises in which people with higher-level skills can make their living is the more urgent need. From a south of Scotland perspective, the more urgent need is to invest in infrastructure. I am not saying that investment in people is not absolutely necessary, but it is a secondary priority.
I disagree, of course. I think that the 50:50 split is reasonable. At the stakeholder events that were held earlier this year, there was discussion about whether people were being trained to move into high-level skilled jobs. I do not think that ESF is going to do that; it is going to target the inactive. The figures at the moment show that we need to target those people or else they will not move into the lower-level jobs that other people vacate.
My question is for Mr Malone. Mr Russell impressed me with the figure of 3.5 per cent expenditure on admin costs. He said that that was a pretty impressive percentage compared with some that he could mention. You then gave the figure of 2 per cent. I am sometimes too fast a listener, but it seemed counterintuitive that Laurie Russell could get admin costs down to 3.5 per cent of programme value in an essentially urban city region and that you, with the most rural and scattered partnership of the lot, could duck under that. You then said that the cost was 2 per cent of the technical assistance budget. Are we comparing like with like? I am trying to compare what you said with what Laurie Russell said. Can you help me to do that?
We have a much smaller programme, so we can draw down much less in the way of technical assistance. The amount of technical assistance that programmes can draw down is specified in the financial table. About 3 per cent of the value of the programme is available for technical assistance.
It could be argued, however, that bigger programmes should be able to make economies of scale.
Perhaps that is the case. We have staff in Stornoway and Lerwick, which reduces our transport costs because other staff do not have to go back and forth to the Western Isles or Shetland. We have also made significant changes in our staffing structure, taking on board family-friendly policies and reducing the number of working hours to reduce the overall complement to about 10.5 full-time equivalents. We have driven down the overall running costs of the programme management executive over the past few years.
I shall study the Official Report at length to try to make sense of it all.
I want to pick up on a point that Dennis Malone raised about complementarity. You mentioned that you will have to run several programmes and ensure complementarity between structural funds and national programmes such as the European agricultural guidance and guarantee fund, fisheries programmes, and so on. That will probably affect the south of Scotland more. To what extent do you feel that complementarity is present at the moment?
Trust Irene Oldfather to end on such a non-contentious point.
That was an interesting series of points; I do not know where to start. All I know is that, in the past two programmes, we have tried to get closer to how the agricultural and fisheries moneys have been used in the Highlands and Islands, particularly in the more remote and fragile areas. We face the disintegration of the participation and involvement of our colleagues, principally from the Scottish Executive Environment and Rural Affairs Department. We ensured that local committees determined how money was spent under some of the schemes that SEERAD operates, but we are afraid that as we move into the new programming period, more of those decisions—particularly about farm diversification—will be taken back to the centre rather than made in the Highlands and Islands.
I return to the CAP. The report to which Laurie Russell referred categorised CAP funding as a subsidy to produce food. Whether it is considered a subsidy to the agricultural sector or to the consumer, who probably pays 2p less a loaf or 3p less a litre of milk than they would if the CAP payment were not made, is a matter of philosophy. However, it was wrong to call that economic development. Calling it an agricultural subsidy is fine, but it could also be called a food production subsidy. The description was misleading.
All eyes are on Laurie Russell.
I am sure that Laurie Russell stands by his comment.
The fundamental point is that we should consider structural funds to be additional to public money that is provided through the Scottish Executive, Scottish Enterprise and other funding agencies. The structural funds add value to areas that are lagging behind. From the evidence that I saw in the Finance Committee report, I think that the main public bodies in Scotland were spending more per head on economic development in rural areas, so there is an argument for focusing structural funds on parts of urban Scotland.
Would Christine Mulligan or Gordon McLaren like to comment?
The objective 3 programme has covered urban and rural areas. We have put less into rural areas than urban areas, but that is a reflection not of the programme but of where bids came from. There is, perhaps, time to address that in the new programme.
As I said in my introduction, we have worked hard because we have a substantial rural hinterland in the north-east in particular. We have been conscious that people there need to play an equal part in the process. We have worked closely and hard with organisations there and we have run events that were geared to the needs and opportunities in the north-east, particularly in sectors such as food and drink and forest products.
Thank you very much for that. We have run over slightly. I offer Dennis Malone's apologies to everyone—he has had to leave to catch a plane. I have a tiny little, straightforward question to ask. If the Scottish Executive implements the planning and disbursement of funds as everyone believes it will and we have one scheme for lowland and upland Scotland, that will obviously affect the organisations that have been operating within those areas—your four organisations, for example. Will you become competitors in seeking funds? Will that damage projects overall? How will the reduction in funding straight away and the different way in which funds will be administered affect each of your organisations?
The current proposal is that whatever is available through the competitive challenge funding part of the structural funds will go out to tender. A prior information notice has just come from the Scottish Executive about that. We are not permitted to discuss it in detail because we are at a contract stage.
Would anyone like to add to that? I am aware of the strictures that you are all under.
The steps that the SSEP is taking are probably the same as those that are being taken in all the organisations when a member of staff leaves—which happens, as they face uncertainty and they have mortgages to pay. At the committee's previous meeting, reference was made to a member of my staff leaving. Now we are down to six members of staff and we have to plan a process based either on a continuation strategy or on an exit strategy. At the moment, my aim is to secure a reasonably long-term contract for enough members of staff to manage the rest of the programme—the claims process, the reporting, the monitoring and the evaluation—which lasts until June 2009. In the face of such uncertainty, that presents challenges.
I agree. The Objective 3 Partnership currently has 24 members of staff but, as Donald MacKinnon said, it is a difficult time for all of us. We still have about 500 claims a month to process, so we are undertaking a fairly high volume of work. Our board is taking the situation seriously and considering any options that it can to retain staff for as long as it can. However, the next few months will be crucial, as we will hear the outcome of the procurement process. I expect a dramatic change in staff views depending on the outcome.
The East of Scotland European Partnership is down to eight staff, which is becoming more and more of a struggle. Because of the future uncertainties, it is difficult to recruit in the current climate.
I thank you all very much for taking the time out to answer our questions and give us a feel for what it is like to be working in the field at the moment.
Meeting suspended.
On resuming—
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