We are in the third part of our inquiry into European funds and additionality in Scotland. Yet again, I welcome Jack McConnell, the Minister for Finance, to the committee. Such is the regularity of his attendance that I am beginning to think of him as a member of the committee.
Thank you for the introduction. My attendance seems to be at least a monthly occurrence, but it is always a pleasure to be here. I am pleased to take part in this important inquiry and will be happy to answer questions.
Thank you very much. I want first to focus on the allocation of structural funds to Scotland.
Thank you, minister, for your opening statement, which was very useful. No one would dispute the fact that Scotland spends European money well. However, that is not the issue in this inquiry. You will be aware that over the next six years Scotland will receive about £900 million in European structural funds. That is to be welcomed, but—because of the amount of European structural funds coming into Scotland over that period—the impact on the assigned budget will be crucial.
It is clear that the structural funds add to the net expenditure levels in Scotland. Structural funds are an identified line in the assigned budget. They are, and have been for some time, additional to the main expenditure programmes of the Scottish Executive, formerly the Scottish Office. The reality for Scotland over the next seven years is that that expenditure will be less than is currently provided for. Although the budget that we have now, as an Executive and as a Parliament, includes approximately £170 million a year for European structural funds, we will spend less than that per annum over the next seven years. The circumstances that you outlined—in which the structural funds will go up over that time and will affect the rest of the budget—are inaccurate. The structural funds will go down slightly over that time, which will release resources for other areas. As I have said consistently for many months, this element of the assigned budget is a very good deal for Scotland and one that we would be unwise to unravel.
It was not me who said that it would go up or down, minister, but your private secretary, in the correspondence that I received. The letter said that the assigned budget goes up or down to reflect the amount of structural funds coming in. Will you comment on that paragraph, which was provided to us by way of evidence from your office?
I do not think that is what it says. You said that the assigned budget goes up or down if the structural funds go up or down. First, that is not what was said in the memorandum from September; it is not what you read out earlier. The point about the structural funds is that over the next seven years they go down, so that releases resources elsewhere in the assigned budget. Those resources will not, under the current funding agreement, be withheld by, returned to, or recovered by the Treasury, the Secretary of State for Scotland or the UK Parliament or Government. That is good news for Scotland. The current arrangements are that we will keep that additional resource.
In that case, if no funds were coming from the European structural funds in to the UK and the Scottish assigned budget next year, what would the effect be on net overall expenditure in Scotland?
If no structural funds were coming into the Scottish budget next year, and if I were a member of the Westminster Parliament rather than a member of the Scottish Parliament, I suspect that I might have some questions to ask about the assigned budget. As matters stand, the assigned budget level is set and any reduction in the structural funds element of that budget benefits other Scottish expenditure programmes. That is why, as I have said again today and have been saying for many months, that is very good news for Scotland.
Are you confirming that the structural funds do not affect the level of net overall expenditure in Scotland?
No. The structural funds are additional to the other expenditure programme levels in Scotland. The arrangement that we have with the UK Treasury, post devolution, is that if the amount of money that we spend on structural funds is less than we currently budget for—which it is likely to be per annum over the next seven years—we get to keep the money that is not spent on the structural funds. That is a good deal and one that we would be unwise to unravel.
Before I bring in Ben Wallace, Irene Oldfather had a question on ring fencing in the budget.
We took evidence from Welsh academics who believe that there would be some merit in ring fencing. Would it be advantageous or disadvantageous to ring-fence structural funds in some way?
It is clear that any effort to ring-fence or completely separate structural funds from the assigned budgets in Scotland would be disadvantageous for Scotland and would reduce the amount of money that is available to the Parliament and the Executive. That would be a dangerous and silly move for anybody to propose.
Has any analysis been undertaken by your department on that matter?
No, because it has not been an issue. I am aware of the debate that is taking place in the committee and in the Parliament, but in terms of the management of the funds, nobody in the Executive, the programme management executives or the UK is proposing that there would be a reduction in the money available in Scotland and that we would want to ring-fence in any way. Ring fencing would be unwise, and I am glad that it has not been raised as an issue. There has not been any serious analysis of the matter, because it is not on the table for discussion. The money is transferred via the UK Treasury to Scotland for spending on the structural funds. That money is allowed for in our budget clearly and identifiably and has been for many years, despite the initial difficulties with additionality.
Is that affected by the fact that structural funds are in decline in Scotland, as opposed to the situation in Wales where they are increasing? It is not a parallel circumstance.
There are different circumstances in Wales. I would resent any Welsh minister trying to interfere in our negotiations with the Treasury or the European Commission, and I would not want to get involved in the Welsh ministers' discussions and negotiations with the Commission and the UK Government. It will be for the Welsh Assembly, the UK Government and the Commission to satisfy themselves that the regulations are being applied in Wales and that the Welsh programme management documents meet the requirements of the regulations and, at the same time, deliver the added value that structural funds are there to deliver.
I want to return to Bruce Crawford's final point. The minister's answer dealt with the surplus of EU funding and what would happen to it should circumstances change. At the moment, we are fortunate that HM Treasury allows us to keep the surplus, but I am aware that under changes to European structural funds, any surplus will be returned to the Commission. I believe that the carry-over procedures that we used to have allowed money that was not spent to be taken forward for other European projects, but that that money will now be returned to the EU. Are you saying that if we were to get no EU structural funds for the next financial period, the Scottish Barnett formula settlement would remain unchanged? If it would not remain unchanged, how would those structural funds be taken into account in the use of the Barnett formula to produce our settlement?
You have mixed up a number of issues in your question. I will try to unravel them. I do not really see a relationship between Barnett and additionality or that aspect of the structural funds.
What would be the answer to my first question then?
In your first point about the surplus, you perhaps misunderstood what I was saying. I was not talking about us making a profit on the structural funds—that we would get money from Europe and not pass it on because there were not enough projects to spend it on or whatever. My point was that over the next seven years the amount of money that we will be able to spend in Scotland will be less than we have in our budget because of our share of the EU structural funds cake for the next seven years.
You are talking about the surplus in relation to departmental expenditure limits.
The other issue was what will happen if the amount of money that we can allocate from structural funds goes down next year, the year after that or whenever. If we are not able to spend the £170 million or so that is currently in the Scottish budget to cover that amount, the money will be freed up for other programmes. It is not taken back by the Treasury.
I want to get a simple answer, minister. If we got no structural funds in 2005, the year after the three years that have been budgeted, would that year's Barnett formula settlement—the Scottish block settlement—remain the same? Would the Scottish block settlement remain the same whether or not we had EU structural funds?
If it were to remain the same, the money would still be available in Scotland. I do not think that you can predict what might happen entirely accurately. If, for example, there was a UK general election, the Government might change and take a different approach. Under this UK Government, the agreement that we have in the statement of funding policy is that the assigned budget is as it is set, and increases and decreases to the budget are calculated using the Barnett formula.
Margo MacDonald has a question on the European implications of Barnett.
I am trying to understand where Barnett comes into this.
Before the discussion goes any further, I should say that there is a dimension to the discussion on Barnett that is important for the work of the European Committee. However, the Finance Committee is also conducting an investigation into Barnett and how the UK budget is constructed. We need to be careful to ensure that we constrain ourselves to the European dimension and do not stray into the Finance Committee's deliberations. Margo MacDonald wants to tease that out.
I just want to understand it—I wish I were at the stage of teasing it out. Minister, you have said that, in effect, there is no relationship between the Barnett formula and the structural funds. Is that right?
There is no relationship between the Barnett formula and the structural funds allocation that was in the assigned budget at the time of devolution because the Barnett formula relates to increases and decreases.
I appreciate that I may be asking you to cut your own throat, but is it fair that Scotland should have funds that are allocated to you to spend as you like—even though you might spend them on things that we would like as well—when other areas in the UK do not have such funds? Is it only a historical accident that we have ended up with this level of allowance to spend? Is it an oversight? Is it generosity? What is it?
I suspect that it would be possible to find other areas in the UK budget as a whole, and in other areas of the Scottish, Welsh and Northern Irish budgets, in which different outcomes could be produced. Perhaps the Welsh or Northern Irish Assemblies have money in their budgets from the time of devolution that is on a historic declining trend, but that is their money and they can keep it. I do not suggest that we should go and poach that money from them.
No, I would not expect you to—it would be so messy.
In principle, the situation in Belgium is the same as the situation in the UK: the money is allocated to the member state and the agreements and the implementation of the regulations lie with the member state. That is the same for Belgium as it is for the UK. That is the devolved settlement that we have. The point that I am trying to make—and I have been trying to make it for a number of months now—is that the current position is of direct financial benefit to Scotland. It would therefore be very unwise of us to challenge it or to offer to give money away.
I, too, would like to ask about the Barnett formula, although I will not stray into the territory of the Finance Committee. This inquiry was set up partly because of an assertion by some people that Scotland is losing out on its fair share of European Union expenditure, or had lost out in the past, because of the operation of the Barnett formula. Welsh academics who have given evidence here have asserted that Wales seems to have done badly compared with Scotland. What is your view, minister? Has Scotland lost out in the past because of the operation of the Barnett formula?
At the time of the debates about this—especially over RECHAR—in the late 1980s and early 1990s, I was involved as a council treasurer and leader. Interpretation of the regulations was clearly an issue at that time. However, those of us who were involved in Scottish local government accepted the agreement that was reached between Bruce Millan and the UK Government. That agreement has worked well in practice. In my work during the past 12 months, I have found no evidence that that agreement was not being implemented and that the money was not providing additional support in Scotland.
How will you defend that position if it is not the Welsh who ask for more money, but the new devolved body in London? The clear implication of everything that you have said is that we are dead lucky and are somehow managing to get something under the counter.
I did not say that we are getting anything under the counter. Our funding is very public—it is in a published line in a budget. It is based on the agreed financial settlement at the time of devolution. Under that settlement, the Scottish budget at the time of devolution is provided for as an assigned budget for the Scottish Executive. That budget is then added to—there may be decreases in exceptional circumstances—each year according to the Barnett formula so that Scotland receives a share of the increases in UK public expenditure. That is an agreed formula and it has stood the test of time during Administrations of various political colours in the UK. In my view, that is a good agreement for Scotland.
However, it is not one that will be addressed by this committee. We are concerned only with the European dimension.
I want to follow up on Margo Macdonald's point about the Flemish Parliament. I have a note from the clerk to the finance committee of the Flemish Parliament describing how money finds its way into the regional treasury. It is linked in many ways to the question that Ben Wallace asked as a supplementary to my question, about whether the assigned budget would stay the same if Scotland did not receive EU structural funds.
The note says:
That is what happens here as well. The money is passed from the European Commission to the UK Treasury and then to the Scottish Executive, and we give it to the project sponsors. I do not see the difference between what you have just described and what happens in the UK.
I will ensure that we obtain relevant information on the situation in Belgium from our adviser. We will consider that matter in that way rather than turn this meeting into an argument about how Belgium deals with structural funds.
As the Treasury has in effect set the departmental expenditure limits, we will be guaranteed that money regardless of any fluctuations in the structural funds over the next seven years. I agree that that is a good thing.
That is a simplistic description—[Laughter.] I could expand the sentence, treble the number of words and explain it more clearly, but the overall total in the Scottish block is determined each year by the increase on the previous year's expenditure that is allocated by the Barnett formula. The structural funds are a line within the block. That is what is being said in that passage.
We will move on. Allan Wilson has some questions on the surplus.
My questions are more specifically on project expenditure and the effectiveness of delivering planned programme expenditure to projects. You produced a table showing a number of figures on the single structural funds expenditure line, from 1993-94 to last year. The figures show an increase in outturn expenditure in that period—I assume that the figures are expressed in cash rather than real terms—from £107 million in 1993-94 to £200 million last year. That is an increase of almost 100 per cent, but planned expenditure increased by only 25 per cent over the same period. There were substantial surpluses and then a very substantial deficit in the most recent financial year.
There are several reasons for that. One of the main reasons is that the method of payment of grants changed. We now pay grants up front, which has reduced delays. As a result of the end of the programming round at the end of last year, there was a rush of applications and closures, which led to a requirement to pay out more grants.
That is very important, because a £47 million deficit is almost 25 per cent of an expenditure of £200 million. If that had not been drawn off the UK reserve it would almost certainly have counterbalanced any prospective benefit over the period of the next planned programme of expenditure.
It is a good example of the funding policy working in practice. It would have been difficult, even within a £17 billion budget, to gain approval to allocate that money from another area of the Scottish budget. It would have been unhelpful for us to work in that way and it was better to make the application in exceptional circumstances. We got the allocation we wanted and that was then passed on to the successful projects.
It has obviously been of great benefit to the Scottish block and to the individual projects.
But we pay it back—it is a loan from the UK reserves?
It is drawn down from future years. It means that there will be less to pay in some of the years to come as a result of some of the grants being paid more quickly than we expected.
It is not a handout—it is a wee loan to finance the projects, which is paid back.
It is not a handout but it was a very useful hand down in the circumstances.
I am just teasing it out.
I have found it very hard to track European funding. If you ask the simple question, how much has Glasgow received from European structural funds in three years, it is very difficult to find an answer. Even the Strathclyde European Partnership does not quite know because of the way the different budgets are set up. I am aware that the European Court of Auditors has sometimes been severely critical of the European Commission's process of assessment. Do you have any plans to make the process more transparent and the funds given out more trackable?
The way funds are distributed in Scotland is more transparent than almost anywhere else in the European Union, although I am not completely happy that it is as transparent as it could be. One of the issues addressed in the recent review of the work of the programme management executives—which we discussed the previous time I was at this committee—was a way to make the process even more transparent so it is possible to follow the money from Europe through to the individual local project and to account for it fully. In the programme management executives, we should have consistent methods to monitor and report on that. This committee will have a key role as an annual monitor of how the programmes are going.
Let us move on to additionality.
How does the UK Government demonstrate additionality to the European Commission?
I am not involved directly in the discussions between the UK Treasury and the European Commission. The Commission demands additionality of all programmes through the member states. The current programming round involves identifying the resources that would have been spent on those different areas in advance so that the Commission can consider what is spent over the years and ensure that the money that it provides is not used as a substitute for the national expenditure.
You say that the Government must ensure the additionality of all programmes. Is not additionality measured according to the funding that is granted under a particular objective rather than on a programme-by-programme basis?
Yes, it is. At you heard in the evidence that you received from Mr Bachtler at your previous meeting, the Commission now has an interest in monitoring the added value—the wider definition of additionality—at a local level as well. The core additionality regulations and provisions are monitored at the member state level, but the European Commission is also interested in checking that that additionality is flowing down through the system into the regions, nations and programme areas. It might not be possible to do that as clearly and simply as it can be done at the member state level, but it is being done. That is why the content of the programme documents that we had to submit at the start had to be much more specific and include commitments on expenditure and predictions of the percentages that would be allocated from the European structural funds to local projects. The negotiations are taking so long partly because those figures are important to the Commission; they are what the Commission will use to check that additionality has been filtered down right through the system.
Could you please forward to us the documents that you have to provide for the assessment of additionality?
Yes. Those documents may be in the ownership and control of the UK Government, but we will provide what documents we can.
I have a wee question. You started your reply to Dennis Canavan by explaining that you had not been personally involved in this. As the Minister for Finance for the Scottish Parliament, how do you see yourself in future being involved in this process of setting the level of structural funds and of deciding how additionality is to be demonstrated? How will you take a proactive part in that process and not merely supply the statistics that you have said you have to supply?
The negotiations between the member states and the European Commission will continue to be between the Treasury and the Commission, but there are a number of important roles for us.
To press you on that, I want you to be more proactive. If you are so confident that we are doing this so well, I want you to take the lead and go to the areas in Europe where the Commission is not too pleased with how funds are dispersed and say, "This is how you do it, boys."
I would not want to tell the Commission how to do its job. That might be a dangerous game. I would not want to go marauding around Europe telling people how to spend their money, much as that might be enjoyable even at this time of year. I think that our work is recognised in Europe.
I did not know that the commissioner and I thought the same way, but it is nice to know.
I am sorry to muddy the patch, minister.
We were getting on so well.
I did not mean to sneak on you in the European Commission, but if you cast your mind back to the comprehensive Highlands and Islands transitional funds plan, there were a number of elements in it that alluded to additionality being used to substitute for some of the Government's social duties, such as the fact that an amount of money was going towards pump stations and the water supply. I asked you if you thought that that was substituting. I mentioned it to the Commission as an example and, funnily enough, it said that it would not be happy with the concept. Now that we are more involved in the rules on additionality and that you have been in the Minister for Finance's seat for longer, could you reflect on whether there is a danger that the Commission may be displeased with some of the plans?
In the Scottish Executive and the Parliament, our job is to press the case for the maximum benefits for Scotland in whatever task we undertake. In relation to the structural funds, our task was to produce programme management documents that would be, in our interpretation, within the regulations, but would get the maximum benefit for the communities affected in Scotland.
I wish that we were in Brussels. Of course, we in this committee would have to face the rigour of the Scottish Parliamentary Corporate Body in such travel if we were invited.
It might be helpful for us to give you a note on that. Mr Canavan asked the same question. It might be helpful if we outlined what we submit and when rather than spending time at the committee going through fairly technical stuff. We will detail what we complete, what information we have to provide and so on.
Will you clarify within that who your other players are?
I will be happy to do that. I assume that you want to know about the reporting mechanisms.
Yes. I want to know about the Scottish Executive's role and your role as the Minister for Finance.
I appreciate that a robust line has been taken in negotiations on the Highlands and Islands funding. How is the UK baseline for demonstrating additionality calculated? How was it calculated for the 1994 to 1999 programme and what departmental and programme expenditure is included in that? That is not clear. Did the baseline figure change in real terms over the programme period?
I do not know whether my colleagues can help me, but I certainly do not feel qualified to give you a detailed answer on the UK baseline figures. I imagine that we could probably provide that information to the committee. We would need to get it from the UK department.
I presume that we will also get baseline figures for 2000 to 2006.
I have not seen the UK documents and I am not sure exactly what information has been published, but we will get you as much information as we can.
We are not able to tease out some of the questions fully, because of the responsibilities of UK departments. That probably signals to us that we need to go back to the Department of Trade and Industry or to the Chancellor of the Exchequer or the Secretary of State for Scotland either with further questions or to make another request that they appear before the committee.
Do you mean in addition to each year's budget, as opposed to the actual budget?
Yes. If we get no structural funds, will we still get 10.39 per cent of changes in expenditure that are applicable to England and Wales?
Yes.
In that case, minister, you are telling us that, whatever happens, we will get that 10.39 per cent of what happens in England and Wales.
The point that I made earlier was that we benefit from the present budget situation for structural funds in Scotland. The budget provision in the assigned budget, which was agreed at the time of devolution, is more than we will need, or be able, to spend over the next seven years. In addition, should the Scottish assigned budget be increased as a result of decisions made on structural funds elsewhere over the next seven years, our share of that money will also be in the Scottish budget—it will be freed up at the same time.
So it comes back to the question that I asked earlier. No matter what happens, that 10.39 per cent will come to us.
I just described that situation. I am sorry if I need to go back through this again. The structural funds are a specific line in the Scottish assigned budget.
I understand that.
I am sorry, but you asked me a question and I have to provide the answer. The structural funds are a specific line in the Scottish assigned budget. That line is clearly identified as additional to the other expenditure programmes in the Scottish budget and it is likely to decline over the next seven years.
That is not the question that I am asking, convener.
Therefore, structural funds will free up resources within the overall assigned budget for other programmes, or for a reserve, if we want to create one.
I am talking about net overall expenditure.
We have been over this before. I will move on to additionality and its application at regional and programme levels.
Would the principle of additionality apply at regional and programme levels in the UK? Could the UK demonstrate that principle in Scotland, if the Commission asked it to, although it has indicated that it would not ask for that?
I do not want to speak on behalf of the UK Government, as I am not here to represent it. However, I wish to be clear in repeating what I have already said: the European Commission has made it very clear for some years that the UK Government meets the additionality regulations. Twice in the past few months, this committee has heard from European Commission officials reiterating the position that it views the current additionality arrangements in the UK as within the regulations.
I am not sure if you are aware, minister, that Dafydd Wigley and your good friend Andrew Wilson MSP met Commissioner Barnier earlier this year. After that meeting, the commissioner said:
I can understand that the Wigley-Wilson statement is designed to achieve that national assessment of additionality. I think that they are wrong. It is not really for me, as a minister, to comment today on members of the Scottish Parliament and on their intentions on such matters, but they are clearly wishing to make a political point. That is fair enough, and I am happy to debate that at any time. I have been happy to do so over recent months. However, I think that they are wrong: I think it absolutely appropriate for such matters to be determined at the level of the member state, which conducts the negotiations and which provides the finance to Europe—which then provides the structural funds back. That relationship therefore has to be clear.
I wish to return to the idea of the Treasury making up the shortfalls. Far be it from me to flag this up, but is it not a little unfair to the English?
That is what I was saying.
I think that everybody in the United Kingdom should have a fair share. We are getting a disproportionately fairer share, and if I was in England, I would perhaps be asking why the Treasury should make up the difference if the structural funds fluctuate.
The key thing is that this applies across the board. The factual answer that I am able to give the committee is that the impact of the regulations, of the agreements on funding policy and of everything else will be that resources—not a huge amount, but some—are freed up over the next seven years in Scotland.
I am concerned that the argument is becoming some sort of virility test. That observation is not confined to any one party.
The Department of the Environment, Transport and the Regions is taking a slightly different approach from that taken by its predecessors, particularly in relation to the arrangements in Scotland. In the new programming round, the DETR will try to move closer to the Scottish system. That is a recognition of the fact that the Scottish system is more flexible and successful in the take-up of the allocation of resources. Indeed, the Scottish system has been seen to work in terms of added value and additionality. That is reflected in the interest in some elements of our system not only in Europe, but in England.
Therefore, the Commission must not have a problem with a slightly different interpretation of rules in different parts of the UK.
It is not a case of interpreting the rules in different ways; it is about the internal funding of different parts of the public sector in England and Scotland. We had a different approach in Scotland, partly because of the scale on which we operate and partly because of the different partnerships and system of local government that has evolved over the years. Much of the process began at a time when we still operated in regions, under a two-tier system that did not exist down south. Fortunately, post-reorganisation, our partnership bodies held the local authorities together in such structures and the system has not been damaged by the change.
I want to extend this beyond the UK. Minister, you are clearly an important player on European issues in the Executive. You must be aware of other parts of the EU that use population-based formulae for internal state financial transfers. Generally, the Barnett formula relates to population base. Which of the devolved areas in the European Union has the closest system to Scotland's when it comes to the internal state transfer of EU structural funds?
Are you asking which states use a formula closest to the Barnett formula or which states use a similar process for the transfer of structural funds? Could you make your question a little clearer?
We have a process for the internal state transfer of EU structural funds, which come through the Barnett formula. Which other European states have a similar approach?
With respect, you seem to be mixing up the questions again.
I do not agree.
The Barnett formula is used to determine the overall allocation of expenditure for Scotland, following on from increases in public expenditure in the UK as a whole, including England and Wales. As I said, the allocation of structural funds to Scotland follows a very direct route. Once projects have been agreed for funding and have committed the money, the money comes directly from the European Commission through the UK Treasury to Scotland and every penny reaches its destination. The two issues are slightly different. The transfer of funds comes direct from the European Commission to the Treasury to Scotland. The Barnett formula concerns the overall allocation of public expenditure in Scotland.
If that is the understanding, will you provide an example of where else that happens in the EU?
Convener, although I have tried very hard to answer questions on financial matters, I was asked in advance by the convener of the Finance Committee to remember the remits of the two committees. I have tried to be helpful on this issue.
If we need any other information, we can undertake some research on the matter.
I have a question about the potential interchangeability of public and private match funding in the new programmes. I understand that the new programmes will operate differently, particularly regarding the relationship with potential funding from the lottery, which is primarily decided on a project-by-project basis. Can you comment on that, minister?
I wish I could. I am not sure how lottery allocations will alter local match funding arrangements. I look for advice to Mr Middleton, who looks as sure about the matter as I feel.
Could you provide a detailed written response to the question?
Yes.
Given that you have established a single structural fund line within the budget that comprises the main beneficiary programmes, how do you determine that the moneys expended in match funding are proportionately what they should be? For instance, how can you ensure that the Highlands and Islands does not benefit disproportionately at the expense of the west of Scotland, Glasgow, North Ayrshire or North Lanarkshire, where social disparities might be greater?
There are two completely separate allocations to take into account. First, there is the allocation of structural funds based on the programme documents and the percentages of funding that go to objective 1, objective 2, objective 3 and so on. Secondly, in a separate but related exercise, there is the allocation of money to such bodies as colleges, the voluntary sector, local authorities, the local enterprise companies, Highlands and Islands Enterprise and Scottish Enterprise. We insist that match funding should come from within those bodies' mainstream resources. They have to demonstrate a commitment to the project. We are not talking about throwing European money at projects that people might fancy doing if spare money were available; these are projects that people want to do but cannot because not all the funding is available. The added value is then provided by the European structural funds; local authorities, for example, automatically get additional capital consent for that European element. Although those bodies have to provide their element of the match funding from within their own funding, European funding does not count against their resources, because it is additional to elements such as section 94 capital consents.
One tiny wee thing has occurred to me.
Out of the corner of my eye, I could see that something had occurred to you.
You seemed quite happy with the role of the state in the EU and how that body negotiated everything from the start. We seem to be very good at administering what is decided at the Council of Ministers. If we are heading towards a Europe of the regions—which everyone thinks is a great idea—where would you, as a Minister for Finance who does not take part in fundamental policy making and principal decisions about structural funds, fit into such a structure?
I do not interpret what we do as simply administration; we have an influence over UK and European policy on these matters. As Christine May said at a previous meeting of this committee, even COSLA has an interest—through the Committee of the Regions—in what is planned for the structural funds over the next few years. This is not just a straightforward issue of public bodies in Scotland and the Executive administering what is agreed for us elsewhere.
How do you influence the Commission in advance?
It can be done partly by influencing the UK Government and partly by influencing the Commission in the discussions that it has with the UK Government all the time.
I have a final question.
No. You have had your final wee question, Margo.
We are talking about a detailed matrix of connections, but those relationships are important. As the committee found when it was in Brussels, regular formal and informal contact will be as important for Scotland as our contacts with Brussels through London. We are making full use of our contacts, which is partly why Scotland House exists and is working well for us.
I was only going to ask whether we could use the Highlands and Islands plan as an example, convener. If we can see how the Highlands and Islands proposals are pursued, and track them through discussions, we will be able to see how the system works.
Margo, you have a tremendous ability to get the last word in.
Thank you very much.
Next
Convener's Report