TUESDAY 4 JULY 2000

_________

Members present:
Mr Bowen Wells, in the Chair
Ann Clwyd
Mr Tony Colman
Mr Piara S Khabra
Mr Andrew Rowe
Mr Tony Worthington

_________

MEMORANDUM SUBMITTED BY THE DEPARTMENT FOR INTERNATIONAL DEVELOPMENT
EXAMINATION OF WITNESSES

THE RT HON CLARE SHORT, a Member of the House, Secretary of State for
International Development, and MR ANTHONY SMITH, Head of European Union
Department, Department for International Development, examined.

Chairman
1. Good morning, Secretary of State. Thank you very much indeed for coming this
morning. This is an old subject between the Committee and yourself. As you know, we have
been to the European Community before and issued a report, but now, as your evidence to us in written form says, this is a new era following the signing of the Lom‚ Convention and the
reorganisation of the Commission. Therefore there are lots of opportunities to get this right so that it is much more effective, which I know is both your and the Committee's objective. We are going to the Commission on Thursday, and will be seeing Commissioners Patten and Nielson, amongst others, and we hope that we can help the discussion in a constructive way as a result.
Can I welcome Anthony Smith. He is a good friend of ours. I understand you have a short
opening statement.
(Clare Short) Anthony Smith used to be my Private Secretary and has taken on the
European Union and the improvement of its programmes for his sins. But we are making
progress. I am very pleased that the Committee is undertaking this inquiry. Your previous
reports on the renegotiation of Lom‚ and the future of the EC Development budget were
influential. There is no question of that, so keeping at it is very important. As you have said,
Chair, we share a commitment to the effectiveness of EC programmes. The optimistic way of
looking at that is: if things are really terrible, it is not very difficult to make improvements. I
think we are making some progress, but no-one should fool themselves about how bad things are
and how important it is to do better. As you will all remember, one of our objectives was to have
fewer Development Commissioners, because the responsibility was so fractured that you could
not get any coherence into budgets and objectives. We made progress there in getting down to
two: Neilson and Patten. I personally would have preferred one, because there is still a split
between Asia and the Balkans, and you get politics between the two parts of the Commission
rather than people putting the whole programme together and having a sense of priorities.
Nonetheless, it is very important progress. The new Lom‚ Convention, which we have to learn
to call the Cotonou Convention, is a major advance. It is massively better structured than
previous Conventions. Obviously we have to work at implementation, but the Committee
contributed to that. It was an important objective of the Government, and we achieved a lot of
what we were after. The draft Development Policy Statement, the new Statement, is good. It
targets all the kind of policy objectives the Government and the Committee overlap on, but of
course, we have no action plan, so we must be very careful here. Everyone will trumpet the
Policy Statement, read the words, it says everything we would wish, and we might feel we have
won, but until there is an action plan and a process for implementation, it is another piece of
paper saying the right things, and we have seen that before in the Commission on poverty, on
gender and all sorts of things, good policy that never got to the implementation stage. Also, the
Policy Statement flags the need for coherence in EU policy on trade, agriculture and so on. You
may remember that was one of the major issues of the Netherlands presidency, to get a
commitment to not just running a better aid programme but looking right across the board in EC
programmes to make sure the developing countries got the chance to improve their economies.
We have a million miles to go to get the rest of the Commission to seriously think about
development and how trade policy and agricultural policy and all the rest will take account of the
needs of developing countries. So it is flagged up, but I do not think it is internalised or accepted
in other parts of the Commission in any way yet. There is a lot to do on that. There are plans to
improve management arrangements, and implementation is starting, as you know. Let us hope
it goes better this time. I do have a fear here that we could get a speed-up of spending and no
improvement of quality. That is a real danger. At the moment we get about 100 million back
a year that they cannot spend because of their inefficiency. If they speeded up and spent it all but
spent it badly, would we have improved things? That is a danger. We want better management
but obviously we want the implementation of better policy. There is a growing consensus though
- and that is important; the policy has contributed to that - about the need for reform and the
direction of reform. The EC has to accept that it needs to do less in order to be more effective,
and not try to do a bit of everything and do it all ineffectively. The final point I would like to
make is this: the skewing of the whole of the development programmes of the Commission
against the poorest countries and the obsession with the near abroad remains, and the proportion
of spending in middle income countries against developing countries is a disgrace. It is much
worse than the performance of the Member States, and we have as yet no progress on that.
2. Yes, and it is likely to get worse, is it not? There is no question that the
programmes for Eastern Europe, if we can treat them as a whole, and the Mediterranean are still
preoccupying the European Union, and that, of course, militates against getting more money
focused on the poorest countries.
(Clare Short) That is right. We have a series of problems here. I think one is the clash
between the perspective of foreign affairs ministers and development ministers. Foreign affairs
ministers of all countries tend to have short timescales and to like gestures. If a crisis is in the
headlines, they want big announcements and big sums of money to be thrown out to wherever
the latest issue is, say the Balkans. We have this ridiculous argument going on with
Commissioner Patten calling for a spend of 5 billion, and it is not a costed programme. We know
then that it is not realistic, there are no details of how it is meant to be spent, it would break the
ceilings on current commitments, and it would pre-empt lots of money that ought to go to poorer
countries. It is back to gesture politics. Obviously, the Balkans is enormously important, but
throwing money around does not actually help the Balkans to reform and get access to the World
Bank and the European Bank for Reconstruction and Development and all the funding it needs
for its long-term problems. We have that, and then we have another political problem that
different countries see that they have a political duty to protect the interests of certain other
groups of countries, and a slight obsession with the near abroad, the need to develop the
Mediterranean because it is next to Europe and there is a danger of immigration pressures if not.
Of course, it is the same with Eastern Europe, and thinking throwing money around is the way
to do that, and not thinking about the issues of justice and morality for the poor of the world in
Asia and sub-Saharan Africa, which are part of Europe's security too. If Africa is in conflict and
in trouble, it will affect Europe. It is not so far away. If Asia, where the highest risk in the world
of a nuclear confrontation lies, does not develop and improve, that is a threat to Europe. To be
obsessed with the near abroad is a very old-fashioned, narrow kind of perspective of foreign
policy. We have that problem too.
3. Do you understand, Secretary of State, how the Commission arrives at these huge
global figures of 5 billion euros, or do they just pluck them out of the air because they will be
impressive to the media and the media's audience? How do they get to those figures?
(Clare Short) I would like to bring Anthony Smith in on the detail, but I think there is a
lot of plucking out of the air and a lot of gesture in it.
(Mr Smith) In general terms, there is no single agreed methodology within the
Commission for making allocations. Anecdotal evidence that we have in different programmes
at different times indicates obviously that past patterns of spending, and the political importance
which the Union is said to attach to particular countries, dictate a figure which is considered to
be sellable to the Council and to the Parliament. In the case of the programme in the Balkans,
there were a couple of elements to add to that. One is the view of the Commission that a political
gesture in terms of a headline figure was important in convincing the United States that Europe
was serious about tackling its back yard, so in effect a big figure to impress the Americans.
Another element is that the Commission felt it was important to make a provision over the next
few years for possible spending in Serbia. Of course, spending is not really possible in
development and ordinary terms at the moment with Milosovic still there, but they felt
nevertheless that they ought to put a considerable amount into their budget. So that added quite
a lot to the global total. I cannot, I am afraid, say that they have a robust methodology for
determining the needs.
4. This is actually raiding money which would otherwise be used for development
of the poorest, is it not, Secretary of State?
(Clare Short) Absolutely. They will never be able to spend it, even if it were sensible to
agree it, which it is not. There are two ways of notionally funding it. One is to break the ceiling
that has been agreed on external spending, and there were moves to try and suggest that that is
what should be done. We as a Government are very strongly opposed to that, because we have
to get more discipline into EC spending, in the sense that they have got to control budgets and
spend the money well rather than just say, "We have broken the ceiling. Let's get some more
money." I think it is now accepted that that is not going to be possible. The second way is to raid
the money that would otherwise go to the poor, because if we stay within the ceiling, if they will
not reduce it, it means poor countries get less.
5. The other defence that I understand they are using is to say, "We are spending it
on middle income countries, but we are spending on the poorest pockets within those middle
income countries, that is to say, we are targeting it on the poorest within middle income
countries." How do you view that as an argument?
(Clare Short) I think we need much more intelligent debate in the international
development system about the needs of the poor in middle income countries. Take Latin
America, the most unequal countries in the world, secondly to sub-Saharan Africa, a country like
Brazil, with lots of very poor people, although it is a middle income country. We have to ask
ourselves what kind of support is needed. If we give large resource transfers, we are actually
subsidising the continuing inequality. We have to help middle income countries with large
numbers of poor people to engage in the reform process that includes their poor in the body of
the nation and gives them the chance of an improvement in life. We really need to get a more
refined debate about appropriate forms of assistance for middle income countries with a lot of
poverty. Big resource transfers do not bring change.

Mr Rowe
6. It is still true that the largest amount of money spent by DFID is spent in India.
(Clare Short) The largest single programme? The programme in India is 100 million. I
think that is right, though in proportion to the numbers of poor in India, that is probably still not
right.
7. It is a middle income country.
(Clare Short) India?

Chairman
8. No, not by definition.
(Clare Short) No, it is not. A third of the poor in the world are in India.
9. There is a little nitty-gritty point about the reorganisation which I would like to
put to you, Secretary of State. We understand that Commissioner Nielson, whilst having
responsibility for development policy, has no operational control over programmes outside the
ACP, therefore he does not deal with the middle income countries of Europe, Eastern Europe and
also the Mediterranean; he only deals with it in the ACP. Is this not a great mistake on their part?
(Clare Short) It is my own view, as I just said in my introductory remarks, that we would
have been better with one Development Commissioner, then we would have to have one policy,
one set of budgets and all the needs of countries would have to be put side by side. Obviously
the responsibility is split: Commissioner Nielson has the ACP countries and Commissioner
Patten has the Mediterranean, Eastern Europe and Asia. I must say, the European Commission
pays very little attention to Asia, where most of the poor of the world live. There is a neglect,
and I think that is regrettable. The new management, the SCR, has now got all these
Commissioners together with Commissioner Patten as the Chair and Commissioner Nielson as
the Chief Executive, and that is a kind of implementation agency. How that will work out we
will see.
Chairman: It does not sound very promising.

Ann Clwyd
10. When I was a Member of European Parliament from 1979-1984, we were always
arguing for more powers. The powers of the Parliament, as you know, have increased
substantially since that time. Is there any evidence that those increased powers have been
brought to bear on the development policy? I do not know how active, for instance, the
Development Committee of the European Parliament is. I would have thought that they could
play quite a substantive role in calling the Commission to account at least.
(Clare Short) I think that is right, and we have been working to try and strengthen the
relationships between the Department and the Parliament because it could be a very important
player. In the past it has tended, especially the Development Committee, to call for more and
more budget lines, to name more issues - HIV AIDS or work with NGOs or gender - which has
been well-intentioned but actually made the problem worse. If you have lots and lots of separate
budget lines, it adds to all the inefficiencies in the system. The Budget Committee has not taken
a lot of interest in this area of policy. We have been working to try and get a body of members
of the European Parliament to take on the positive agenda for reform. I think that is beginning
to move, but I agree very much, Ann, with the direction of your question. If there were an
informed body of opinion in the Parliament that saw how bad it was and had some idea of what
kind of positive change would bring improvement, I think it would speed up reform. I think it
is worth us all working to try to create that body of committed opinion across countries.

Mr Rowe
11. What concerns me is that we have so little information about outcomes. One or
two of our witnesses have already said that the evaluation of EU programmes is notable by its
absence in some fields. I wonder whether you have good evidence of successful projects and if
so, whether those cannot be used to improve the rest.
(Clare Short) Basically, there never used to be any evaluation, so we had all this anecdotal
evidence, and when you travelled around people would say, "Please get the EC to stop offering
any help with this." It is like a blockage on progress, because once they have offered, no-one else
will offer any and you never get any progress. I get that kind of feedback as I travel around the
world. We had to fight for an evaluation, which was then done, which came out terribly critical,
and in some instances it was not possible to say how bad things were because not all the
information was there. It is bad, but if you do not have any information on outputs, you cannot
see how bad it is. That has helped to create a climate for reform. But you are absolutely right.
Development agencies do a lot of evaluation because we work in very difficult conditions. I
think there are lessons for the public sector generally in a commitment to constantly evaluate
what you do. The Commission is not part of that culture, and we have had to fight to get it to be
part. I do not know whether Anthony can say anything about examples of success that we would
like to trumpet. Somebody did tell me the other day that there was something very good. I have
forgotten what it was.
(Mr Smith) People often speak of the HIV AIDS work that the Commission is doing,
which is perhaps an interesting example, because they do it, unusually, in quite a strategic way.
They have established quite good policies with a lot of help from Member States. They have
virtually no health professionals of their own; they second them from Member States, then they
try and work strategically in the key countries with other donors and are, for example, looking
at a big contribution to WHO. In effect, that works well because they are not trying to do
everything themselves on the ground; they get the policy framework right and work strategically
with others. Can I say on evaluation that the reform proposals that have been tabled also call for
strengthening of their evaluation service. There is an evaluation service at the moment connected
to the implementing agency, the Common Service, but certainly, as you have indicated, it needs
considerable strengthening.

Chairman
12. How many projects have they evaluated? I think it is about two, but I am
interested in your assessment.
(Clare Short) They never used to evaluate, but part of the arrangements for the new
management system is to build in evaluation. We need to keep an eye on that and make sure it
is done. My final point, Andrew, is that evaluation is good but being output-driven is better, and
getting the commitment to the international development targets and the collection of enough
statistics to be able to monitor progress country by country is the big objective. That is a lesson
for the whole international development system, which has tended to be obsessed with inputs,
not measuring systematically objective progress. We are trying to get the whole international
system to turn round, including the EC, which has now signed up to the targets, most notably as
part of the renegotiation of Lom‚. There is agreement now right through the World Bank, the
OECD Development Committee, the EU, the UN system and so on to a series of statistical
targets, 21, that is manageable. If we can get capacity in the countries year on year to measure
children in school, child mortality, maternal mortality, and we can see year on year, country by
country, where progress is being made, we would then have the instruments in our hands to build
an effective international development system.
Chairman: Can we move on now to the statement on EC development policy.

Mr Worthington
13. There were originally six Commissioners concerned with development. Now
there are two, and that is seen as an improvement, but the logical progression of that is that there
could be a time not too many years ahead when there are no Development Commissioners. You
can read this reform as marginalising development. Do you agree with that?
(Clare Short) No, I do not think I do. I do not have the power to predict the future, and I
certainly am not complacent that we have got there on the reforms we need, but we argued very
strongly for reducing the number of Commissioners because it created such a fracturing. You
could not get any coherence into budgets or policy objectives. So down to two is much more
manageable than what we had before. I am clear about that, and I am clear that the policy
objectives in the Commission's paper are right, but I think Commissioner Nielson has said it is
do or die, or words to that effect. The whole Commission is on test. We either have to get
significant improvement or the calls to reduce any involvement of the Commission in the
development work will become overwhelming. This is now a period of real trial. There has to
be major improvement or more and more people will be saying the Commission is incapable of
doing good development work; let the Member States do it.
14. I get the impression reading the documents though that they fudged the important
issue. They never said that too much money has gone into some places, for example. There is
no confession of failure there. There is no recognition that their trade policy has been deeply
damaging to developing countries. In other words, we had this window of opportunity with the
establishment of a new Commission to set out new policies, and they fudged on that. What you
therefore have is a situation of drift.
(Clare Short) I think you are absolutely right that the argument is not comprehensively won
across the Commission. With the argument on focusing more on the poorest countries, they had
to fight for the principles that we are all agreed on, and there are large parts of the Commission
that do not agree and believe in gesture spending and prioritising the near abroad. Similarly on
trade. My own sense is that Commissioner Leon Brittan, towards the end of his term of office,
as we were coming up to the Seattle meeting, started to think more about the interests of
developing countries and to be conscious that there would not be agreement on a trade round
without developing countries feeling they were making gains. He paid a lot of attention to
Bangladesh, which is the Chair of the least developed countries, and so on. Commissioner Lam‚,
of course, took over and then went straight to Seattle. There were a lot of negatives in Seattle,
but one of the positives was everybody realising there would be no more trade rounds without
developing countries being at the table and making gains. Commissioner Lam‚ has shown more
interest, but it is early days and we are coming from behind. The mainstream of thinking in the
Commission sees development as marginal and a second-tier issue.
15. That is very depressing, but characteristically realistic. The Statement on
Development Policy says that Community development support has to be concentrated - and you
have said this - on a limited number of core areas. Can you let us know what you think those
should be and how they should be chosen?
(Clare Short) I do not think it is for us to dictate, but I think it is really important for the
Commission to look at where it has expertise and a track record. Building roads and transport
is one of its areas of expertise, and we need to look at which roads where, and roads have to be
maintained to be useful. There is very clear evidence that rural roads are profoundly important
for development. They help the very poorest people produce more crops, get their children to
school and get access to health care, so that is one area. Trade is another obvious one, but we
would have to convince all the parts of the Commission to look at trade in a development context
as well. I think the Commission is interested in pushing forward on trade and doing lots of
capacity building in developing countries, because we go into the negotiations for these regional
free trade agreements under the new Lom‚, which are going to be a complex and important set
of trade negotiations. So trade and transport.

Chairman
16. Power perhaps?
(Mr Smith) Energy?
17. Yes.
(Clare Short) I think on energy we would argue that it cannot be ODA money that supplies
the energy needs of developing countries. What we need is help with feasibility studies and
regulatory arrangements that enable countries then to attract private investment. To get all the
electricity and telecoms that Africa and South Asia needs, the ODA budgets of the world are not
enough. We have this public/private infrastructure advisory facility with the World Bank which
is trying to help countries make the arrangements that will help them to leverage private
investment. I do not think the Commission has been engaged in any of that very much. They
need to look at their staffing. Let those be the areas of comparative advantage. After all, one of
the advantages of the coalition of all these Member States, some of them with a good track record
in development, is that where Norway or the Netherlands or Sweden have done some work on
education in a country, the Commission ought to be able to trust that work and put some finance
behind a big project to do, say, a universal primary education programme or whatever, and not
have to crawl over all the details again.

Mr Worthington
18. Nothing clear comes out on the staffing issues from the papers we have. They
say we have far too few staff in comparison with other development agencies. Then they are
proposing to abolish these technical assistance offices, which I find bewildering in their
vagueness. What are they? They spend, is it right, œ170 million? They seem to be not of the
Commission. Do we have any in this country? It is very, very difficult to get a picture of what
they are going to do about staffing
(Clare Short) Yes, I think staffing is a trap. They are inclined to say, "We can't improve
without more staff." Then you are supposed to throw good money after bad, and I do not think
Member States will agree to just increase their staffing. What they need to do is use the staff they
have well, and then co-finance with Member States in other areas rather than duplicate on
Member States' staffing strengths in all areas. So that is a battle yet to be won, because the
excuse line is, "We haven't got the staff so we can't improve. Give us more staff, let's have even
more of the development energy of the international system." On these technical assistance
offices I will bring Anthony in. They have had offices spread across the world, a wonderful
range, with very limited discretion to spend or make decisions. So there is representation and
blue flags and stars, but no capacity to act, which is wasteful and very frustrating for a lot of good
people who are in those offices and cannot achieve very much. I do not know if that is part of
these technical assistance offices. They are, I know, withdrawing them, and they are going to
strengthen the in-country offices and give them more discretion and more authority to spend
within agreed policy, which we agree is the way it should go forward. I will ask Anthony to say
something about the technical assistance offices.
(Mr Smith) They are essentially consultants that are employed to implement specific
projects, and they are set up because the Commission never felt able to handle these projects
themselves for various reasons. They cost a lot of money, they are very poorly monitored on the
whole, and there has been a lot of concern in the European Parliament and elsewhere in the past
about the fact that a lot of money is channelled through these instruments without any real
monitoring and control. The logic of the reform proposals that are being put forward is that you
would get rid of them and use the money to put contracted staff with the right skills under proper
Commission control, either in Headquarters and the new expanded Common Service, or
delegated out to Commission offices overseas, which would make much more transparent how
programmes were being administered, and would use a method which most member States and
major donors use of using the programme budget to fund some expert staff.
19. Is there a list of these consultancies?
(Clare Short) The technical assistance offices?
Mr Worthington: Yes.

Chairman
20. Can we have a list of what they are doing?
(Mr Smith) There are a lot of them. I imagine there must be a list, yes.
(Clare Short) Could I just stress that one point that Anthony Smith has made. The
reorganisation of the management structure has been done in such a way that the Commission
will be able to use programme funds to employ people to help deliver its programmes. That will
be part of the answer to its staff shortage problem. We think it is sensible - we do it too - but it
needs watching to make sure it is done well, rather than a proliferation of people who do not
deliver specifically. So they are going to get new staff through this mechanism.

Mr Colman
21. Coming back to the technical assistance offices, I am assuming that a large
number of those are actually UK organisations, and I am concerned that there may be an area
here, with the untying of aid, which is something you have led on, that there may be a situation
where in fact technical assistance officers from the developing countries perhaps ought to be
considered more. Is this an area which you have looked at in terms of the untying of aid from
the consultancy point of view, given that such a large amount of money is in fact being spent in
this area?
(Clare Short) The whole untying issue is very important to get rid of ulterior motives in
aid, because if everyone is trying to get vehicles or spares bought from their country, how can
you run a fleet of vehicles? It creates massive costs and inefficiency. Secondly, I agree with your
point, that it focuses on consultants flying in endlessly from the donor countries, not building up
capacity in developing countries, or using neighbouring countries and the expertise that is often
in a more relevant form, used to working with less safe facilities or less expensive systems. We
are trying to move on that in general. It is part of the untying argument, and it is part of the way
we are trying to change the work of the Department. I do not know if these technical assistance
officers include any UK people, but we take the view very strongly that the old game of countries
simply pushing forward their own people is not the job; the job is to get effective development.
Let British people make a contribution if they are good, and if not, let others, and let us have
mixed international teams. For goodness sake! What is at stake in terms of the levels of poverty
and need is much bigger than making sure a few of your nationals get some benefit.

Mr Rowe
22. You have said something which seemed to me absolutely central to the future,
and that is that it should be possible for the EU to piggy-back on the projects and expertise
developed by Member States. What I do not understand is how you achieve that. The EU
presumably (a) is inundated with requests from people taking initiatives of their own and wanting
them funded, and (b) wants to have its own priority list. Would it not be a miracle of benefit if
the priority list of the EU actually coincided with a successful project done by one of the Member
States on which it could piggy-back?
(Clare Short) This is part of a much wider question on improving the quality of
development assistance internationally. In the past it has tended to be that each country or each
agency has its own attemptedly perfect projects, often in a sea of poor-quality administration and
poor provision in health, education or whatever it is. But there is a good British project here or
a French project or an EC project, and when the funding ceases the projects crumble because they
did not bring sustainable change. If there is a proliferation of tiny initiatives like that, countries
with weak administrative capacity cannot cope. They are so busy accounting to all the different
donors with all their different financial systems that there is no time left to run their own
departments of health or departments of education. So this big move to sector-wide provision,
where a country looks at its educational sector, starts with a priority on primary education, looks
at its administrative capacity, its ministry of education, how it trains its teachers, how it produces
its books, and the donors come in behind that, tighten up the management of the public finances
to make it more transparent and then put money through the budget to help build sustainable
improvement in that sector in a country, is the way to work. It involves putting the flags away
and being more serious about outputs and sustainable change that gets to scale. That is where
good development work is going, and we are trying very hard to drive that way. The World
Bank's comprehensive development framework, poverty reduction strategies that have come out
of debt relief, are all pointing in this direction. You are right that the EC wants its flag up badly,
even worse than some nation states, and there should be a willingness to piggy-back, to go into
sector-wide, and then if Britain has done the work on the health sector, let us get behind that. We
want to do it with other Member States too in the UK. If the Netherlands has done it on health,
why do we need British experts crawling all over and using up the time of the Tanzanian
government or whatever? We have to put our flags away and help countries get sustainable
change that goes to scale. If the EC were moving this way, which is the way in which the best
development thinking is moving, it can piggy-back, improve quality and help to improve the
whole quality of international development effort. We must persuade the Commission to move
in that way. They are talking about it, but they have not done it yet.

Ann Clwyd
23. For as long as I can remember, there have been complaints about the small
number of staff employed by the Commission. Glenys Kinnock in her evidence to us says that
the Commission as a whole has fewer staff then Clwyd County Borough or Leeds City Council,
and compared with DFID, of course, it has a very small number of staff. I think you have 5.8
officials to manage each œ10 million and the Commission has 2.9. I wonder what you consider
to be appropriate staffing levels. Is it any wonder that EU development assistance is below par
when they simply do not have the staff to cope?
(Clare Short) I do not know whether those figures are accurate. I do not know whether
Anthony does.
(Mr Smith) Broadly.
(Clare Short) I think this is a complete trap. What we have is lots and lots of money, not
spent or badly spent, very big budgets, and very poor quality work. If the Commission says, "We
are keeping all the money but we can't do better without you giving us far more staff" and they
take even more of the precious resources we have across the European Union for development,
it is, I think, throwing good money after staff that is going bad. I think we have to say to them,
"Let's focus the staff you have or redirect the staff you have. Let us see some improvements in
quality, and not support any increase in the numbers of staff." We have 18 UK experts working
in the Commission to try and help the process of reform, but I personally would resist completely
the suggestion that they should have masses more staff when the quality of what they are doing
is so poor. I think they have a preponderance of engineers because of this tradition of working
in roads. Either they need to play to that strength or change the balance of the staffing. I think
there is a case for playing to the strength. If you look at a lot of the work the EC does across the
world, it is roads, and there is a place for good roads, particularly rural roads. Anyone who wants
to make an excuse for the poor performance of the Commission will say they do not have enough
staff, and I personally will fight to the death to not give them any more staff until they improve
the quality of what they are doing, otherwise we are just throwing more and more resources
away.
24. Glenys Kinnock, of course, is a Member of the European Parliament.
(Clare Short) She is a friend of mine and she is a passionate fighter for development, but
she defends what the Commission does passionately too.
25. She says the vast majority of the Commission staff are highly competent and
highly motivated, but all too frequently they are frustrated by out-dated procedures and
burdensome red tape. Do you know what she means by that?
(Clare Short) Yes. It takes 40 signatures before a contract can be amended. Those are the
procedures they have. It is a monstrous Kafka novel of disgraceful administration. Just imagine
it! This, of course, is Neil Kinnock's remit; it is centred on the procedures. It is a very
bureaucratic culture that then has had scandals, and they have put more and more layers of
control into it so that it becomes like concrete; it cannot move. That was one of the reports of
the three wise men, that it has created a culture of no-one taking responsibility for what they do,
because the bureaucracy is so intense, and there are so many layers of control that there is not a
culture of people feeling in control of their own policy area and accountable for what they
achieve. That was one of the criticisms in the three wise men's report. Neil Kinnock is leading
on this reform, so I am sure that Glenys hears about it both in Parliament and at home.
26. Do you think that the quality of the staff is because of the necessity to have a
country balance of people, which used to be the case, that because each country had to have its
quota, sometimes you did not get the best people?
(Clare Short) I think that is a very important point. As I understand it, there is a tradition
right across the Commission and in every bit of it that there has got to be a balance by country
and by political tradition. So for every country there have to be Christian Democrats,
Conservatives, Social Democrats or Labour of each nationality, and as well as nationality
networks there are political networks right through, and loyalties pulling into the networks rather
than getting an efficient job done. I think that is an old-fashioned patronage way, and we should
have more open, transparent recruitment procedures, and of course a mix from all countries, but
quality people doing a good job and modern management of staff.
27. If staff are incompetent, what are the procedures for getting grid of them, or is
it difficult because of country sensitivities?
(Clare Short) I will ask Anthony Smith to come in on this. I do not have any detailed
knowledge but I think it is very difficult indeed to get rid of someone who is not doing their job
properly.
(Mr Smith) That is broadly true. I do not have detailed knowledge of the staff
procedures, but they are legendary in their complexity and the extent to which staff disputes are
taken to the European Court as opposed to being dealt with in normal management relationships.
But changing the balance of skills in the Commission is a high priority for the Commission and
the external programmes there.
28. This is 20 years on, but I remember similar criticisms being made in 1979. Who
do you think is going to be able to take the whole thing by the scruff of the neck and shake it?
(Clare Short) I think this is the job that has been given to Neil Kinnock. I think it is a
tremendous task, and as I understand it, the staff associations and the culture of the staff of the
Commission is very resistant to these reforms. It is absolutely crucial to get better quality
administration. If we are going to enlarge the European Union, just imagine. We are going to
have another set of countries, another set of languages, another set of people who have to be
included in the patronage system. The thing will just fall apart. It is very urgent for the EU to
be a good organisation that operates efficiently. Neil Kinnock has been given the job of trying
to reform it. I think there will be a lot of resistance and difficulty, but it is very important, not
only to our own development concerns but to the whole future of the European Union and its
effectiveness.
29. Do these matters come to the Council of Ministers? Is there any discussion of
staffing difficulties, for example? If there is a discussion, is it an honest discussion or is it a
cover-up?
(Clare Short) The issue of staffing in development and needing more staff or a different
mix of staff has been touched on time and again as part of the reform agenda, but it tends not to
go any deeper than that. The problem we have, as you know, with the Development Council is
that it meets every six months. It tends to have very informal discussion and demand
improvements in policy, then goes away and maybe it takes them six months or a year to write
a good policy document that has no implementation. In the mean time the General Affairs
Council meets monthly, and takes some development questions. Sometimes I attend but it tends
to have more of a foreign ministers' perspective. So in terms of getting it into the nitty-gritty of
the improvements in the management of staff to get improvements in effectiveness, we tend to
skate over the surface, to be frank.
(Mr Smith) Obviously the Council of the Parliament of the EU as a whole is intimately
concerned with improving effectiveness and recognises that these nitty-gritty nuts and bolts
issues are basic to bringing about improvement. Obviously, a lot of this action is the
Commission's own responsibility, so formal decisions are not always the responsibility of the
Council. The Council does come in in a few particular areas: financial regulation, for example,
which will be part of the way that the audit systems will be changed, will be agreed by the
Council and will be debated by it. There are probably a couple of other examples like that, but
the main battle is an internal management one for the Commission to undertake.

Mr Worthington
30. Going back to that issue, I understand in July Commissioner Patten has to
produce performance targets. So that is scheduled to occur this month. We will see. Does the
Secretary of State feel that her own performance targets for DFID are the ones that should be
adopted in the European Union? What particular emphasis would the Secretary of State like to
put on this?
(Clare Short) I was not aware that Commissioner Patten had to produce performance
targets. If so, I presume others have to. I am very focused on needing the action plan to
implement the development policy document. How can you have performance targets when you
have not tied down what you intend to do over the next year in what area? It seems to me that
meaningful, policy-related performance targets require clarity about when and which first, and
what your priorities are in the implementation of the broad policy that has been laid down. Our
performance targets, which we are currently renegotiating because we are on a second time round
on the Comprehensive Spending Review, are very tied to outputs and very tied to trying to
mobilise the international system to meet the international development targets. In that sense,
they are difficult, because we do not have everything under our control that is required to fulfil
them. I think that is the way to move the international system. I understand the Netherlands are
moving in that direction now. It would be wonderful to get the Commission to such a point. I
think it is going to take a little time. At the moment, if they signed up to those kind of
performance targets, they would not have any mechanisms for measuring whether they were
achieving anything against those objectives, because the structures do not give them ways of
measuring their own outputs.
31. We could ask him on Thursday.
(Clare Short) Do you know anything about Mr Patten's performance targets, Anthony?
(Mr Smith) I do not. There is an action plan purely for the reform proposals that has
been tabled. There are a number of things related to, for example, activity-based budgeting,
where you target staff and financial resources to areas of high priority, and perhaps in drawing
that up, which is due to be done later this year, they will try.
Mr Worthington: I have read it somewhere.

Chairman
32. Secretary of State, you belong to a group, I believe, of development ministers of
Norway, Sweden, Holland and ourselves. I learned this on a visit to the Hague from a friend of
yours who was the development minister in Norway. What is this group?
(Clare Short) It is known as the Utstein Group (?), which was the constituency of the
previous Norwegian Development Minister, where we first met. We called it a kind of
conspiracy of implementation. It came together informally. We were all women development
ministers who were members of the Development Committee of the World Bank. We were
really pushing at that stage for this very strong poverty focus behind debt relief, and we had a bit
of a breakthrough. The women behaved differently at the meeting, and did not just read out texts,
and I think it moved things forward. That is how the group came to be borne. We have tried to
stay together and get into implementing some of the agreement on this sector-wide way of
working, which the whole international system is now signed up to in theory, but practice is way
behind theory. It requires everyone to change their practices, their accounting, financial, etc. We
went together to Tanzania to look at the details of our administrative systems as countries, to
merge them and not require governments like that of tanzania to have a different accounting
system for Britain, for German, for the Netherlands and for Norway. (Those are the four
founding members.) I think there might be some other countries that want to join, but we are
trying to agree some bottom-line commitment, so it is not just a like-minded group that says all
the right things, but it is an implementation group. We have also worked together on untying.
It is trying to ginger the system into moving forward and implement some of the good policy that
lies on the table and is not implemented.

Mr Rowe
33. Given that the inefficiency of the EU is one of the best defences of national
sovereignty, and given that Neil Kinnock's brief seems to run right across the Commission, to
which ministerial council does he look for support, and is there a commitment within it to assist
him?
(Clare Short) I do not know the answer to that question.
(Mr Smith) He talks on some issues with the General Affairs Council, which has, as the
name implies, a general remit, but also to the economic and finance ministers, who are obviously
the treasurers of the EU, who have a close interest.
34. Listening to Michael Heseltine talking about his experience of ministerial
councils, one gets the impression that it is extraordinarily difficult, particularly because of the
long time-scale between their meetings, to actually focus coherently and with real political will
on issues of this kind. I wondered whether in fact you had the feeling that there was real clout
behind this desire to change the staffing culture of the EU.
(Clare Short) We also have an operation in Brussels. We have an ambassador, we have
staff there, and we as a Department have staff there that are tracking all the reform agenda, week
in, week out. You need to do that. It is no good the Minister just turning up to the odd meeting;
you have to be inside the system, working to drive forward all the commitments you have.
I personally do not have the knowledge to properly answer your question about who Neil
Kinnock is accountable to, but it is my impression that the whole Commission knows, following
the humiliation of the previous Commission, that their credibility is on the line. The success of
Neil Kinnock's reforms is crucial to the credibility of the Commission. So I think he has strong
back-up in that spirit, but I still think it is an incredibly difficult job that he is trying to take
forward. With enlargement coming too, if it is not done, it will endanger, I would have thought,
the future of the European Union. But let me add that Poul Nielson did say at the last meeting
of the Development Council that the Commission is good at trade negotiations. He said it is
particularly bad at development because it requires a different kind of management capacity, and
there are some things the Commission does well. I have not had the joy of working in those
areas.

Mr Colman
35. Picking up the one point which has not been covered, the role of developing
countries in peer-reviewing this Statement of Development Policy. In the Statement on page 28
it talks about partnership, ownership and participation, and the quality of dialogue with the
partner countries as the key to successful development policies. Was there any dialogue before
this statement came out? Was it part of the discussion at Cotonou? If not, could there be?
Really, it is extraordinary if this document was produced without any input from the developing
countries.
(Clare Short) I do not know whether there was any discussion with developing countries
in the policy document, but I do know there was intensive, prolonged and detailed discussion on
the renegotiation of Lom‚. That included the effectiveness of managing money and being more
flexible in having funding available. My own sense - and I will ask Anthony to comment on this
- is that the principles that informed the Development Policy Statement were very much the sort
of principles that informed the renegotiation of Lom‚, and they were intensively discussed. I
suspect that the policy document was not, in that it is now about reforming the Commission's
capacity to deliver on what are agreed and have been discussed policy objectives.
(Mr Smith) That is right. As far as I know, there was no formal consultation with
developing countries.
36. Given that it is a draft statement - I think that was your description - is it a
situation where you would think it is worth asking the Commission to ensure that views are taken
into account on it and that there could be input?
(Clare Short) I do not actually think that this is important, in that the draft Policy Statement
incorporates the best of development thinking, which developing countries and donor countries
have discussed in the World Bank, in the UN, in consultations through the Development
Committee of the OECD in the renegotiation of Lom‚. I think it is now time for the EC to put
up and implement on all that, rather than consult again about whether it is desirable, because I
personally think everybody thinks it is desirable. This point about it being a draft is important.
It is a draft that comes from the Commission, and we need a final document that is supported by
the Parliament, Commission and the Council of Ministers for Member States that then becomes
an agreed policy objective. We need to get to the stage of a shared commitment across the three
parts of the Union to agree the policy and have this determination to drive it forward. So we need
the action plan added on so that we have broad principles agreed and method of implementation
agreed.
37. So in your negotiations at the next Development Council, it will be to ensure
there are very clear performance targets in and action plan in the final statement. What sort of
performance targets do you want to have written into this action plan?
(Clare Short) We do not have an action plan yet. We have a statement of good policy
intent that does not say what will be done by who this year, next year, whether we know we
succeed or not, or how you are going to distribute the effort, the staff. We do not have anything
that could measure performance until we have an action plan. We said very strongly at the last
Development Council what we needed. It will be a disaster if we get no progress until the next
Development Council. So now, through all the officials from the Department that we have in
Brussels, people like Anthony Smith and so on, we need to get the Parliament to be seized of this.
The Committee's influence will be important in getting an action plan that has output, so that you
can then measure effectiveness. That is the nature of the action plan, and that is the crucial thing
we need to start being able to implement and to measure the effectiveness of implementation.

Mr Worthington
38. I agree with you, but going back to what I was saying earlier about performance
indicators, I am quoting from a document called "Communication to the Commission", which
is in our filing system as ECB4. It says, "Quantified performance indicators would help to
measure progress against these objectives and to ensure that the success of programmes is no
longer judged in terms of whether a budget allocation in a given year has been committed. Relex
directors-general are therefore working to have suitable indicators and deadlines in place by the
end of July 2000."
(Clare Short) I have to say that part of the experience of working with the Commission is
deadlines that are not met. It is part of the culture too. I absolutely applaud the wanting of
objectives and measuring them, but you cannot put it in place until you have a plan for
implementation of some broad policy objectives. How can you measure your effectiveness when
all you have got is a general statement of good intent on good development policy?
39. I agree. Can I just ask a question about ECO which has featured previously in our
discussions. One of the depressing things, again quoting from the same document, is that it says
that present arrangements for ECO are unchanged. Then in another document coming from Carlo
Trojan, Secretary-General of the European Commission, about ECO he is saying - which I find
extraordinary - "The Community's humanitarian office, ECO, is called on more and more to
finance post conflict programmes outside the remit of emergency aid due to the absence of other
instruments that are sufficiently flexible and swift". As you know, Secretary of State, no-one has
ever described ECO as flexible and swift. How can ECO have come through this reform
unchanged without a recognition that the way it performs at the present time is just totally
inadequate in an emergency situation?
(Clare Short) We are at the very beginning of reform. We must not kid ourselves. We have
had the reduced number of Commissioners and a statement of good policy intent, that is as far
as we have got so far. These are good things. We have the intention to set up the Common
Services Agency but we have no change on the ground. My understanding, and again I will ask
Anthony Smith to come in, is that this pressure to get ECO to operate on post conflict is not
particularly welcomed by ECO. It is coming from other parts of the Union and the Commission.
Clearly post conflict is very important.
40. It is.
(Clare Short) Badly done humanitarian relief can paralyse people into being stuck as
refugees and dependent on hand-outs and not getting back home and getting their lives rebuilt
and getting to the root of the conflict. Post conflict work is very important but I do not think
ECO thinks it would be good at it. It does not particularly want to do it. Other parts of the
Commission want it to do it, we think it should not do it, it would be a disaster. We should get
ECO more efficient at what it does. We think there has been some improvement but there is room
for a lot more.

Ann Clwyd
41. There has been criticism of the human rights budget line. It has been described
as absolute peanuts compared with needs. Do you have any comment on it?
(Clare Short) Human rights budget line?
42. Yes?
(Clare Short) Personally, I have not heard of this before. I think the whole idea of the
human rights budget line is questionable. Human rights, the Universal Declaration, which is a
fabulous piece of thinking and writing, is about curing all fundamentals which every human
being needs to enjoy their humanity: their being able to work and get an income, get their
children to school, being able to express their opinions, be consulted. You have to incorporate
those values in the very essence of all the development work you do rather than do development
work and then add some additional human rights work. Of course, sometimes there might be
training of police officers to respect human rights or whatever but I do not think there should be -
I am speaking really personally - a separate budget line for human rights. I think you want to
incorporate that culture in everything that is done and then, of course, bolster respect for human
rights and human rights conventions amongst the policies of law and order and so on. They tend
not to respect those principles. I am very against personally separate budget lines, it leads to this
very fractured and inefficient way of proceeding.
(Mr Smith) I agree.
(Clare Short) Could I just add one postscript here from Anthony? He suspects that
performance targets will be about increasing speed of spend, not quality. That is a little nightmare
waiting for us. What is more do it faster but not better. We could see that happening.
Chairman: That would be ghastly. We will have to explore that in Brussels.
Mr Rowe: I think question eight has been asked already by Tony.
Chairman: Yes, I think so.
Mr Worthington: I am sorry about that.

Mr Rowe
43. Both the statement on Development Policy and the Patten Proposals acknowledge
the influence of political decisions on development assistance. On 13 June Foreign Ministers
agreed to suspend the allocation of 50 million euros to Liberia because of that country's support
for rebels in Sierra Leone. The 50 million ecu was aimed at alleviating poverty in the country.
What we would quite like to know is what was the involvement of EU Development Ministers
in that decision? Are you happy that decisions which will impact on projects aimed at poverty
alleviation are being taken in the General Affairs Council?
(Clare Short) To be honest about this, there is absolutely no doubt that this crisis in Sierra
Leone and the performance of the RUF and their exploitation of the diamonds and terrorising of
people in Sierra Leone is supported from Liberia and, indeed, Burkina Faso. It has become an
absolute issue from the human end, the international system and the UK that we have to succeed
in Sierra Leone otherwise yet another failed mission operating in Africa is unbearable when we
are talking about conflict resolution. I personally did not find out that there was this new
programme from Liberia until shortly before this decision was made. It was my view, and I
presume Development Ministers in other Member States were consulted because the issue was
taken in the General Affairs Council which meets monthly - and therefore is much more capable
of keeping hands-on on these issues - that it should be suspended to look at what was being done.
Now, we would argue that there needs to be humanitarian relief for the people of Liberia but
what is the detail of the programme, how far is it strengthening the Government of Liberia,
should we not be looking at how far the Government of Liberia is working with the RUF and
spreading terror and instability in Western Africa? So suspension is what it says, it is suspension
while we look in more detail at what is proposed and what is being done. Certainly I played a part
in that and looked at what the UK's position was and argued for the decision that was taken. I
think Keith Vaz went to the meeting but it was our call, so to speak, in that this is our policy area
in the Government. The UK led the call and I think other countries followed us because of the
commitment we have made to Sierra Leone. It is nothing for Liberia, it is let us look at what there
is for the people of Liberia and make sure it assists them but does not strengthen forces that are
behaving irresponsibly about the situation in Sierra Leone.
Mr Rowe: That is helpful.
Chairman: Yes, indeed. Now, Ann Clwyd, could you lead us on the questioning of
Commissioner Patten's communication to the Commission which recommends greater delegation
of authority?

Ann Clwyd
44. Yes, greater delegation of authority, a country's delegation. Do you think they
have the capacity to engage with all the players in the country?
(Clare Short) I think greater delegation of authority behind good policy with a good action
plan is a key component of the reform. At the moment we have delegations of the EC right across
the world in country after country, wonderful reach, and they have so little discretion. They can
do very little and all decisions are referred back to Brussels. It is frustrating for the individuals
concerned and it is very, very inefficient because there is a lot of delay. This is also an issue in
good development practice. We, the UK, are more devolved than many other agencies which
have to refer back to their capital about everything. We are very in favour of greater delegation
of authority behind good policy and a good action plan where then you can have every six months
a look at the Development Council, of what the progress is. It is delegation within agreed policy
priorities and then let the people on the ground get on with it. You need the improvement in the
quality and the action plan to be able to delegate intelligently but we are very in favour of moving
in that direction.

Chairman
45. On micro management, Secretary of State, Chris Patten has criticised the
European Community for attempting to micro manage projects by taking all the decisions from
Brussels and not permitting the managing delegations to take their own decisions within their
own countries. Can I ask you to what extent is DfID involved in overseeing specific individual
projects and do your staff meddle in this micro management kind of way?
(Clare Short) I know that Chris Patten made a point of what had happened after Hurricane
Mitch. That was a disgraceful delay and failure to spend after some devastation a long time ago.
He suggested that the delay was caused by Member States' interference. We checked that and it
is a false allegation. If you have a completely malfunctioning bureaucracy I suppose you try to
intervene at every point in which decisions are made to try and both get better quality decisions
and more effectiveness. I imagine we are involved right down the line in all the different
programmes. You might call it micro management, we are trying to get increased effectiveness
and better quality. I think for anyone to claim that this is a Member State's problem is not the
right criticism. What we need is a better policy, better action plan and then the delegation. If
Member States resist that then the Commission should complain and make an issue of it. We
have not as yet got better policy, better action plans. I think honestly to complain about Member
States micro managing is just an attempt to pass the buck for poor quality and ineffectiveness
personally.
46. You would not give up the kind of micro management which Member States are
involved in, as Christopher Patten suggests we should, until and unless you can see a better
management by the European Community itself forthcoming?
(Clare Short) I met with Chris Patten before he took up his post and said "This is the
direction of reform. Better policy, better transparent action plan and, therefore, being able to
measure where the progress is being made and then more delegation of authority, all comes as
a package." I am not saying we would not give it up until we see better effectiveness on the
ground, we would give it up as part of the reform package. We want to see that put in place as
rapidly as possible. You cannot just delegate without any principles about what the quality is for
and where you are spending the money and what the object is, that needs to be agreed and then
you can delegate.
47. You have not got there yet. Right. What can be done to reduce the backlog of
commitments without jeopardising the quality of programming? What can we do? What
policies? What perhaps can your group of Development Ministers do? I have not got the
Norwegian name to mind.
(Clare Short) Utstein.
48. Would your group be willing to take on the question of tackling the backlog of
commitments without jeopardising the quality of the programmes?
(Clare Short) Of course Utstein includes Norway which is not a member of the EEC.
49. Right. No, I gather that.
(Clare Short) I think Commissioner Patten has talked about this in relation to the MEDA
programme which had lots of problems and ineffectiveness and I think allegations of corruption
and then froze all spending.
50. Nothing gets spent.
(Clare Short) Lots and lots of commitments which are not spent tying up the programme.
I think he has talked about cancelling the backlog.
51. You mean just forget them.
(Clare Short) Well, to clean everything up. To get good policy, to get a plan that says what
the objectives are, and how you will measure success in six months and a year and then cancel
the backlog and get on with doing it well is my view of how we need to proceed.
52. Yes. As drastic as that?
(Clare Short) You know that on the replenishment of the European Development Fund,
what is it, 14 billion euros unspent and they asked for a new replenishment. It is like a political
game. It is just sums of money flying around, not that the money is there to be spent on good
development. I think we have to get serious about what we want to do to have an effect on the
ground, spend the kind of budgets well, get rid of backlogs and have all the staffing being
effective in the future. Is that the line?
(Mr Smith) On the backlog, it is really the Commission that has to deal with this. As the
Secretary of State says, the Mediterranean programme has been a particular problem and
Commissioner Patten has said that he just wants to wipe off the books commitments that are over
five years old which have never been taken forward, which is a logical thing to do because
commitments that old are unlikely to be relevant any more.
53. Yes.
(Mr Smith) Member States, I suppose, could help in that the Commission could do what
the Secretary of State was saying earlier and piggy back on our programmes or other donor's
programmes but we cannot manage for the Commission the process of reducing their backlog,
they have to do that themselves.
54. They have to do it themselves. I am very interested to know, the Committee is
very interested to know, what the Secretary of State thinks should be done?
(Clare Short) Certainly Commissioner Patten has talked about this in relation to the
MEDA. I think we should not under-estimate if those decisions were made there would probably
be some resistance and then we would need to be strongly backing the Commission. It is to get
effectiveness into the system and stop all this embarrassing gesture spending.
55. Can I just move on quickly, before I call in Andrew Rowe, to the question of the
5.5 billion ecus to the Balkans. Where will the 5.5 billion be found? Our calculations suggest
it cannot be found simply within the development budget and, therefore, it would have to be
transferred from other budgets: agriculture, trade or other matters. Presumably it can be found
within the total existing resources but how is it going to be put together? I am not certain that
either you, Secretary of State, or Anthony knows this because it has been done behind your backs,
as far as I can gather. If we did find it from other categories of the budget would this not lead to
the Commission breaching the financial perspectives ceiling for External Action?
(Clare Short) Yes. We did discuss this a little earlier today.
56. Yes.
(Clare Short) I think when it was first proposed it was very much in the spirit of breaching
the financial ceiling and increasing the spend. I think there has been a growth of determination
in Member States not to agree that. Therefore it would have to be found partly out of other parts
of the development budget at a cost for poorer countries, as we said earlier. There is talk about
finding money from agriculture. I do not know the details of it but I understand that technically
that would still breach the ceiling and probably Member States would not agree to that. The third
point I would like to make is the 5.5 billion is ridiculous. We must not go for that sum. We must
look for real costed programmes which will be implemented and will help real people in the
Balkans and it will not come to anything like this figure. So that is the other thing. I think the
determination amongst Member States to cut this back and be more sensible about it is now
growing quite strongly, is that not right?
(Mr Smith) That is right. The Commission made a proposal for the Balkan spending
covering the period up until 2006. The formal decisions are made year by year on each budget.
Negotiations on the 2001 budget are going on now and the council has rejected the Commission's
proposal for breaching the ceilings.
57. Right.
(Mr Smith) It has written down the amount they want for next year for the Balkans
considerably. This now has to be negotiated with the Parliament but at present the Member States
have rejected the Commission's proposal.
58. Just two other questions. How will the Quality Support Group relate to the SCR
or its successor? The second question: what are your views, Secretary of State, on the
budgetisation of the EDF?
(Clare Short) Right. Quality Support Group, I presume this is the new evaluation element?
(Mr Smith) The Commission's proposal is that within the SCR, in fact within the SCR
and Development Directorate-General and the External Relations Directorate-General, so the
three bits that deal with the programmes, a group should be set up with members who are there
on their own authority because they have experience within the Commission, Commission
officials experienced in programme management. They should basically vet programme
proposals to make sure they are sensible. There is a model for this in ACP programmes. An
informal Quality Support Group was set up because project design was so poor that a group got
together, in fact the UK helped to establish this group, and simply vetted programmes before they
were taken forward to try and improve their quality. This is a more formalised version of that and
it is meant to cover all programmes, not just ACP but also the ones covered by Chris Patten's
Directorate-General. It will have the Secretariat in the Development Directorate-General. We
are not sure how it will work but the idea has a pretty good precedent. Evaluation will be done
separately. This is at the design stage to try and improve quality.
59. Do you think you have adequate support for this suggestion?
(Mr Smith) To establish it?
60. Yes?
(Mr Smith) It is agreed it should happen.
61. It is agreed.
(Clare Short) I have to say logically, why do you need a Quality Unit to vet what is put
forward, why can you not get quality put forward in the first place? On budgetisation of the EDF,
I asked the Department fairly early on to do me an analysis on this and a very good note was done
which I think I would like to share with the Committee. My crude conclusion is that there just
is not a political majority for it, it is not going to happen. To be honest, I have sort of put it out
of my mind because it is not a feasible thing that we are going to have to take a decision about.
I no longer command the details in my mind. There are theoretical arguments for it because the
EDF replenishment has to happen separately around the renegotiations of Lom‚ but, of course,
under the new agreement it will not be like that. I am not in favour of any change that gives more
authority to the mainstream when the mainstream is operating so badly. I do not have that kind
of long term ideological position. I have genuinely forgotten a lot of the detailed argument
because it is not a practical proposition at the moment. A number of Member States were against
it. I think it was a very good note, I remember it. Do you remember, Mary Stevens prepared it?
I would like to make it available to you.
62. Thank you very much.
(Clare Short) Do you want to add to that?
(Mr Smith) This was discussed during the renegotiation of the Lom‚ Convention among
the Member States in the Commission. There were essentially two opposing views. One was
led by France which favoured budgetisation because essentially France would pay less. Their
contribution to EDF is above the level of contribution they would make through the budget. The
opposition was led, in fact they were isolated at the end, by Spain but they held out and did not
agree to a reference to possible budgetisation in some of the conclusions because Spain would
pay more. The Secretary of State, when we discussed this at that time, made some of the points
she has just made. If there is a logic to putting all of your money in a single pot if it works
effectively so you get better coherence between programmes in Africa and other ACP countries
and the rest of the world then doing it now makes sense.
63. Yes.
(Clare Short) I think the long term argument is very strong. The practicality is we are a
long way from it.
64. We have also the worry of it being diverted away from the poor.
(Clare Short) Absolutely.
Chairman: We would love to see the paper if you could let us have it. Now, Andrew
Rowe has been extremely patient and I know he wanted to come in earlier.

Mr Rowe
65. There is talk of ruling out the backlog, wiping it off, which leads me to think
about the fact that we never really seemed to consider the costs incurred by NGOs and other
practitioners in actually submitting proposals for EU money. I just wondered how practical it
would be, for example, to say that if through no fault of the applicant a proposal either gets
aborted or something just goes wrong in some way, there should be some form of compensation
because really a lot of organisations are ceasing to apply for EU funding simply because they
cannot afford to take the risk and involve all the costs of doing it.
(Clare Short) I think that failure to pay, and we have lots of trouble with the British
Consultants Bureau and people being commissioned to do things and they do not get paid, is a
disgracefully bad administration. We had to intervene on behalf of people whose organisations
were going to go bankrupt so they could pay their mortgages just because things that they had
been commissioned to do were not paid, and that is unforgivable. But I have to say I think for the
Commission to fund very small NGOs from all the Member States for these small programmes
is a nonsense. There is too much of that in my view. It is an example, Ann, where Parliament
quite reasonably said "Let us have an NGO budget line, we want to fund NGOs, NGOs are good
things". A tiny NGO in Greece or a tiny NGO in Scotland could apply to its own country but
goes on through this very slow bureaucracy, I think that is a nonsense. I think it is another area
where we should say "Let Member States fund certain kinds of things and where there is some
cross cutting element or whatever let the EC fund it, let them do it better and do it faster".
Personally I am disappointed with the very powerful alliance of NGOs involved in development
across the European Union that I would expect and want and try to engage with to be appointed
for reform, but they are not. I think that is largely because they are all tangled up in making
applications. I think we need to look at this, we need to make it more efficient, but I think again
we should say "What should NGOs be applying to their own Member States for? What is
distinctive about the EU which makes it worthwhile taking an application all the way to
Brussels?" and then make the whole thing more efficient. If there is some system of penalty if
you fail to fund when you have been offered, that seems to me a reasonable proposition. I do not
know quite what it would entail but it is reasonable.

Ann Clwyd
66. We have had a number of complaints from NGOs about delays in funding.
Population Concern, for example, mentioned two cases where delays in funding for two projects
meant that in one case the Director of a local NGO had to take out a bank loan using her house
as collateral to pay staff salaries. Do you think Commission proposals will do something about
that ridiculous situation?
(Clare Short) I presume this is linked to the 40 signatures to change the contract problem?
It is outrageous and disgraceful that the EC bureaucracy in our area of development is famous
for it. I do not know if there are any detailed proposals to deal with this?
(Mr Smith) There have been particular problems with funding the NGO line and people
have been in touch with our NGO Department, Civil Society Department, to look at that. I think
additional to the other problems that have been described there has been a change of personnel
which is trying to improve things but it has simply been incredibly inefficient in dealing with
applications. There is a huge backlog of applications which are just not dealt with. Clearly if
contracts have been signed and commitments made and then delivery does not follow, those are
the types of cases which in the past we have taken up with the Commission. Where it is simply
applications not being dealt with and not getting to the decision point, again we can push them.
We do not have a legal obligation yet.
(Clare Short) Maybe we should take this up, Anthony, and talk about it because if they
could agree to concentrate where they will fund, say no more quickly where there is no hope. We
do intervene on behalf of NGOs and others where they are already committed, they are already
working and they do not get paid. That is an absolute outrage and it is far too common. It is to
do with gross inefficiencies.
67. We heard from EUROSTEP that no contracts have been signed for NGO co-
financing in the first months of this year. Do you know the reason for that?
(Mr Smith) Partly what I have just been referring to, simple inefficiency within that unit.
There is a relatively new person in charge, Tim Clark, and I think he is trying to get to grips with
it.
68. You sound a bit sceptical?
(Clare Short) I think personally we have to restrict what NGOs apply to the Commission
for and then make them more efficient at handling those. I know people put applications in to
their own country or other countries and then the Commission of course is putting in and the
whole system is grinding to a halt which is no good for anybody.

Chairman
69. Well, I think that is a disappointing note to end on but I think it is the right note.
We have all got to get a better European Commission and European Development Programme
if we can. We have to go on proceeding. Thank you very much indeed, Secretary of State, and Anthony Smith, for spending time with us this morning. We hope we shall be able to progress what is obviously a common trend.
(Clare Short) Thank you. Can I just repeat, the previous two reports of the Committee on
EC matters were influential, so thank you for this. It is important we get more and more people
interested in a reform agenda. We have made some progress but we need to make more.
Chairman: Thank you very much indeed.