EUROPEAN COURT OF AUDITORS
(21194)
7873/00
| Special Report No. 7/2000 concerning the International Fund for Ireland
and the Special Support Programme for Peace and Reconciliation in
Northern Ireland and the Border Counties of Ireland.
|
| Legal base:
| — |
| |
| Forwarded to the Council:
| 12 April 2000 |
| Deposited in Parliament:
| 10 May 2000 |
| Department: |
Northern Ireland Office |
| Basis of consideration:
| EM of 18 May 2000 |
| Previous Committee Report:
| None |
| To be discussed in Council:
| No date known |
| Committee's assessment:
| Politically important |
| Committee's decision:
| Cleared |
Background
12.1 The International Fund for Ireland was established
by the UK and Irish governments in 1986 under the Anglo-Irish
Agreement. It aims to promote economic and social advance and
to foster reconciliation throughout Ireland. Its main focus of
operation is in Northern Ireland and the six border counties of
Ireland. The Fund is administered by an independent Board appointed
by the two governments. The EU (50%) and the United States (47%)
are the major contributors to the Fund. It has assisted some 4,300
projects, spending about £380 million. It claims to have
levered in additional private and public sector assistance in
excess of £3 billion and to have helped create some 36,000
jobs. An independent evaluation of the Fund said in 1999:
"By its tight integration
of economic development and reconciliation activities, the Fund
has stimulated a range of new activities and new contacts between
the communities in Northern Ireland and between North and South.
In this way the Fund has made a major contribution to the development
of an economic and cross-community dynamic which has had an important
rôle in underpinning the Peace Process in Northern Ireland."
12.2 The Commission formally administers the
EU contribution to the Fund and reports on it to the Budgetary
Authority.
12.3 The Special Support Programme for Peace
and Reconciliation ("the Peace Programme") was established
following the 1994 cease-fire as an EU initiative and given 300
million euros for an initial period from 1995 to 1997. By the
end of 1999, the EU had provided 517 million euros. It funds projects
in the same geographical areas as the International Fund for Ireland.
Its five priority funding areas are employment, urban and rural
regeneration, cross-border development, social inclusion and productive
investment, and industrial development. It is a multi-funded initiative
under the governing regulations of the Structural Funds and the
European Investment Bank (EIB). At the Berlin European Council
in March 1999 it was agreed to extend the Peace Programme for
a further five years and to allocate 500 million euros for that
period.
12.4 Northern Ireland as a whole has Objective
One status for assistance through the EU Structural Funds.
The document
12.5 The Court of Auditors' Special Report No.
7/2000 covers both bodies. It recognises that both schemes were
developed and implemented in difficult circumstances.
(a) The Fund
12.6 The Court acknowledged that the Fund had
pioneered the joint management and delivery of programmes and
was innovative in giving priority to disadvantaged areas, and
that its rôle as first funder of projects enabled recipients
to access other funding. However, it considered that:
—.the Commission's
payment of grant-aid to the Fund in advance of need did not ensure
the most efficient use of EU funding;
—.the Fund should consider setting out staffing
arrangements and delegations of power in writing;
—.the evaluation of project applications and
the post-grant monitoring of projects should be improved to ensure
sound financial management in all cases; and
—.the Commission's failure to carry out verification
and spot checks as required under article 3 of the funding agreement
with the Fund must be urgently addressed.
12.7 As regards the impact of the Fund, the Court
found a lack of rigour in the estimates of the leverage effect
of the Fund and of job creation, bearing in mind the availability
of other funding in an Objective One area. It criticises the relative
lack of information on the achievements of projects which it says
"presents the risk that the organisation may not be accomplishing
its objectives efficiently and effectively".
12.8 The report makes specific recommendations
to address the weaknesses it found.
(b) The Peace Programme
12.9 In contrast to the Fund, the Peace Programme
has operated through local non-governmental organisations and
cross-community partnerships. The report notes that this innovative
"bottom-up" approach was deemed politically necessary
despite the risks of management difficulties and delays in implementation.
These risks were compounded by the speed with which the programme
was initially implemented.
12.10 The Court summarises its main findings
on this programme as follows:
"— the programme
was effective in providing opportunities for partnership and dialogue
and gained acceptance by both communities by bringing decision-making
and responsibility for community development closer to the people;
"— programme implementation was complicated
by the wide diversity of the implementing bodies and by the differing
needs of the two regions;
"— in some cases inadequate consideration
was given by the implementing bodies to developing an effective
methodology for targeting community projects and social groups;
"— the allocation of three years' funding
to a five year programme caused difficulty in the planning and
management of the measures, resulting in delays in the programme's
execution;
"— the decision to place much of the management
and decision making functions in the hands of non-governmental
bodies led to difficulties in the selection of the implementing
bodies;
"— the selection and appraisal procedures
lacked common criteria and, as a result, appraisals were often
limited in scope, not adequately documented or contained inconsistencies
of treatment between projects;
"— up to December 1997 the lack of appropriate
control mechanisms, weaknesses in computerised databases and inadequacies
in financial and management reporting systems led to inaccurate
reporting of financial and management information;
"— measurement of the impact of the programme
was adversely affected by the lack of quantified targets;
"— although the programme's objectives
and delivery mechanisms were substantially different, there was
significant overlap between the programme, the activities of the
International Fund for Ireland and Structural Funds support measures,
resulting in inefficiencies and delays in the execution of other
programmes."
12.11 The report also notes that eight out of
58 projects examined were mainstream economic development activities
which could have been absorbed into the normal Structural Fund
programmes, and that other funded schemes had previously been
rejected as of doubtful value. It expresses concern about the
doubtful "additionality" of some of the expenditure.
12.12 It makes a range of recommendations to
address these weaknesses.
The Commission responses
12.13 As usual, the document includes the responses
of the Commission. It points to the difference in terms of its
responsibilities between the two schemes — with a much smaller
rôle in respect of the Fund. Its comments mainly relate
to the Peace Programme. Its general observation is that the criticisms
relate to the early years of the programme (up to the end of 1997)
and that most of the areas for improvement identified in the report
have been addressed in the subsequent years. However, it promises
further consideration on a number of specific points.
The Government's view
12.14 In his Explanatory Memorandum of 18 May
2000, the Parliamentary Under-Secretary of State for the Northern
Ireland Office (Mr Howarth) says that the Independent Board of
the International Fund has generally welcomed the report and agreed
to study the detailed comments of the Court to ensure that best
practice is followed in the areas of project application, evaluation
and post-grant monitoring. The Government agrees with the Fund
and the Commission that all the monies held by the Fund have been
committed to projects and cannot be regarded as unused. (The report
had noted that funds were made available ahead of needs and hence
significant sums were uncommitted at particular points in time).
12.15 As regards the Peace Programme, the Minister
says that the Commission has welcomed the specific recommendations
and noted that action has already been taken by the Peace Monitoring
Committee on several matters in the report. He says that all the
recommendations will receive careful attention in the preparation
and approval of the Peace II Programme for 2000-2004, and that
the relevant Northern Ireland Department will work with the Commission
to that end.
Conclusion
12.16 Like the Court, we fully recognise the
special circumstances in which both these schemes operate and
that the Community was consciously "taking risks for peace"
in its funding and other support. The Court points out that there
were "relatively few viable project proposals involving entirely
risk-free investment opportunities".
12.17 The Court does not question that both
schemes have contributed to the overall objective of improving
social and economic conditions and involving local communities
— a particular strength of the Peace Programme.
12.18 However, working in a higher risk environment
arguably strengthens the need for efficient and effective methods
of assessment, management and control. It is also important that
high profile funding initiatives bringing additional resources
to specific areas because of their special needs, are seen to
be well managed if political support for them is to be sustained.
The Court's report has highlighted deficiencies in both schemes
which concerned us. So we are glad to see that they have been,
or will be, addressed. We urge the Minister to monitor progress
carefully. But we have no questions to ask and clear the document
accordingly.
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