Structural Funds Programmes 2007 to 2013
The next item of business is a debate on motion S2M-5013, in the name of Linda Fabiani, on behalf of the European and External Relations Committee, on an inquiry into the Scottish Executive's plans for future structural funds programmes from 2007 to 2013.
The remit of the inquiry carried out by the European and External Relations Committee was to look into the Scottish Executive's plans for the delivery of structural funds in Scotland from 2007 to 2013. Many organisations were naturally concerned by the reduced level of funding that would come from the European Union via Westminster and how that funding would be administered. The committee responded to those concerns.
I speak on behalf of all committee members when I say that the inquiry was extremely interesting. The evidence received, both written and oral, was substantial and of a quality that reflected the knowledge and commitment of those who have worked with and administered such European funds in the most recent funding period. I thank all those who contributed, as well as the Scottish Executive for its speedy response to our report.
The committee agreed to structure the inquiry around eight questions that would inform members' deliberations and understanding of how stakeholders viewed the current operational structures and how those structures should be adapted to benefit the country best, in the knowledge that funding would vastly reduce. The committee welcomed the Executive's statement that no final decisions had been taken on the future delivery of structural funds in Scotland and therefore the committee's inquiry and report came at an opportune time to inform the Executive's decision taking.
Members who read the committee report will have noted the level of detail involved. There is not enough time today for me to do justice to the amount of work carried out by those who contributed to the inquiry. I can, however, relay to the chamber the conclusions and recommendations reached. Other committee members will provide in their speeches further detail on the specifics. I have no doubt that Irene Oldfather will pick up on all the things that I miss in this opening speech.
With regard to the current structure of structural funds programme delivery and the potential advantages and disadvantages of changing it, the committee concluded that although the programme management executive structure that managed the structural funds programmes from 2000 to 2006 did a good job in establishing a bottom-up, partnership approach that has been lauded throughout Europe, the reduced funding levels require and dictate change. Even though structural funds make up a small percentage of the total regional development moneys in Scotland, it is vital that the money available is spent wisely to achieve the best results.
The Executive told the committee that the current cost of the programme management executive to the public purse was approximately £4.5 million a year and that costs could fall to between £750,000 to £1.5 million if the system were restructured and streamlined. The committee believes that that is a significant and welcome saving in administration costs that should free up more money for projects.
The committee is mindful of the potential pitfalls of changing to a new structure and is concerned about the added burden that any transition would place on resources. It could have a particular impact on smaller organisations, and adequate support must be provided by the Executive to minimise that burden.
The Executive's proposal to move to a Highlands and Islands programme and a lowland and upland Scotland programme must not result in a loss of local accountability, and any new structure should harness current expertise effectively.
In the past day or so, there have been media reports about the potential loss of jobs and projects because of the late commencement of the 2007 to 2013 programmes, and I am sure that other members will elaborate on that. The committee was certainly mindful of the issue and thoroughly questioned the Executive on the potential funding gap and the requirement for transitional funding. At first, the minister was optimistic that the new programmes would begin on time, on 1 January 2007. In fact, he rather annoyed me by suggesting that the committee's glass was always half empty while the Executive's glass was always half full. In light of what we now know, I suggest that the minister gets a bigger glass.
The committee believes that there is a danger that the transition from the 2000 to 2006 programmes to the 2007 to 2013 programmes could lead to a lot of instability, which could have serious economic impacts on current and future projects. Steps must be taken to address all those concerns and, where necessary, to provide transitional support.
The committee recommends that the Scottish Executive urgently put in place appropriate transitional planning that meets the European Commission's requirements and the needs of those who plan and deliver projects in Scotland. I gather from hints in its response to the committee's report and from media reports that emerged last night and today that the Executive will now proceed towards introducing transitional arrangements. I look forward to hearing more about that matter from the minister.
The committee also recommends that every possible effort be made to enable new programmes to begin on time. Obviously, since the report was published, we have learned that that will not happen, so I must stress the second part of the committee's recommendation, that
"there are no financial or staff costs to projects as a result".
There was much discussion by the committee and in external forums on how structural fund delivery should be linked to Scottish Executive priorities. Although the committee agrees that a close link is important for the sake of complementarity and to avoid the duplication of resources, it was clear that such a link to domestic priorities should not mean that structural funds are used in place of a committed Scottish Executive budget to fund established projects outwith the structural funds programmes. Structural funds should always provide added value and be additional to committed domestic spend. As Fife Council said:
"The Scottish Executive does need to co-ordinate activity across its departments and ensure that Structural funds are providing additionality and not simply replacing domestic spending".
The committee therefore recommends that the Executive uphold the principle of additionality at all times when planning and approving programmes.
With regard to the main priority areas for the new programmes, the committee understands that the European Commission has set specific targets that require a large percentage of funds to be spent on projects that support the Lisbon strategy, particularly under the competitiveness objective. However, the allocation of funds should, where possible, address issues such as social exclusion, the economically inactive and infrastructure as well as economic growth and development. The committee recommends that the Scottish Executive make an assessment of the impact of any reduction in competitiveness objective funds for infrastructure and tourism projects and indicate whether it intends to reprioritise other budgets as a result. Of course, clearly identified economic and social outputs should be established to measure projects' effectiveness. Those outputs should be measured against desired outcomes; after all, as we know, outputs and outcomes are very different things and should not be confused.
The committee acknowledges that because of European Commission stipulations there is limited opportunity for infrastructure projects. However, it understands that, although the Department of Trade and Industry has agreed a 50:50 split between European regional development fund and European social fund moneys, it is up to the Scottish Executive to determine the convergence objective split between ERDF and ESF funds. The committee supports a weighting in favour of ERDF. It also understands that there is more flexibility on this matter in the Highlands and Islands.
Although the broad priorities should focus on economic, social and environmental sustainability, there are, as we all know, accessibility and connectivity issues that must be addressed, along with improving infrastructure where possible. In the committee's view, those issues contribute fundamentally to the Lisbon strategy goals in the longer term.
The committee recommends that there should be two programmes in Scotland to deliver structural funds from 2007 to 2013—one for the Highlands and Islands and one for lowland and upland Scotland—and both should have separate ERDF and ESF programmes within them. The committee also recommends that the programmes that cover lowland and upland Scotland should include geographical targeting where necessary and appropriate, and I understand that tender documentation based on that model has now been put out by the Executive.
I am sorry that I have not had time to read the committee's report fully, but did the committee ask the minister about where the Highlands and Islands programme would be delivered from? Will that be done from the Highlands and Islands, or will the Executive's original intention of having it delivered centrally be pursued?
I will say a wee bit more about that. We were concerned about the potential lack of local accountability, but it is essentially up to the Executive to decide how the programme is administered. We relayed our concerns, as did others who gave evidence, and I hope that the minister will address those concerns when he responds.
With the move to the two programme areas—a Highlands and Islands area and a lowland and upland Scotland area—the Scottish Executive must ensure that there is local accountability, that partnerships and expertise are not lost and that a degree of geographical targeting is retained. It is essential that the money is not spread too thinly. Urban and rural areas must have their own needs addressed as necessary.
I must address a particularly contentious issue on which the committee took evidence: co-financing rather than challenge funding. The committee felt strongly that there was not enough information on the possible co-financing models. The Hall Aitken report, which studied the situation in England, highlighted some issues that must be addressed. We were pleased that the Executive seemed to have taken on board our recommendation that we should go for co-financing and single-stream funding but should also leave an element of potential challenge funding.
I shall leave community planning partnerships and the future of the delivery of the funds in particular areas to other members, as I am now running out of time. However, I would like to mention our recommendation that the Executive should continue to consider other forms of European Union funding to complement structural funds. Dennis Canavan will talk about that, as will Irene Oldfather.
I finish by thanking the clerks, past and present, for the work that they put into the committee's report, and the Scottish Parliament information centre staff who fed us with loads of information.
I move,
That the Parliament notes the conclusions and recommendations contained in the European and External Relations Committee's 4th Report, 2006 (Session 2): Report on an Inquiry into the Scottish Executive's plans for future structural funds programmes 2007-13 (SP Paper 611).
I must state at the outset that the Executive welcomes this debate on the future of structural funds programming. The timing could not be better, as public consultation on the future programmes started last week. Today's debate effectively launches that consultation formally and will help to shape the final version of the programming documents that we will submit to the Commission. The debate is therefore timely and apposite.
I welcome the report by the European and External Relations Committee, which was published in June. I did not disagree with anything that Linda Fabiani had to say in support of that report today, except perhaps the reference to her glass being half empty rather than half full. I hope that, during the course of the debate, I can fill her glass.
Our planning for future structural funds programmes is taking place, as all members know, against a background of major change in structural funds—possibly the biggest change that we have seen in our 25-year history of receiving those funds.
First, Scotland—like the United Kingdom as a whole—is facing significant reductions in funding. The enlargement of the European Union has put huge pressures on the EU budget and has resulted in a protracted and difficult set of budget negotiations. Indeed, those protracted negotiations came to a conclusion only with the personal and high-profile intervention of the British Prime Minister. As a result, for 2007 to 2013 the Highlands and Islands will receive £105 million—€158 million at the current exchange rate—as a statistical effect region under the convergence objective. That is a cut of 50 per cent on what the region receives at present.
For the rest of Scotland—lowland and upland Scotland, as the area is described for these purposes—the cut is more severe. It will receive £384 million—€573 million—under the new competitiveness objective. That is a drop of around 60 per cent from the figure for the 2006 programme. We have never before faced such a decline in structural funds.
Does the minister accept that the cut will hit rural areas in the south of Scotland disproportionately? Rural areas in the south of Scotland have exactly the same transport and location issues as the Highlands of Scotland, but the Executive is doing nothing to address the concerns of small market towns and rural areas in the south of Scotland.
I do not accept any of that, and I will come on to explain the specific measures that will ensure that the rural economy is protected. In particular, I will explain the measures that will ensure that the south of Scotland receives a fair and equitable share of the reduced level of funding. However, I do not accept any of what Mr Ballance has said, in any shape, measure or form.
As Linda Fabiani said, the structural funds will have to be very focused on the EU's goal of economic and employment growth—the Lisbon agenda. In practice, that will put important restrictions on traditional areas of structural funds support. The infrastructure that has been referred to will no longer be eligible for support, and that will place intense pressure on programmes to be more focused in their spending.
That is not an unusual feature of structural funds development; there has never been a round of structural funds for which we have not had to change our delivery systems or programme areas. As has been said, Scotland has a positive reputation for structural funds that is lauded across Europe. Central to that reputation is our ability and willingness to adapt to the changing situation.
With that in mind, we have developed our proposals using three key principles. First, as I have said, future structural funds will need to have a clear strategic focus on Scottish priorities for developing the economy, tackling poverty and sustaining our environment. The priorities set out in the future programmes have been designed to reflect closely our domestic priorities. Secondly, we need to retain partnership. Partnership is one of the key strengths of structural funds in Scotland and it will be built into the delivery of future programmes. We believe that commitment to partnership in the structural funds can be extended by giving local partnerships a greater role in delivering parts of the programmes, especially in relation to social inclusion and regeneration activities. That answers in part the question of how local development will take place.
Of clear interest to me, John Farquhar Munro and others are the recent incidents of flooding and intemperate weather in the Highlands. The minister talks about sustaining our environment, but will those unfortunate events be taken into account as the Executive considers the targeting of structural funds?
That will depend on the project, its relationship to the Lisbon agenda and whether it focuses on infrastructure improvement as opposed to, for example, issues to do with workforce development, poverty or social deprivation. When issues to do with environmental sustainability cross over into flood prevention measures, there will obviously be opportunities for the development of local projects.
You have one minute left.
In that case, I will cut quickly to the chase.
We are proposing a mixture of change and continuity. As with any change in a system, there is a risk of disruption, as Linda Fabiani suggested. We are very aware of the impact that disruption could have on partners and the services that they deliver. Particularly affected could be the vulnerable beneficiaries of structural funds, about which there has been recent press comment.
For that reason, we are making a commitment to gap-funding arrangements to address the late start to the programmes. The late development of the national strategic reference framework was outwith our control. In the interim, negotiations took place between the devolved Administrations and the Westminster Government. In response to a request by the committee, we will make available £12 million—the full annual allocation for vulnerable projects in future programmes—for a round that will start in January. We do that at some financial risk to the Executive, as there is no guarantee that the Commission will agree to all the projects that we decide to fund before the programmes have received formal approval. Our intention is to minimise any delay to the start of the programmes, as far as we can.
Managing the transition is a challenge for us and for everyone involved. A different and bigger challenge, which all our partners face, is that of managing the decline in funding. There are hard choices to be made if we are to use the structural funds to leave a legacy for Scotland. We believe that the proposals that we put out to consultation represent the best balance between continuity and change, and I am sure that the transitional funding that I have announced today will help to smooth the process.
Managing this debate is difficult.
I am not surprised that the Presiding Officer has selected to speak a member who is known for his good behaviour and who can therefore set an example.
All of us agree that European structural funds have had a significant impact on a range of projects. Hardly a constituency in the country has not been affected by infrastructure improvements and the development of tourism or environment projects that have significantly enhanced the quality of life in our communities. Today's debate must deal with the impact that the change in structural funds will have on many communities.
A constant refrain has emerged in parliamentary debates and in the inquiry that the Finance Committee recently concluded on deprivation. It concerns the importance of delivering a degree of continuity and sustainability to a range of projects. When I consider the proposed transitional arrangements on structural funds, I am struck by the fact that it does not appear that the Government has learned any lessons from the concerns that have been expressed by a number of parliamentary committees—including, most recently, the Finance Committee—about the need to put in place sustainable mechanisms to support those projects in a time of change.
I wish to put it on the record that the Scottish National Party has no grumble with the enlargement of the EU or with the consequences of enlargement. We support enlargement and recognise that it will have financial consequences for the support of projects in this country. The challenge for Scotland and the Scottish Executive is to ensure that that process is managed effectively, sustainably and in a fashion that means that the projects that we believe contribute to the advancement of the common good in Scotland are able to survive and prosper and are not challenged by any uncertainty about future funding arrangements that may exist.
That brings me to my central point, which is that enlargement came as no surprise to anyone. The significant enlargement of the EU that took place in 2004 had been in the making for years and was well trailed. As the minister was correct to say, the present round of changes in structural funding is the most dramatic that we have faced, by a long way.
In this morning's edition of The Herald, the minister is quoted as saying:
"I am acutely aware of the challenges that the voluntary sector will experience with the decline in EU funding."
If the response of the minister and the Government to the situation is summed up by the fact that the minister is
"acutely aware of the challenges",
I would hate to think what circumstances we would be in if the minister were in blissful ignorance of those challenges. The issue has been allowed to drift. We have received some pretty serious siren warnings from our important voluntary sector organisations, which are alarmed at the financial uncertainty that they face. I accept that there will be financial uncertainty for some people and that hard choices will need to be made. However, what is intolerable is the uncertainty that has been created by the Government's lackadaisical approach and by the lethargy with which ministers have responded to the issue.
Does Mr Swinney accept that the delay in Europe setting a budget and agreeing terms is the cause of some of the uncertainty? Does he further accept that, in many respects, the Executive had little choice but to wait until decisions were taken at European level?
That was not an advert for taking responsibility for our own decision-making process; it was an argument for blaming somebody else for our problems. That is not the politics in which the Parliament should be engaged. We should be taking responsibility for the decisions that we take, for which our communities hold us to account.
Of course issues arise from Europe. However, although the European and External Relations Committee recommended in June that,
"as a matter of urgency, the Scottish Executive put appropriate transitional planning in place",
it is only now, months later, with difficulties brewing for some of our important voluntary organisations, that the Executive is at last offering some form of solution. The Executive says that that will kick in by January and that the situation may be resolved by Easter.
One minute.
The Government should be delivering on its commitments and doing so on time, but all that we are seeing is lethargy and delays. I have no confidence that the Executive is delivering with the urgency that people are looking for from the Government of the country.
The report represents a serious wake-up call to the Executive. There are a number of projects that provide important assistance to individuals across our country, transforming people's economic opportunities and life chances. The Government is jeopardising that by the lethargic way in which it is taking forward that work.
I am sorry, minister, but Mr Swinney is finishing.
I would love to give way to the minister but, sadly, I am in my last minute and I am determined to keep to time.
In tackling the issue, the Government has to raise its game. If it does not, there will be serious consequences for many of our communities. The Government has mishandled the opportunity to tackle the problem.
First, I apologise to Ms Fabiani and the minister for the fact that Mr Phil Gallie, our European spokesperson, is elsewhere on parliamentary business. Mr Gallie would have thoroughly enjoyed participating in this afternoon's debate, just as members would have enjoyed his contribution.
The recent cuts in funding that the European Union has made, which were aimed at helping new member states, have left Britain and Scotland with gross funding cuts. As the minister indicated, Scotland's receipt of funding is to be cut by between 40 and 60 per cent of the 2000 to 2006 levels, leaving Scotland with only £490 million. Although the cuts are not the responsibility of the Executive, they are dire to say the least. Bearing in mind the intervention of the UK Prime Minister, the Executive may feel that it has achieved a result. Unfortunately, instead of addressing the situation, the Executive has proposed changes that will serve only to exacerbate the effect of the proposed cuts.
Although the European Commission has a main objective of supporting poorer areas that are struggling economically, that objective cannot be seen in the reforms that the Executive is bringing forward. The reforms will leave areas such as the Highlands and Islands, which are among the poorest regions in the UK, without a lot of hope. The Executive is seeking to compound the misery of the funding cuts by interfering in the system of delivery. The current delivery system of five programme management executives works well. The Executive's reforms, under which two PMEs will be created from the five existing ones, are not helpful.
The minister refers—
That is unlikely.
It is very unlikely.
I believe that the member is referring to transitional convergence funding for the Highlands and Islands. However, the sum is set by Brussels and the Executive does not interfere in that. Perhaps we should bring back Mr Phil Gallie. He would probably have known that.
Yes, but the minister cannot say that the extent of the change is helpful, especially given the cuts to local input. I accept that transitional convergence funding is separate but, under the system that the minister will introduce, it is inevitable that over time there will be a reduction in local input. That is unfortunate.
What could have been done to improve matters? First, the Executive's lethargic approach has caused severe difficulties. As John Swinney rightly said, it was known for years that European enlargement was inevitable. We could have learned from the Irish experience. The Irish exploited the grants system mercilessly—and quite properly—over the years. They knew that the money would eventually run out and that the arrival of the accession states would create a problem.
Will the member give way?
No, I must make progress. This is a short debate.
Why did the Executive not get on the job much earlier and make an effort to address the situation that was clearly going to happen?
The minister said that £12 million would be made available, which is welcome, but it is arguable that such a contribution is being made far too late and that it is not enough to carry through projects until a final decision is made. People are already being laid off in Fife, as we saw on the television news last night, because there is likely to be no continuity for projects.
Does Mr Aitken accept that there are two elements to the problem? First, there is uncertainty about whether the projects that the minister supports through gap funding arrangements will be supported by the EU in due course. Secondly, the Government is not prepared to make hard choices about other projects but will pass the buck to local authorities and leave them to pick up the tab.
That is entirely the case—
Will the member give way?
I will let the member in when I have finished my point.
If the Government had got on to the matter earlier, we would not face that problem.
If what Mr Swinney said is "entirely the case", why are between £11 million and £12 million of ESF funds for the voluntary sector currently unspent?
Mr Aitken, you are in your last minute.
There must be delivery difficulties, but we saw on television yesterday that people are being laid off because funding is not forthcoming and the situation remains unresolved. I refer the minister to the BBC news, which identified the difficulty in Christine May's constituency—I look forward to hearing what she says about the matter.
The Executive's lethargy has been inexcusable. The system that it introduces will not work in the short term and the minister should carefully reconsider his approach.
As Linda Fabiani said, this is a timely debate on the European and External Relations Committee's report on the future of structural funds.
I stress a preliminary but vital point, which John Swinney also made. The reason for the significant drop in the amount of structural funds that will come to Scotland—reductions of 50 per cent in funds for the Highlands and Islands and almost 60 per cent in funds for lowland and upland Scotland—is enlargement. I think that all parties in the Parliament supported enlargement, which was well trailed. It was known that enlargement would have consequences for funding if we accepted the principle that European funds should be distributed equitably and fairly. The committee commented in paragraph 59 of its report:
"The Committee recognises that it is a fact that some organisations across Scotland will receive a reduced amount or lose out completely on Structural Funds in 2007-13."
It is important that we also acknowledge the opportunities that are presented by enlargement, although they are not the subject of this debate. Our industries and businesses should seize those opportunities and we look forward to the opportunities that are presented by the accession to the EU of Romania and Bulgaria.
Bill Aitken mentioned the Highlands and Islands, but he perhaps misunderstood the situation. The minister corrected him by explaining that the amount of funds going to the region was set in Europe, which is why we have known for some time what the amount will be. I think that it was only in the past week that we found out the amount that will be available for lowland and upland Scotland, because that involved a negotiation with the United Kingdom Government.
The money decreases through a phasing-out and convergence programme. I remember when the Highlands and Islands were first awarded objective 1 status—I think that it was back in the late 1980s. The chairman of the Highlands and Islands Development Board said then that the objective of objective 1 status was to get out of objective 1 status. Members from all parties would support that, but that is not to say that if there are resources going, we should not negotiate and try to get the best deal that is available.
Projects will lose out on European structural funds, perhaps because the region has got out of objective 1 status due to economic progress, but does Jim Wallace accept that it might be worth while to continue some of those projects? Does he also accept that the Government needs to do more to identify which of them we can adequately support, rather than passing the buck to local authorities and other funding providers?
I will come to those projects. However, it is fair to say that the fact that there was going to be a difficulty has not been without notice—it did not suddenly materialise in the past two or three months—so there have been opportunities to address it. It is not only local government or the Executive that could have addressed it, as there are other sources of funding. If additionality—which is a purpose of European funding—means what it says, the point of the structural funds was not to substitute money that the Executive should have been putting in—I hope that that is not what we have been doing all along.
Maureen Macmillan asked where the bodies that will run the programmes, which I think we must now call interim administration bodies, will be based. Obviously, I would prefer the one for the Highlands and Islands to be in Kirkwall, but I will settle for Inverness or anywhere in the Highlands and Islands. I will happily give way to the minister if he will confirm that the Highlands and Islands programmes will be delivered from within the region.
I can happily confirm that. I do not know where the suggestion came from that the programmes were to be delivered centrally, as that was never our intention.
There has been some uncertainty, so that reassurance is welcome.
It is important that, in the Highlands and Islands, we consider sustainable businesses, infrastructure, the opportunity for investment in, for example, innovation for the renewable energy industry and the research and development that can be associated with the UHI Millennium Institute. Those are important things that can be supported through the programmes. For our vulnerable communities, not least those in some of the remoter islands, sustainable transport links are vital.
It is also important that targets for lowland and upland Scotland meet some of the Lisbon agenda. Chris Ballance, who has left the chamber, mentioned the south of Scotland. It is my understanding that, if the Scottish Borders and Dumfries and Galloway had not been linked with the conurbations of Edinburgh and Glasgow respectively, the gross domestic product per head in the south of Scotland would not be dissimilar to that in the Highlands and Islands and the region would have qualified in the past for objective 1 funding. I notice that the Executive's consultation document makes specific reference to the south of Scotland, so perhaps the minister will elaborate on that if there is an opportunity for him to do so.
What we have heard about the consequences of the changes for the voluntary sector is recognition of the valuable work that that sector does. Some concerns have been expressed about delivery. Paragraph 58 of the committee's report—I will not read it out—quotes the Hall Aitken report, which says that the quality of the projects is important for future delivery arrangements and that delivery can be better if the focus is much more local, rather than being imposed from above. I commend those points to the minister.
I ask the minister to indicate when the proposals for shadow funding will be placed on the Executive's website to indicate what the procedures will be. In one document, it said that that would happen by the end of October. I will forgive him if it is 24 hours late, but perhaps not if it is a week late.
I also ask the minister to accept that there is a range of other initiatives, such as the seventh framework programme, the joint European resources for micro to medium enterprises and joint European support for sustainable investment in city areas—or JEREMIE and JESSICA—initiatives, the European fisheries fund and the European agricultural fund for rural development. We should not lose sight of those and the important contribution that they can make in our future use of European funding streams.
The European and External Relations Committee's report grapples with a complex and multifaceted issue. One short speech cannot do justice to every facet, but I am hopeful that the debate as a whole will highlight the various concerns that require responses from the minister—we have heard some already.
I will emphasise certain principles and practicalities. Scotland has been the beneficiary of structural funds since 1975. Only utter cynics would deny the economic and social regeneration benefits that they have helped to achieve. With the accession of 10 new, poorer member states to the European Union, it is difficult to argue against Scotland's future share of the structural funds cake becoming smaller, not just because of the 31 years of benefits from having a larger share but because of the principle of redistribution, to which some of us still adhere.
There is a paradox implicit in our arguing for our constituencies to be eligible for structural funding and, for that matter, community regeneration funding, despite the fact that such eligibility is, in part, an indicator of poverty. Let us not forget that the ultimate objective is to have a Scotland so successful that it no longer needs such funding. Jim Wallace was quite right to remind us of that. That said, we must be alert to any danger of successful programmes and projects being cut off before their work is completed, not so much because the cake is now smaller but because the new, smaller share of the cake is distributed in a more restrictive way. That is not to argue for a crude divide-small-and-serve-all approach. In paragraph 86, the report recognises that
"it is unfortunately a fact that some organisations will not receive the same level of funding compared to previous rounds of Structural Funds programmes."
That is probably an optimistic way of putting it. The fact is that some projects might not survive. It would be even more unfortunate if strategic, thematic programmes under the competitiveness objective in areas such as tourism development, in which excellent progress was highlighted in a debate in the chamber last week, were to lose out under the new funding criteria. I seek an assurance from the Executive that it will fill any consequent gap.
One way of partially addressing the downside of reduced funding is to make savings on management bureaucracy so as to free up resources for front-line services. The committee was right to highlight the potential saving of £3 million to £3.75 million a year that moving from five to two programme management executives could bring. As that is an issue of process, however, and given the Scottish overfascination with process, that proposal has inevitably generated much adverse comment. The committee report acknowledges the geographical focus and accountability that the five programme management executives were perceived to have. It depends on which comparator we use. My personal comparator is the former Strathclyde Regional Council, which was second to none in delivering such programmes. However, it is not just nostalgia that makes me hope that local government remains at the heart of the new funding programmes, if not of the new management arrangements. In the Highlands and Islands, the Glasgow city region and the Clyde valley, local government has been leading our most effective delivery.
I do not share the prevailing Holyrood culture of ambivalence towards local government, but in a related regard I am not alone. Let us not give unfettered power under the new arrangements to Scottish Enterprise or Communities Scotland, which are perceived by many people as unreliable and secretive respectively. I do not believe that every project that is currently being funded can survive, nor do I believe that the new management arrangements can be fine-tuned to please everyone. However, I believe that, with flexible and responsive gap funding arrangements, which we heard about from the minister, and a commitment by him to reflect the valid concerns that have been expressed in the debate and elsewhere in the context of the Executive's response to the consultation, we can get away from arguments over processes and get back to driving programmes and projects that help to deliver a more competitive, more inclusive and more sustainable Scotland. The sooner we do that, the better.
I, too, welcome the debate, in which I wanted to take part because I know how much the proposed changes are exercising the minds of councillors. I will highlight the problems that are faced by Aberdeenshire Council and my colleague Brian Adam will concentrate on Aberdeen City Council.
First, I will address some remarks to the report. The reduction in EU funds to the UK, which is due to EU enlargement, is recognised by all, but how the Scottish Executive deals with the transition will be crucial. The reduction in programme management executives from five to two must not result in centralisation and top-down management. We must not spend much-needed time and money on dismantling five bureaucracies to create new ones. We must use dispersed teams and identify the most effective leaders in structural funds teams to ensure that their skills continue to be used.
The ethos of subsidiarity must not be lost. There is a feeling in the country that the Labour-Liberal Democrat Executive has been sucking up powers from local councils. Although that situation will be reversed by the people on the SNP benches after next May, it is a problem that is exercising the minds of people out there.
I ask that the Scottish Executive be up front with councils and voluntary organisations on how they will be affected, so that they can plan for change. It is vital that the Executive engages with all the recipients of EU funds to discuss what changes they will have to make and plan for. Aberdeenshire Council regrets that although it has been able to meet officials from the EU and the Department of Trade and Industry, the Deputy Minister for Enterprise and Lifelong Learning has so far refused its requests to meet him. I hope that that will change.
Given that rural development and environmental sustainability are no longer priorities for Scottish Enterprise, which is now focused on city regions to obtain growth, structural funds could provide much needed additionality in rural areas. Aberdeenshire Council in particular is concerned to ensure that although Aberdeenshire does not meet the convergence criteria, it will still meet the competitiveness and co-operation criteria.
I know that many members from other parts of Scotland believe that the north-east is all wealthy, but it is not. The spatial targeting criteria hide pockets of deprivation and Aberdeenshire now has two data zones in the worst 5 per cent and six zones in the worst 20 per cent. That is largely due to the decline in the fishing quota for the Scottish fleet and the subsequent scrapping of boats, which has had a disastrous effect on the economy of Fraserburgh and Peterhead in particular. The recent report on small towns also highlights the problems that much of the rural north-east faces.
Aberdeenshire Council is concerned about the distribution of funds to urban and rural projects. It hopes that money will be targeted to obtain the maximum impact. I am not asking for special pleading, nor is Aberdeenshire Council. Indeed, the council should be congratulated on shifting the emphasis to take account of the Lisbon and Gothenburg agendas.
All that we in the north-east are asking for is a level playing field on which to compete for funding. That is why measuring outcomes is so important, as Linda Fabiani said. I do not think that there is ever enough scrutiny of the effectiveness of funds used. If there were, I know that we canny north-easters would not be found lacking. We know how to get more bang for our buck, or euro.
When we joined the European Economic Community in 1973, there were nine members. Now, the European Union has 25 members and, in a few weeks' time, it will have 27. I strongly support enlargement and believe that we should welcome new members to the European family of nations. However, if we believe in the socialist principle that most help should go to those who are most in need, an inevitable consequence of enlargement is that we shall receive a smaller share of structural funds because, in general, we are relatively rich compared with the new members of the EU.
The European and External Relations Committee report states that it is clear that a greatly reduced amount of structural funds will be available to Scotland in the period 2007 to 2013. However, the committee also recommends that the Scottish Executive should closely examine other European Union funding options and opportunities that are available to Scotland, such as the seventh framework programme, the globalisation adjustment fund and the European Union solidarity fund.
The committee also reiterates the conclusions and recommendations of the report on possible co-operation between Scotland and Ireland relating to accessing cross-border territorial co-operation funds. I was the reporter for that inquiry, which the Executive welcomed. Last month, we had a good debate on the inquiry report and members throughout the chamber expressed strong support for it. During that debate, the Deputy Minister for Enterprise and Lifelong Learning, Allan Wilson, referred to a sum of €200 million that had been allocated for a programme of tripartite co-operation between Scotland, Northern Ireland and the Republic of Ireland. However, I have since been reliably informed that the sum of €200 million had already been allocated for the programme of bilateral co-operation between Northern Ireland and the Republic of Ireland before the decision was taken to include parts of Scotland in the programme.
It does not seem fair to expand the area that is covered by a programme without expanding its budget. I therefore appeal to the minister to do everything possible to increase the budget, even if that means he must go back to the United Kingdom Government to negotiate a larger share of the UK budget for territorial co-operation. I know from my discussions and correspondence with Peter Hain, the Secretary of State for Northern Ireland, that he supports Scotland's inclusion in the programme. Scotland has an important role to play in the east-west strand of the Good Friday agreement and the St Andrews agreement and, therefore, in the peace process.
Those who took part in the recent delegation from this Parliament to the Republic of Ireland will vouch for the fact that there is huge enthusiasm for co-operation between Scotland and Ireland. I also know, from my visits to Northern Ireland and the response to my report, that there is huge enthusiasm for the idea in Northern Ireland among people of different religious and political traditions.
We have a great opportunity to encourage co-operation by ensuring that it is adequately funded, therefore I seek an assurance on funding from the minister. Funding will ensure that the long-standing links between Scotland and Ireland can be strengthened and extended and that the people of Scotland and Ireland can co-operate with each other, learn valuable lessons from each other and work together to build a better future.
I remind members of my entry in the register of members' interests, which says that I am an unremunerated board member of Community Enterprise in Strathclyde, which is one of the organisations that is mentioned in the Scottish Council for Voluntary Organisations briefing.
I welcome the report and today's debate. Those who have known me for some time will know that I have a fair track record in relation to European structural funds issues. Indeed, it was once alleged that I could bore for Scotland on the subject, but members will be glad to know that they will be spared that today.
Fife has been a major recipient of European structural funds and the economy and people of Fife have benefited considerably. I remember that, when we were doing the work that set in place the current round of funding, transitional arrangements were put in place for those areas that would have otherwise experienced a greater than necessary reduction in their funding. Again, Fife was a beneficiary in that regard. The benefits have accrued to industry in Rosyth, Methil and Glenrothes. Through objective 3 European social fund funding—the board of a group relating to which I once chaired—benefits have also accrued to human resources developments and equalities, on which significant work has been done in parts of Fife.
The benefit of the objective 2 programme has been £14 million of investment that has generated a further £60 million of leverage. Under objective 3, £35 million of investment has been made, which has generated £45 million of match funding. At my request, the Enterprise and Culture Committee has agreed to commission a piece of research—in which I know that Maureen Watt will be interested—examining the cumulative impact of the funding from Europe and the funds that have been levered in in creating sustainable economic growth. I hope that Maureen Watt will examine that.
In the coalfield areas that I represent—members will know that I chair the all-member group on coalfields—we have significant issues of a low employment rate, a low level of qualifications and poor health. The new funds—although reduced—must be targeted at the areas that are proportionately less successful than those in which, I am pleased to say, health, employment prospects and educational attainment have improved under Labour and the Labour-Liberal Executive. The reduced money needs to be better targeted. We said that during the previous round of funding, and it is crucial to the current round.
I am sure that everybody agrees that when sums of money are reduced, it is sensible to reduce bureaucracy. As other members have said, we cannot continue to have five programme management executives. We must examine additional funding from other strands and consider how to focus better.
When the minister spoke about the criteria to determine how we manage and distribute the current funds, he talked about a clear strategic focus and the need to retain partnerships and to give local partnerships devolved responsibility for implementation. He also spoke about managing the transition and the reduction. I will ask questions about both those aspects that officers from my local authority have raised with me. The minister might not be able to answer today, but I hope that he will agree to discuss them further with me.
The partnerships that are in place involve many local authority officers, some local authority members, representatives of further and higher education colleges and representatives of the voluntary sector. Not only are they part of programme management committees and programme monitoring committees, they are part of our community planning partnerships, which are intended to be key players. I am concerned that perhaps not as much dialogue as might have occurred has taken place with the key partners whom we will want to be closely involved in developing the current proposals.
I am pleased to hear Bill Aitken acknowledge my close relationship with Fife. However, I represent Central Fife, and the report that he talked about seeing last night referred to West Fife Enterprise, which is based in my colleague Helen Eadie's constituency.
The issues for the voluntary sector are more complex than just the issue of structural funds. Many voluntary groups are involved in several strands of Government policy and initiatives. They have built up their businesses and their expertise in managing various elements of Jobcentre Plus, training for work, get ready for work and other strands of Government support for areas of deprivation. Changes to such programmes and the fact that some Scottish Enterprise training programmes this year have expanded less than expected—
That is another word for cuts.
Programmes have indeed been cut or have not gone beyond what was anticipated, which has created concerns, so I ask the minister to discuss with me the dialogue that will take place with key partners, including the voluntary sector, on the delivery of the new systems to minimise structural fund disruption to local programmes. I welcome the transitional arrangements that the minister announced, which will help.
I read the report with interest—it is not always the case that I read a report or that it is interesting. Some good speeches have dealt with the geographical aspects. Members are knowledgeable about the problems that exist in particular areas of Scotland and have expressed themselves well, but I will concentrate on the voluntary sector rather than a geographical issue.
There are good and bad things about all organisations. One of the bad things about the Scottish Executive is its treatment of the voluntary sector. Civil servants, the Executive and Governments in general do not really understand the voluntary sector, which plays an important part in the system. Sometimes, local government does not understand it either. However, taking account of the voluntary sector's concerns is important. I have met a number of groups to discuss that matter. Indeed, a short paper has been circulated by groups to which I have spoken. All of us are used to people crying wolf, but I am not doing so. There is a risk that important parts of the voluntary sector that provide training—especially to harder-to-reach groups and to others whom European funds help—will be seriously dislocated.
I ask the minister to ensure that, when the Executive is developing its programmes, the voluntary sector is properly consulted and involved in the process. We should regard people in the voluntary sector as real partners. They should receive adequate and fair access to European funds. All the funds should not be directed via quangos, some of the practices of which are, as Charlie Gordon said, slightly dubious—that is what I took from what he said.
We must learn from the past, carefully examine what is happening, study the previous funding transition, find out what has and has not worked, and consider the existing funds and projects. If projects are working well, they should be kept going. We must have a monitoring system in the future to ensure that the smaller sums of money that are available are properly targeted. Scotland has developed a good partnership and peer assessment system, which I understand the Europeans regard with great favour, but we seem to be dumping it. Doing so is not a good idea.
Consultation is one issue: continuity is another.
Does Donald Gorrie accept that, by keeping five programme management executives, we run the risk of spending up to €5 million that we might not need to spend if management arrangements are redone?
The management system should be as economical and efficient as possible. However, we can devise a bottom-up system as opposed to a co-financing system. That is a cliché, but it is an important cliché. That said, I do not have a problem with reducing the main homes for the money from five to two.
I mentioned continuity. Successful organisations must be kept going until the new system is sorted out because, as members have said, sorting it out will take time.
There is a risk that more funding will go to groups that target easier-to-reach people. If people are given credit for the number of people whom they get back into work and training, it will obviously be tempting for them to go to easier-to-reach groups. However, there are good voluntary organisations that do tremendously good work in preparing people for work. Pre-vocational training is vital. If we lose some organisations, we will lose the huge corpus of experience, knowledge and skills that people have built up.
We must invest in people. A fault of Governments of all shapes and sizes and of people in government at all levels is that they think that it is easier to invest in things than in people. The public can then be shown things that have been made, such as machines that people can be photographed beside. It is much harder for Governments to show what they have done with people, but it is people who do things. We must ensure that the voluntary sector is sustained and that it can deliver people with the skills that we want. People will then lead satisfactory lives.
We need to have bottom-up local decision making, with the voluntary sector having direct and fair access to the funds, which I think means having some element of bidding. We have to ensure that local communities can assess where most value will be added and that we support the voluntary sector in doing that.
I urge the minister to work alongside the voluntary sector and assess the legitimacy of its concerns. We can make things better. In the end, if less European money is available for vital social funds, we have to find money from within our own budget. Otherwise, some of our poorest communities will suffer grievously.
Like other members, I welcome the report. Not being a member of the European and External Relations Committee, I will treat the report as a work of reference as we work our way through the problem.
It is not unusual for me to disagree with Dennis Canavan, and people will not be surprised to hear that I disagree vehemently with something that he said today. He said that it is a sound socialist principle that help should go to those who are most in need. I do not dispute the fact that help should go to those who are most in need; I dispute the idea that it is an exclusively socialist principle. It has been a traditional Scottish principle and certainly a sound Christian principle—one that many of us have pursued in our lifetimes and one that has been pursued over generations.
For that reason, it is difficult to argue that, considering the priorities faced in Europe today, the money that has traditionally been allocated to development programmes in Scotland should not now find its way into eastern Europe. We are all going to have to learn to live with that. That does not mean that it is any easier to deal with. I would not like to face the problems that the minister might face in justifying his decisions.
The priorities and problems have been highlighted by a number of members. Chris Ballance got a bit of a rough ride from some members of Executive parties earlier in the debate when he raised the issues of the south of Scotland. Sadly, the truth is that if we are to reprioritise—which will be necessary as priorities are assessed—some will lose more than others. I was going to say that there will be winners and losers but, as we know, there are no winners in regional terms.
For that reason, it befalls the Executive to consider its administrative procedures carefully. If the funds are cut—as we know they will be—it will be necessary to ensure that administrative costs are cut by at least the same percentages. It is disgraceful that when organisations' budgets have been cut in the past, their administration costs have gone up instead of down. We cannot afford for that to happen. The money that is available must go into projects that justify the expenditure. We must get more bang for the buck.
That still leaves huge gaps. We have heard today about the situation that Aberdeenshire faces and how little recognition there is of the poverty that exists there. I live in the administrative area of Aberdeenshire—I will never call it just Aberdeenshire, because I still live in Kincardineshire—and it is obvious that there are radical differences. In the south of the area, we are much wealthier than those in the north. Those who are close to the city of Aberdeen have good links and can boast a much stronger economy than those who do not have such links. Stewart Stevenson is not with us today, but he does an excellent job in highlighting the economic problems of north Aberdeenshire. Aberdeenshire faces a grave problem in the current round.
In spite of my sympathy, I must cast doubts on the Executive's ability to deal with the problem that it faces. It can point to the fact that the European Union has done it no favours, and many of the difficulties that it faces, particularly in the late announcement of the available funds, are not actually its fault. However, as we speak, another crisis is brewing in relation to the distribution of European funds. The Executive can perhaps be said to have more blood on its hands from the way in which Ross Finnie has chosen to distribute rural development funds. That problem is almost entirely of the Executive's making. Controversial decisions on how funds will be top-sliced and redistributed have proved difficult to get accepted by the European Union. As a consequence, many of Scotland's poorest farmers will find themselves short-changed. The interim measures for rural development funds that I believe have been announced today—some of which sound similar to the interim measures for structural funds that the minister has announced today—will be of no help to those who expected large amounts of money, because they will simply not materialise.
I close with a warning for the minister. The difficult situation that he has been left to administer may not be his fault, but the Executive must learn from the mistakes that it made in its proposals to distribute rural development funds. As the administrative process for structural funds is changed, the Executive must ensure that it does not end up suffering from problems that are essentially of its own making. As I said at the outset, I do not regret the fact that I am not required to make the decisions that the minister faces, but I urge him to act quickly, decisively and clearly to ensure that the moneys are not delayed for a moment longer than is necessary.
I draw members' attention to my entry in the register of members' interests: I am an unpaid board member of the Wise Group, which is probably the United Kingdom's leading organisation in helping people to overcome barriers to employment and to secure jobs.
The Wise Group and similar organisations, such as One Plus, take a responsible approach to running their businesses. Wherever possible, they have systematically tried to reduce their dependency on the European funding programme that is running out. Indeed, the minister with whom I first discussed the issue was Peter Peacock, who has not dealt with structural funds for a considerable time. Organisations such as the Wise Group accept and embrace the need for funding to be distributed in line with quality of provision and outcomes. Over the past few years in particular, they have become increasingly adept at working in an environment in which they need to deliver in order to retain their funding. As it happens, Wise Group projects have, I think, been at the top of the rankings system in the west of Scotland for the past several years and the quality of what they provide is not in doubt.
However, it is fair to say that even the Wise Group has certain limitations on its adaptability in dealing with the circumstances that it now faces under the transition process. The information on what funding will be available in 2007, and in particular on the criteria and mechanisms through which the funding will be distributed, has not been satisfactory from anyone's point of view. It has made forward planning difficult for organisations such as the Wise Group. As the minister suggested, transition measures will need to be introduced to deal with the significant gap that will exist between the end of the current programme and the start of the next one. Those transition measures are welcome but, nonetheless, we risk losing capacity within the sector as a result of the need to put those transition measures in place.
The Executive's proposal for a tandem arrangement involving commissioning coupled with challenge funding is not the most obviously streamlined approach to disbursing funds. One problem is that it is not 100 per cent clear at this stage how much money will go down the commissioning route, how much will go down the challenge funding route and how the mechanisms will work. There is a need to clarify those issues.
Another issue is the need to consider alternative funding sources. The Finance Committee's "Cross-cutting Expenditure Review of Deprivation", to which John Swinney referred, pushes hard the idea of a single regeneration fund, which I recommend to the minister. By having clear criteria for the required outputs, such a fund would create a level playing field among the different kinds of organisations, because it would identify the tasks to be performed and the criteria against which people would be judged.
We need to examine deprivation funding alongside the change to structural funds, to ensure that we are not losing key capacity that is needed to deliver essential programmes. We are not dealing with a potential loss of capacity in isolation. A series of Westminster, Scottish Executive and voluntary sector programmes focus on employment. We want significant high-quality provision to be in place. There is a danger that workforce plus, the city strategy and other mechanisms that we are putting in place will not be sufficiently joined up unless the system is well managed. That issue needs to be addressed.
Another issue is the way in which the community planning commissioning system will work. When dealing with employment, which is my main concern today, it does not make sense to focus attention on small geographical areas—data zones, in the parlance of the Scottish Executive mechanism for distributing funding. Instead, it is necessary to focus on much larger travel-to-work areas and to provide structured funding and support to people in those areas who meet the criteria. If we focus on data zones, we will end up with very local bases of funding that do not deliver the best outcomes for employment support.
There needs to be a clear focus on the distribution mechanism—the way in which commissioning will work alongside challenge funding. We must ensure that challenge funding arrangements are closely linked to the outputs and outcomes that are expected, especially in the crucial area of employment. If that is done, the encouraging message that the Scottish Executive has tried to send about its desire to build the capacity of the voluntary sector as a key delivery agent for many areas of devolved policy will be followed through. If we fail to get the arrangements right, the policy will be hot air and will be seen as such by people who are active in the sector.
I echo Alex Johnstone's point that managing a decline in funding is not a simple task for anyone. We must ensure that the arrangements that we put in place are streamlined and clear, that people know that they are rational and make sense, that they deliver the expected outcomes, and that we focus on the key issue, which is employment. I would like the minister to do a number of things. My colleagues and I are willing to speak to him about how we can move forward, because further thought and clarification are required.
There are a number of duties to be performed in the classic closing speech, the first of which is to comment on what others have said. After I have done that, I will make some points of my own, with special reference to my part of the world.
I congratulate Linda Fabiani, members of the European and External Relations Committee and the clerks, who worked extremely hard to produce a very good report. Although I have never been a member of the committee, I read the report with interest. It strikes a number of chords with what I and other members believe.
It has been a good-quality debate that shows that the ghost of Euroscepticism has been laid to rest. Almost everything that has been said has been said in the context of Europe working together. All parties have accepted that enlargement, on which I will touch later, is a reality. That represents a sea change and a taking of the nation's temperature as it really is. Europe can bring benefits to us all.
In her opening speech, Linda Fabiani was right to talk about the backdrop of the reduction in EU funding and the appropriateness of putting in place regional planning. She mentioned the two programmes that have been agreed: one for the Highlands and Islands and one for other parts of Scotland.
In his reply, Allan Wilson spoke about the reduction in money. Although I will speak more about my intervention in a minute or two, I deliberately asked how rapidly changing events in different parts of Scotland sit with longer-term funding. That will be touched on later in the ministerial statement on flooding in the north of Scotland, which affects not only my constituency but many others.
John Swinney and other members were correct to say that EU enlargement was no surprise and that we knew that it was going to happen. Jim Wallace in particular echoed John Swinney's remarks and made a point that we should all remember, which is that the amount of funding that goes to the Highlands and Islands is set in Europe. It was useful when Jim Wallace invited the minister's intervention because we are now certain that the administration of the programmes will be not in Kirkwall or Wick, as some of us might have liked, but probably in Inverness or somewhere else in the Highlands. That is what I call a useful exchange as part of a well-tempered debate.
Charlie Gordon said that Scotland has benefited from such funding for 31 years, since 1975.
Does the member acknowledge the great work that was done by the previous Conservative Government, which negotiated our entry into the European Union?
The funny thing is that I was tempted to intervene during Bill Aitken's speech to say that we have a slight difficulty in the Highlands—since 1994, Europe has wanted money back from us on account of the lack of accuracy from what I think was a Conservative Government.
That was creative accounting.
The member may choose whichever words he likes.
Maureen Watt spoke with some feeling about her part of the world, Aberdeenshire. I associate myself with Dennis Canavan's remarks. As is his wont, he took a broader view that honours the chamber. As many members know, my wife's family come from Northern Ireland. One of the reasons why the EU was formed was that generations ago we were killing each other—I lost two great-uncles in the first world war. If we can reach out via the good Friday and St Andrews agreements to the nine counties of Ulster, then well and good. Dennis Canavan was bang on with that one. We should be proud of our involvement. The day on which the Parliament can look slightly beyond—
Jamie Stone might be aware that as part of the on-going peace process in Northern Ireland, a view is growing there that corporation tax should be set at a uniform rate throughout the emerald isle. That is the strong view of Sir George Quigley, the chairman of Bombardier Aerospace. Does the member support that view and would he support the same policy for Scotland?
I do not see what that has to do with structural funds, to tell the honest truth. Being married to an Irish colleen, I am aware of the subtlety and wiles of the Irish; I detect an Irish input to that question and I know a trap when I see one.
Donald Gorrie took a singular and interesting view of the debate, which we might discuss later. He has always upheld honourably the voluntary sector in all his contributions.
I echo others when I say that flexibility would be useful when we have to deal with untoward instances such as the flooding in the Highlands or the landslips in John Swinney's constituency. It would be good to direct structural funding that way.
I must put on the record yet again the old point about the Highlands. It is now generally accepted that one of the factors in the Highlands and Islands losing objective 1 funding was the inclusion in the bid of the honey pot that is the rich centre of Inverness. That was a mistake and said nothing about poorer and more remote parts of the Highlands. My plea to ministers is one that I have made for many years, right back to when I was a councillor. In Wales they are clever about how they draw the boundaries. There might be no objective 1 funding in the future because of enlargement, but let us be cleverer in how we draw our boundaries, in how we apply for funding and in targeting it where it is most needed.
Once again, I congratulate Linda Fabiani and her colleagues on an excellent report.
It is always a pleasure to fill in for Mr Gallie when he is on other important parliamentary business. Indeed, that might explain why Mr Stone felt that there was less Euroscepticism than he has been used to—although it might well be that we are all Eurosceptics now.
Speak for yourself.
Well, perhaps.
Today's debate has been useful. For example, John Swinney's speech on the reach of European funding and his comment that very few places in this country have not been touched by previous spending were very apt. Indeed, that is why there is such concern in Scotland about the potential implications of what will happen with the next funding stream. That is particularly the case in my own area of South of Scotland, which I will come back to.
Whenever we discuss European issues, a fog tends to descend on us and perhaps it is the European and External Relations Committee's role to be a beacon and shine a clear light on these matters. For example, after reading the Scottish Executive's consultation document on the lowland Scotland programme, I am not surprised that people are scared to talk about Europe. The document runs to 174 pages; sets out 74 approved categories of expenditure that are eligible under the Lisbon criteria; and lists 50 acronyms.
I was interested to see in the document that
"JEREMIE will provide a mechanism for setting up revolving loan instruments for providing development capital to enterprises".
I thought, "Good for him," although I have to say that I imagined that he might be busy with other matters. I then discovered that JEREMIE was one of the funding streams not mentioned in the list of 50 acronyms to which I referred. That just shows how anyone who tries to make sense of European matters can end up confused.
Of course, people are most concerned about the impact of the cuts to funding. I cannot argue with members' comments about the impact of enlargement on the amount of European funding that is available to us. However, most, if not all, of us welcome enlargement and feel that a broader, if not deeper, Union is an attractive prospect.
As many members have pointed out, we need to manage and minimise the negative impacts of the cuts and, if we can, up-play the potential benefits of the funding that is left. As Des McNulty and Alex Johnstone said, we know that ministers face difficult decisions. However, that does not take away our responsibility for scrutinising decisions and keeping a close watch on what ministers do with the remaining funding.
Last October, during a debate on European funding in the south of Scotland, the minister made the important point that only 3 per cent of economic development spend comes from structural funds, which might well reassure people who are concerned about the impact of cuts. I also entirely concurred with the emphasis that he placed on the need for value for money. When he started talking about hard choices, I thought that I was listening to Tony Blair, such was the spiel of new Labourese coming out of his mouth. Presumably, those hard choices and the need for value for money relate not only to the 3 per cent that he mentioned but to the other 97 per cent of economic development spend. I see the minister nodding, so I take it that he agrees with me.
In that case, given that we are seeking to deliver value for money and to maximise the impact of spend, I am at a loss to explain why the minister's colleagues are so reluctant to let us see the Howat committee's very detailed work on the matter. Surely that would help in attempting to ameliorate the implications of European decisions and would allow us to maximise value for money. Perhaps he will reflect on that point and allow us to see the report before tomorrow morning's debate.
I thought that Chris Ballance was rather unfairly criticised for some of his comments on the South of Scotland, where there is real concern about the funding cuts. One of the Liberal MPs—in fact, the only Liberal MP—for the Borders has accused the Government of failing the area. That is a view that Mr Stone and his colleagues might seek to endorse, but they seem to think that the Executive has influenced the Government sufficiently in speaking up for the South of Scotland, or indeed for any other part of Scotland. As members will know, the south of Scotland alliance was vigorous in its affirmation that the single programme for lowland Scotland was not helpful in ensuring local decision making.
I heard what the minister said about the reduction in bureaucracy, and we must reduce bureaucracy as much as we can to ensure that we can free up resources for positive spending priorities, but it is rather late in the day to come to that. Why, suddenly, are we left with a reduction in bureaucracy when the Executive's own efficient government programme seems rather to have run into the sand?
I conclude by asking the minister to take us forward from mere warm words and to give us some clue about what actions the Executive will take, and according to what timescale, so that we can have comfort that our constituents will not be as severely affected by the cuts as might otherwise be the case.
The convener of the European and External Relations Committee, Linda Fabiani, laid out the position of the committee, the process undertaken, the conclusions reached and the recommendations made to the Scottish Executive. The committee produced a good report, which got to the nub of the issues.
We have had an interesting debate and have heard some interesting views. In his opening remarks, Allan Wilson was able to reflect on how much funds had reduced since the previous programme, from an allocation of around £1 billion in the period 2000 to 2006, to a programme for 2007 to 2013 that has fallen by about 60 per cent to around £400 million. Unfortunately, it is difficult for us to determine whether Scotland actually gets its fair share of those EU funds, because negotiations take place at UK level. I do not think that that is right, but I know that we should expect our fair share.
As John Swinney, Jim Wallace, Dennis Canavan and other members have said, the chamber is unanimous in being prepared to support the accession of new states, particularly from eastern Europe, and if we all support that, we must accept that the economies of those countries require greater support. That said, and although structural funding is welcome, it is a pity that, in the 21st century, Scotland should still require any structural funding at all because our economy is not developed as well as it could be. It is unfortunate, but a reality, that the cuts in structural funds will be felt in certain sectors of the Scottish economy because we rely on those funds and the underperformance of the Scottish economy over a number of decades means that those funds are still required. The sums required might not be a great deal—in the order of 3 per cent, as Derek Brownlee said—but they are nevertheless important for certain sectors.
By the time we get to the end of the next programme, in 2013, I hope that we will have faced up to the challenges and opportunities that globalisation provides. By then, we should aim to have less need of structural funds, so that we can free up funding to help other areas of the European Union. By 2013, we should have an economy whose export base is considerably expanded, where investments in research, development and innovation are providing significant dividends, and where high-value-added employment is the norm and our people are highly skilled and continue to upskill to get ahead of the game in the modern labour market.
I was particularly taken by paragraph 64 of the committee's report, which states:
"The Committee recommends that the Scottish Executive should closely examine other EU funding options and opportunities available to Scotland, such as the Seventh Framework Programme 2007-13, Globalisation Adjustment Fund and European Solidarity Fund".
I have looked at the Scottish Executive's response to that recommendation, and I wish that I had the feeling that there was a bit more dynamism and energy in how it is written, because those funds could be crucial to Scotland in the future. Perhaps in his closing speech the minister will give us the feeling that the Executive takes the issues seriously.
Other members have mentioned the voluntary sector and the funding gap. The minister conceded that it was not simply a question of a funding gap but one of programmes coming to an end. However, the situation for the voluntary sector is much more complicated than that. Not only must the sector deal with the reduction in European structural funds, but it must face the complexities caused by lottery funding coming and going. It is probably more difficult than ever for voluntary organisations to sustain their future.
Members have received a briefing document from the voluntary sector, which explains the scale of the problem. I can recall the end of the urban aid programme. At the time, I was the leader of Perth and Kinross Council, and I think that Christine May was the leader of Fife Council. As the programme came to an end, all the voluntary bodies started to queue up at the door of local authorities and others to try to obtain mainstream funding to allow very worthwhile projects to continue. Local authorities did what they could to help. Now, someone referred to learning from history. I would have thought that we would have learned from the ending of the urban aid programme and would know how to manage the present situation. The management has not been nearly as effective as it could have been.
Another problem will appear in 2013 because of co-financing. By that time, partners all over the public sector will be supporting the voluntary sector, and you can bet your bottom dollar that the voluntary sector will be knocking on the doors of co-funders just as they are knocking on doors now. The chickens are coming home to roost, because not enough was done to study the scale of the problems that would face the voluntary sector.
I hope, as John Swinney does, that the European and External Relations Committee's report has woken up the Scottish Executive. We welcome the new money, but perhaps it is a bit too late.
I will try to cover all the points that members have raised. If I cannot do so, I undertake to write to the members in question on all their points.
The input from members of the European and External Relations Committee and the Enterprise and Culture Committee was different from the input from John Swinney and Bill Aitken, who undoubtedly saw a political bandwagon passing and decided to jump on it rather than address this very welcome European and External Relations Committee debate and my response to it.
Bruce Crawford spoke about Scotland's share. That issue has preoccupied us for the past three or four months, which is one reason why we could not have responded any more quickly than we did. The accusation that we have been lethargic or lackadaisical holds no water whatever. Scotland receives around 11 per cent of the competitiveness fund. Per capita, we receive €122 while England receives €91 and Wales receives €114. I believe that we secured a fair and equitable share from the negotiations. Critically, we considered respective need.
There has been a misconception in the chamber today, although I can understand why. The misconception is that the reduction in funding arises purely and simply because of EU enlargement. It does in part, but not entirely. Because of improvements in our employment levels, and because of workforce development and skills training, our prospective share of structural funds has decreased. Derek Brownlee was right to draw attention to the fact that structural funds account for around 3 per cent of our total economic spend. That figure will reduce. That is an important point, but we are talking about match funding and only up to 45 per cent of the funding for any individual project comes from structural funds.
I take the points that the minister makes, but for the benefit of those of us who have not been quite so involved in the detail of the debate, will he clarify by how much the negotiations that the Executive has engaged in have increased the share of the funds that Scotland has obtained? Has more been obtained than would have been the case if the Executive had done nothing at all?
The debate is about how the funds are allocated across the regions and nations of Britain. There are different ways in which the funds can be distributed. We might get more or less, depending on what criterion is adopted. For example, if a density of population criterion were to be adopted, Scotland would get more per capita, but would that be a representative descriptor of need? I would argue that it would not. Given our desire to concentrate on employment and skills training, we would like European structural funds to be used to improve our relative competitive position in those areas. We wanted innovation and enterprise to be criteria for allocating funds and the fact that we have secured that will benefit Scotland, because innovation and enterprise are key drivers of regional growth.
The minister's substantive point is that not all the changes arise from enlargement alone. Does not he accept that that reinforces the argument that the Government has been caught napping, in that it has failed to manage the transition that we knew was going to happen and which has been intensified as a result of economic change?
Nothing could be further from the truth. As my colleague Jim Wallace mentioned, we have been engaged in consultation and negotiations with our partner organisations, including local authorities, further education colleges and, dare I say it, the voluntary sector for 18 months. I could not have announced what I have announced today one week earlier, because the negotiations on the national strategic reference framework have only just concluded. It is simplistic and simply untrue to argue that we could have acted earlier or more directly.
The briefing to which Mr Swinney referred was based on two serious misconceptions. The majority of existing projects will continue to spend their current funding as they approach the end of the year. The European structural funds will not suddenly be turned off, as Mr Swinney or those behind the briefing would have us believe. In fact, some £84 million of the ESF money that has been awarded to projects has still to be spent. That is in addition to the figure of circa £11 million that remains unclaimed in the relevant pot of ESF entitlement.
It is extremely important that the transitional funding that I have announced today goes to those projects on which the most vulnerable clients rely. Those projects may be run by the voluntary sector but, crucially, they may be run by local authorities, further education colleges or other partners. It is important not that the funding that is available to sustain projects goes to a particular sector, but that it goes to the most vulnerable projects with the most vulnerable clientele. Given that there is only one cake to be distributed, if one sector is cut a bigger slice, by definition less of the cake will be left for the other partners that deliver equally important projects.
I am big enough and strong enough to take Mr Swinney's criticism, but if he wants me to give more of the cake to the voluntary sector, he must say from whom cake is to be taken away. Is it to be taken away from local authorities or further education colleges? We have proposed a transitional fund that everyone will be able to bid for to help them through the transitional period. We have taken account of the fact that European structural funds are on the decrease and we want to maintain the additionality that they provide to economic growth, innovation and the Lisbon agenda more generally.
I am pleased to wind up the debate on behalf of the committee. The debate has been a good one.
If I am to be absolutely honest, when we first made a bid for this committee slot, we did not expect to be given the majority of time in an afternoon debating slot. I think that the convener will agree on that. However, members rose to the challenge and found no shortage of things to say. It will be difficult to sum up on all the speeches.
First, I turn to the importance of the Scottish Parliament and the European and External Relations Committee in the European Union structural funds scrutiny process. The committee has been vigilant on the matter since its inception; indeed, it has produced no fewer than six reports on the subject. Structural funds have been debated five or six times in the chamber—roughly on an annual basis. In addition, the committee has included in its work programme an on-going commitment to keep a watching brief on the issue. That allows the committee, and the Parliament, to act as a conduit and a voice for stakeholders. Today's debate has demonstrated that.
As a number of members pointed out, structural funds are important to Scotland both historically and traditionally. That has been, and will continue to be, the case. Funding of £1 billion was mentioned for the period 2000 to 2006. As the minister explained, the figure will reduce over the next period. As members pointed out, given the proviso that the money is managed appropriately, the revised amount is still significant. In our report, we said that structural funds must be seen in tandem with other opportunities. I will return to that point later in my speech.
Members including Christine May and Jim Wallace gave examples of projects and areas of rurality and deprivation in which funds have been used to advance social inclusion and to contribute to sustainable economic development. Those members made a plea that, in the next programming period, we should get the targeting and clarity that will be vital to making the same impact, or the best that we can manage with the reduced funds that are being made available.
Obviously, concerns were raised this afternoon. They were also raised in our evidence taking, including concerns on transitional provisions and the administration and organisation of the funds. Almost all members spoke about transitional funding and made particular mention of the position of the voluntary sector, from which the committee took oral evidence.
I welcome the commitment that the minister made today to £12 million of transitional funding. I note what he said about the convener being pleased about the announcement. However, as members who know anything about structural funds will recognise, transitional funding is not without significant risks. Given that we are not in the euro zone, any slight fluctuation in exchange rates can greatly affect allocations. The committee feels that that could become such a significant risk to the Executive that we may not be able to secure such a promise from the minister again. We cannot simply gloss over the issue; we must acknowledge both its significance and the fact that it is not without risk. The committee can take some credit for raising the matter in our discussions with the minister and in our report.
Donald Gorrie, Christine May and Charlie Gordon spoke about the importance of grounding projects in our communities. The convener and I met Commissioner Hübner when she visited the Parliament. She spoke of the success of the Scottish model and the high regard in which it is held across Europe. Many members have reflected on and emphasised that point in the debate.
There seems to be scope, within the models that we are considering, to take that approach forward. I refer in particular to the community planning model. However, it is important to get the model right. Des McNulty spoke about the need for an overarching strategy in relation to the importance of employment and jobs. The Executive is considering pilot schemes. Although I have some reservations on the subject, the proposal will also bring opportunities. The use of pilots could ensure that we put in place the right model for the right type of programme.
Charlie Gordon reflected on what the committee said about the importance of involving Scottish Enterprise and, at the same time, retaining accountability in local communities. We must look for ways in which to ensure that that bottom-up approach is taken. It was encouraging to hear the minister emphasise the importance of local partnerships.
The committee welcomes the savings that will be made as a result of the reduction in the number of PMEs. We have been told—and Linda Fabiani said—that significant savings of £3.5 million will be made. We also welcome the possibility that there will be a bottom-up approach.
Dennis Canavan made an important point when he reflected on the role of structural funds as a policy instrument to assist in the reduction of inequality and the achievement of social cohesion throughout the EU. If we are in favour of enlargement, we must accept that given Scotland's relative position our take must be reduced. John Swinney acknowledged that point. As many members said, the challenge is to ensure that we make the best use of the moneys that are available and ensure that funds are focused and targeted.
John Swinney, the minister and others said that as we face the challenge of the reduction in structural funds we must be creative in considering the opportunities that are presented. Derek Brownlee asked about that, which was good, although I am not sure that he offered any answers.
Enlargement brings an opportunity to expand our consumer markets. The European Commission undertook research, which showed that between 30 and 40 per cent of all EU funding that is spent in the poorer member states finds its way back to the richer member states, through purchases of equipment or human capital and expertise. People in Scotland should particularly reflect on that point. Improvements in the quality of life of people in the new member states can bring direct benefits for us all if we approach the matter in the right way.
This point has not been made in the debate, but as we look ahead to the next session of the Scottish Parliament it is worth reflecting on our bilateral and interregional partnerships and considering whether we have put in place criteria for forming links and partnerships that will enable us to build on the opportunities that I described, by providing expertise that allows us to link up with the moneys that go to the new member states. It is clear that Poland will be a key player in the enlarged EU and will access a significant proportion of funds.
I have time briefly to comment on other European Community programmes, which members mentioned. Smaller Community programmes can deliver disproportionate benefit, so we must not underestimate the complementarity that the committee described in its report. Members offered a number of suggestions in that regard. Dennis Canavan talked about his work as reporter to the European and External Relations Committee's inquiry into possible co-operation between Scotland and Ireland, which offers opportunities. Bruce Crawford mentioned the globalisation adjustment fund. I am very much in favour of the fund, which should be taken seriously, because it will offer opportunities to tap into money to help workers who are made redundant.
Is the member aware of the research that the Enterprise and Culture Committee is undertaking? Our findings on complementarity across leveraged funds will be reflected in our report on the work.
I look forward to reading about the results of the research. From discussions in the Parliament and in the European and External Relations Committee, I know that we should be doing as much as we can to lever in additional moneys and ensure that there is complementarity.
In its remarks on the proposal to set up the globalisation adjustment fund, the Commission said that the fund should not apply in areas in which structural funds are applied. The Committee of the Regions takes a different view and it is important that the Enterprise and Culture Committee adds its weight to the discussions, to ensure that there is complementarity.
I am running out of time and I must conclude. Like the convener of the European and External Relations Committee, I thank the clerks—past and present—and SPICe for the work that they put into the report's production. I also thank the players in the voluntary, private and public sectors who gave evidence to the committee to influence our report. I am sure that other members of the committee agree that the debate is not the end of a process, but part of a work in progress.
I thank members for their speeches and I support the motion.