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Select Committee on Welsh Affairs Second Report


The Welsh Affairs Committee has agreed to the following Report:




The European Union uses funds of money called Structural Funds to strengthen its economic and social cohesion by reducing the disparities between the levels of development of different regions and economic sectors. Two-thirds of Structural Fund money is allocated to Objective 1 regions: those regions whose average GDP per capita is less than 75 per cent of the EU average. In March 1999, West Wales and the Valleys—an area covering around two-thirds of the population of Wales—was granted Objective 1 status to run from 2000 to 2006 (paragraphs 1-7).

Delivery of the Objective 1 Programme in Wales involves the European Commission, six UK Government departments, the National Assembly for Wales and the agency which the Assembly established to oversee the Programme, the Welsh European Funding Office (WEFO). The Programme is run by a Programme Monitoring Committee (PMC) and a series of local and regional partnerships, each of which includes representatives of the public, private and voluntary sectors. The Committee concludes that the inter-relationship between the different layers of government involved in the delivery of the Programme is working well, but recommends that the UK Government could do more to disseminate best practice across UK Objective 1 regions by establishing a forum for this purpose, involving participants at all levels of the programmes (paragraphs 8-12).

It is vital that the Assembly has sufficient funds to provide the level of "public expenditure cover" and public sector match funding necessary to make full use of the available Objective 1 money. The outcome of the 2002 Spending Review will therefore be critical to the success of the Objective1 Programme in Wales (paragraphs 13 & 14).

WEFO is missing its targets for the time taken to process applications by a considerable margin but this is due in part to the quality of some of the applications. Some of the English Objective 1 regions are in a similar position. The need to produce strong projects, not the desire to meet processing deadlines, should be the driving force here. Work by WEFO with prospective bidders at the pre-application stage is the most important factor in ensuring that the application process itself goes smoothly (paragraphs 15-20). Objective 1 money will only meet part of the cost of any project; the remainder must be "match funded" from the public, private or voluntary sector. The Committee identifies four features of match funding arrangements which help to promote the success of Objective 1 programmes: co-ordinating the various sources of match funding; integrating the application processes for match funding and Objective1 money; flexibility in giving approval in principle to projects before match funding arrangements have been finalised; and supporting applicants to develop their match funding applications during the pre-application stage (paragraphs 21-25).

The Assembly's approach to the composition of the PMC and the partnerships has been praised by the Commission and representatives of the English Objective 1 regions. However, there are obstacles to the full participation of the private and voluntary sectors in the partnerships, notably the financial cost (for which full reimbursement is not always available) and the fact that the proceedings of the partnerships may be difficult to follow for those with no prior experience of EU funding programmes (paragraphs 24-30).

Money which is not spent within a certain time is "decommitted" or clawed-back by the EU and concern has been expressed about the rate at which Objective 1 money is being committed and spent in Wales. However, comparison with its English counterparts indicates that Wales is performing well in this area. Although avoiding decommitment is an important target, the rate of commitment and spend is only one measure of a programme's performance. Performance against key measures such as creating new jobs and businesses is much more important (paragraphs 31-38).

Under certain circumstances, Objective 1 regions are entitled to a degree of relaxation in the EU's rules against "state aids": government assistance to business which is likely to distort competition within the EU. The Committee urges the Government to look favourably on any request from the Assembly for the use of state aids (paragraphs 39-41).

Wales is unlikely to get another round of Objective 1 funding after 2006, although this is not impossible. The Commission has yet to decide what funds or other benefits, if any, will be made available to current Objective 1 regions when their Objective 1 status comes to an end. The Committee welcomes the Secretary of State's commitment to ensuring that the National Assembly will play a significant part in formulating the Government's policy on this question (paragraphs 41-43).



  1. The European Union uses funds of money called Structural Funds to strengthen its economic and social cohesion by reducing disparities between the levels of development of different regions and economic sectors. There are four of these funds: the European Regional Development Fund (ERDF), the European Social Fund (ESF), the European Agricultural Guarantee and Guidance Fund (EAGGF) and the Financial Instrument for Fisheries Guidance (FIFG). Use of the funds is in accordance with three basic Objectives:[1]
  2.   Objective 1, which promotes the development and structural adjustment of "NUTS II" regions whose average per capita GDP is less than 75 per cent of the European Union average.[2] It also covers the most remote regions and some areas with a very low population density. Two-thirds of Structural Funds concentrate on Objective 1. Around 20 per cent of the EU's total population is supposed to benefit from the measures taken under this Objective.

      Objective 2, which contributes to the economic and social conversion of regions in structural difficulties which are not eligible for Objective 1. It covers areas undergoing economic change, declining rural areas, depressed areas dependent on fisheries and urban areas in difficulty. No more than 18 per cent of the EU population will be in areas covered by this Objective.

      Objective 3, which gathers together all the measures for human resource development outside the regions eligible for Objective 1. It is not geographically limited in the same way as Objectives 1 and 2.[3]

  3. In March 1999, West Wales and the Valleys was granted Objective 1 status for 2000-06.[4] South Yorkshire, Merseyside and Cornwall also have Objective 1 status during this period. The Highlands and Islands of Scotland and Northern Ireland continue to receive transitional support under Objective 1 following the end of their previous Objective 1 status in 1999.[5] The Objective 1 Programme in Wales will cost _3,942 million (about 2.4 billion) of which _1,853 will come from the European Structural Funds, _1,395 from UK public sources and _694 from the private and voluntary sectors. The systems by which these funds are managed and allocated to individual projects are discussed in paragraphs 15 to 30.
  4. This is not the Committee's first report on this subject. In February 2000, at the beginning of the Welsh Programme, our predecessors produced a Report on European Structural Funds.[6] At that time, responsibility for social and economic development in Wales and for the Structural Funds strategy had only recently passed to the National Assembly. Most of the planning and negotiations for the Objective 1 programme had been carried out by the UK Government prior to devolution. In the Report, the Committee emphasised the importance of making maximum use of the opportunity presented by Objective 1 status and achieving a 100 per cent take-up of the available Structural Fund money.[7] It made various recommendations about the allocation of funding to Wales by the UK Government.[8] It urged the UK Government "to respond positively to proposals from the Assembly for the use of operating aid to aid economic development in Wales," a subject to which we return in paragraphs 35 to 40 of this Report.[9]
  5. In July 2002, we decided to re-examine the Structural Funds in Wales, specifically Objective 1, for several reasons. We wanted to follow up some of the recommendations from the Committee's earlier Report, as well as some of the areas our predecessors covered in their Report on Wales in the World.[10] The granting of Objective 1 status to West Wales and the Valleys is one of the most important political and economic events in Wales in recent years. It is an area where all levels of government and civil society—the private and voluntary sectors, local authorities, the National Assembly, the UK Government and the institutions of the EU— must work together and we therefore felt that it was a policy area to which this Committee could make a contribution. We also felt that we could usefully compare the way the Objective 1 Programme is organised in Wales with the way that the three English Objective 1 programmes are run.
  6. In its earlier Report, the Committee recommended that administration of the European Social Fund in Wales should be transferred from the Department for Education and Employment (now the Department for Education and Skills) to the National Assembly and made several recommendations about how the Structural Funds Programmes might be administered in Wales.[11] This was only a few months after devolution, and our Report was primarily examining the period leading up to the granting of Objective 1 status to West Wales and the Valleys during which the UK Government had been in charge of the process.
  7.  The Assembly, through the Welsh European Funding Office (WEFO), has now been running the Structural Funds programmes in Wales for two years. We decided at the beginning of this inquiry not to attempt to scrutinise the work of WEFO. That is a job for the National Assembly. This is in line with the Committee's general policy, which has often been stated in the past, of not attempting to hold the Assembly to account.[12] Inevitably, some of the evidence we have received relates to the work of WEFO. We cannot simply ignore it. We will therefore highlight that evidence in this Report, but will not make recommendations directed at WEFO or at the National Assembly. We hope that Members of the National Assembly, particularly the Economic Development Committee, will find the evidence we have taken useful.
  8. As well as the witnesses whose evidence is printed in this volume, we held informal meetings with representatives of the National Assembly for Wales, the Welsh European Funding Office, the Welsh Local Government Association, the TUC, the CBI, the Federation of Small Businesses, and with Brian Morgan and Kevin Morgan of Cardiff University. We visited Brussels on 28 and 29 January 2002 where, as well as taking formal evidence from representatives of the European Commission,[13] we held a number of informal meetings with Welsh MEPs, Commission officials and representatives of the Wales European Centre and the Assembly's Brussels office. We also met the Vice-President of the Commission, Rt Hon Neil Kinnock, to discuss a variety of issues relating to Wales and Europe. We are most grateful to all those who assisted with the inquiry, in particular to our Specialist Advisers, Professor Dylan Jones-Evans of the University of Wales, Bangor, and Dr Gillian Bristow of Cardiff University.
  9. Relationships between the different tiers of government

  10. Three layers of government are involved in the delivery of Structural Funds Programmes in Wales, as well as the institutions of the European Union: the United Kingdom Government, the National Assembly for Wales and local authorities in Wales. The private and voluntary sectors also play a major part in implementing the programme at the regional and local level. As representatives of WEFO told us, Objective 1 is the "ultimate joined-up issue" and the inter-relationships between these bodies is complex.[14] The overall budget for the Structural Funds, the basic rules governing their use and the allocation of funds between different countries and different Objectives are determined by the Council of Ministers, acting on a proposal which has been negotiated between the European Commission and the European Parliament.[15] The European Commission also approves each region's Single Programming Document (SPD). This is the detailed plan for the implementation of the Objective 1 programme, including an analysis of the regional situation in the area, an assessment of priority needs, the strategy and envisaged priorities for action, and an indicative financing plan. The Commission deals with the UK Government on "issues of general importance", mostly those which affect all UK Objective 1 regions. It deals directly with the National Assembly on implementation policy, and with the Wales European Funding Office (WEFO) on practical matters relating to implementation.[16]
  11. UK Government departments

  12. The Department for Trade and Industry (DTI) is responsible for co-ordinating and presenting policy on Structural Funds.[17] Five other departments also have a role:
  13.   The Department for Work and Pensions (DWP) has overall responsibility for the European Social Fund.[18]

      The Department for Environment, Food and Rural Affairs (DEFRA) leads on the EAGGF and the FIFG.

      The Department for Transport, Local Government and the Regions (DTLR) is the managing authority for the English programmes. In practice, this authority is delegated to the Government Offices for the Regions, in which all four departments are partners.[19] While the Government Offices carry out the day-to-day running of the programmes, the Regional Development Agencies also have a strategic role.

      HM Treasury has no direct involvement in the running of the programmes but it plays a central role in determining the size of the block grant to the National Assembly for Wales, from which much of the match funding comes.[20] Its approval must also be given for proposals for state aids in the form of tax incentives which may be offered in Objective 1 areas.[21]

      The Secretary of State for Wales told us that his involvement was mainly in the negotiation of the block grant, as well as emphasising to his colleagues in Government the tremendous importance of Objective 1 to Wales.[22]

    The National Assembly Government

  14. In Wales, the management of the Programme is devolved to the Assembly, which in turn has established the Welsh European Funding Office (WEFO) to oversee it. WEFO's primary aim is to ensure that Wales derives maximum benefit from the European and other regeneration funds. Its objectives are to enhance economic development and employment opportunities throughout Wales by promoting sustainable economic growth; increasing prosperity in all parts of Wales and tackling inequality, inactivity and the resulting social exclusion.[23] However, the Programme is not administered directly by WEFO. Like the English Objective 1 programmes, it is run by a series of partnerships consisting of representatives of the public, private and voluntary sectors:
  15.   The principal Partnership, with overall responsibility for the strategic direction of the Programme and for drawing up the Single Programming Document, is the Programme Monitoring Committee (PMC). This is chaired by a Member of the National Assembly (who is nominated by the First Minister),[24] and has 18 other members, six from each of the three sectors.

      The work of identifying, supporting and assisting the development of individual projects falls to the regional and local partnerships.

      There are ten regional partnerships, each of which deals with a particular theme: Agri-Food, Information Age, Entrepreneurship, Innovation / R&D, Sites & Premises, Tourism, Community Regeneration, Human Resource Development, Employment, Business Support and Forestry, Countryside and Coastal Management.

       There are fifteen local partnerships, each of which covers a local authority area.[25]

      There are four strategy partnerships: Business Assets, Human Assets, Rural Assets or Community Assets. These partnerships advise WEFO on projects which have already been proposed by one of the regional or local partnerships.

    Bids for projects with local application must be presented in the first instance to a local partnership. Those with wider application must be presented to the relevant regional partnership. The relationship between WEFO and the various partnerships is explained in more detail in paragraph 16.

  16. Despite its complexity, our witnesses felt that the inter-relationship between the different levels of government was working well. The Director of the DTI's Regional European Funds Directorate told us that "the present system of co-ordination and communication works well", an evaluation with which the First Minister agreed.[26] In Wales, the UK Government's involvement does not extend to the management of the Programme in the same way as it does in England, through the Government Offices and the Regional Development Agencies. However, we were told that, in practice, the Government Offices enjoy a large degree of operational freedom in the way they run their programmes.[27] The First Minister was keen to point out that neither the Government nor the Assembly "owns" the Objective 1 Programme. It is a requirement of the Commission that programmes are implemented through partnerships in which representatives of the public, private and voluntary sectors are involved, rather than directly by government.[28]
  17. Most witnesses agreed, however, that there was scope for greater co-ordination and sharing of best practice between the different UK Objective 1 regions. The European Director for Merseyside thought that the demands of running the programmes themselves left little time for consultation and discussions between the regions.[29] There is a UK Evaluation Standing Group for the European Social Fund, but its main function is to ensure that there is consistency between regions in the way the Fund is monitored and evaluated, not to disseminate best practice.[30] There is no similar body for the ERDF. Other meetings of representatives of the UK regions do take place, but not very frequently.[31] The Secretary of State told us that there was "everything to be gained" by having the closest possible co-operation to share best practice between the UK Objective 1 regions. We are pleased that the inter-relationship between the different layers of government involved in the delivery of Objective 1 in Wales appears to be working well, but we believe that more could be done to share and disseminate best practice between UK regions. This is clearly an area where the UK Government must take the lead. We recommend that the Government establish a forum for the discussion of these issues and to draw on examples of best practice from other EU regions. It should meet regularly, with each UK Objective 1 region taking it in turn to host it. There should be an opportunity for those involved in the programmes at all levels to get involved, including members of regional and local partnerships.
  18. The size of the Assembly's block grant

  19. As we have already noted, the principal role of the Secretary of State for Wales in delivering the Objective 1 Programme is in the negotiation of the Assembly's block grant. In the 2000 Spending Review, Wales was given an additional allocation of 80 million for 2001-02, 90 million for 2002-03 and 102 million for 2003-04 to enable it to draw down its full entitlement from the Structural Funds.[32] There are two distinct reasons why this additional allocation was necessary:
  20.     EU Grants are treated as part of public expenditure. The Structural Funds money goes directly to the Treasury and is then passed on to the National Assembly in the form of "public expenditure cover", which is effectively permission to spend these receipts. A block grant determined by the Barnett formula would not have provided the necessary public expenditure cover for Wales to spend all of its Objective 1 entitlement.[33]

        The need to provide match funding from public sector sources (see paragraphs 21-25) places additional pressure on the Assembly's budget.[34]

    In order to enable Wales to derive maximum benefit from its Objective 1 status, the Barnett formula was, in the words of the Secretary of State, "overridden".[35] The Secretary of State argues that this was fully justified in the extraordinary circumstances of the Objective 1 Programme, which provides "a unique opportunity, six or seven years in order to transform the Welsh economy to ensure that the GDP in Wales rises and that we enhance the skills and the talents of Welsh people".[36]

  21. The settlement in the 2000 Spending Review implied that spending would be weighted towards the middle and end of the Programme, with the additional amount allocated rising by 10-12 million per year. This is understandable, since there is a certain lead time involved in the early stages, when the Programme is being set up and not much is being spent. It means that the 2002 Spending Review is likely to be as important for Wales as the 2000 Review, if not more so. Although he refused to be drawn on the likely outcome of the 2002 Spending Review, the Secretary of State made it clear to us that he believed that the case for additional funding to support the Objective 1 Programme in Wales is as strong now as it was in 2000.[37] We wholeheartedly endorse the Secretary of State's assessment, that the arguments for providing additional funding to support the Objective 1 Programme in Wales are at least as strong now as they were during the 2000 Spending Review. It is vital that Wales is able to obtain maximum benefit from the unique opportunities presented by Objective 1. It will only be able to do so if additional funds are once again provided by the Treasury in the 2002 Spending Review.
  22. Administration of the Objective 1 Programme in Wales

  23. As we noted at the beginning of this Report, it was not our intention in conducting this inquiry to examine the performance of WEFO or the Objective 1 partnerships in Wales. We have, however, received some useful evidence about the way the Programme is administered in Wales and how this compares with the English programmes. The Objective 1 programme in Wales is divided into seven priorities which, together with the amount of Objective 1 money available to each one, are as follows:
  24. Priority 1:  Expanding and developing the SME base (285 million)

    Priority 2:  Developing Innovation and the Knowledge-based Economy (183 million)

    Priority 3:  Community Economic Regeneration (110 million)

    Priority 4:  Developing People (289 million)

    Priority 5:  Rural development and the sustainable use of natural resources (131 million)

    Priority 6:  Strategic infrastructure investment (130 million)

    Priority 7:  Use of Technical Assistance (16 million).[38]

    Each of these priorities is further divided into a series of measures. For example, the measures for Priority 6 are accessibility and transport, energy infrastructure, strategic employment sites and environmental infrastructure. The amount of money allocated to each Priority is fixed in the Single Programming Document; the scope for varying it is very limited.

    The application process

  25. It is a common complaint about the Objective 1 Programme in Wales that the application process is too slow and too bureaucratic. Small businesses, in particular, do not have a great deal of resources to devote to making applications which may ultimately prove to be unsuccessful or which may take so long to be approved that the project has moved on or been abandoned by the time a decision is made.[39] The approval process itself involves three levels of decision-making.
  26.   Firstly, the project must be submitted to the relevant local or regional partnership. Local projects (defined as those which cover fewer than four local authority areas) must first be submitted to one of the local partnerships. Larger projects must be submitted through the regional partnership which deals with the relevant theme.[40] The relevant partnership considers how the project fits within its strategy and whether it duplicates any existing projects and sends its views to WEFO.

      Secondly, WEFO assesses the eligibility of the project. This is a complex business since each of the Structural Funds has different eligibility criteria. WEFO also considers how each project fits with national strategies and priorities and whether it represents good value for money.

      Thirdly, WEFO passes its views on to one of the four strategy partnerships which will make a recommendation to WEFO on the approval for the project. WEFO is responsible for issuing approval letters, monitoring projects and paying claims.[41]

  27. The time taken to process an application depends on the quality of the application and the complexity of the project. WEFO aims to process all applications within 90 days. This is broadly in line with the times taken to process applications in the English Objective 1 regions, which also aim to process most applications within three months.[42] South Yorkshire's target for the time taken from the receipt of a full application to the issue of an offer letter is 16 weeks.[43] In practice, WEFO only meets its 90-day target in 42 per cent of cases. Many projects take longer because of the quality of the application. WEFO's policy is not to reject incomplete or unsatisfactory applications immediately but to work with applicants to see if the project can be put into a more acceptable form.[44] It is of course not satisfactory that WEFO should be missing its target for processing applications in more than half of all cases. The First Minister told us that WEFO has demonstrated its ability to meet the target when applications are "strong and well prepared".[45] It is important to recognise, when comparing WEFO's performance in this area with that of other Objective 1 regions, that the way in which unsatisfactory applications are dealt with can have a significant impact on performance figures. The driving factor here should be the need to assess each application fairly and to develop strong and innovative projects, not the desire to meet performance targets.
  28. Project bidders may go directly to WEFO for advice on eligibility at the planning stage. WEFO has established a Private Sector Unit to provide guidance and support for the private sector. Its work involves translating the SPD and associated regulations into clear guidance for the private sector and providing support and advice during the development of projects.[46] Many partnerships allow bidders to submit an outline proposal which enables them to give feedback to the sponsor to help them to decide whether the project is worth pursuing or not. Mr John Flamson of the Merseyside Objective 1 Programme told us that sometimes applicants confused these preliminary, pre-application procedures with the submission of a full application. This is a source of dissatisfaction with the process, when project sponsors feel that "the clock is ticking" as soon as they make a preliminary approach to the relevant body whereas, in fact, the pre-application process may take many months before the application is ready for submission.[47] Although it may appear to drag the process out beyond the expected deadlines, the pre-application stage is extremely important.
  29. All our witnesses agreed that the quality of an application was one of the most important factors in determining whether it would be approved and how long the approval process would take.[48] Ms Ann Beynon of British Telecom Wales, who submitted evidence on the application process for their Opportunity Wales project, shared this view. She concluded that "it was impossible to talk to too many people" during the pre-application stage.[49] As Ms Beynon acknowledges, BT was in a position to invest a great deal of resources in consultation and collaboration, not only with WEFO and the Objective 1 partnerships but with other private and public sector organisations. This is unlikely to be true of most small and medium-sized enterprises.
  30. It is important that prospective bidders do not waste time and money on projects which are unlikely to be approved. It is equally important that poor-quality applications do not result in valuable projects being rejected or applications taking an unnecessarily long time. For these reasons, the pre-application stage is extremely important. The quality of the application is principally the responsibility of the project sponsor but it is unrealistic to expect that small businesses—for many of which an Objective 1 bid will be their first and only experience of applying for EU funding—will be able to produce good, sound applications without a great deal of input from WEFO. We believe that work by WEFO with prospective bidders at the pre-application stage is the most important factor in ensuring that the application process runs as smoothly as possible. It is particularly important that bidders are made aware, at the earliest stage of the process, how long the pre-application stage is likely to take.


1   The number of Objectives was reduced from seven to three as part of the Commission's Agenda 2000 reforms, which were adopted by the Council in March 1999. The present Objectives apply from 2000 to 2006. A summary of Agenda 2000 as it relates to the ESF can be found at (May 2002). Back

2   NUTS stands for the nomenclature of territorial units for statistics and is the system used by European Office for Statistics (Eurostat) for identifying regional areas of different sizes. There are three levels; level II includes, for example, the Belgian and Dutch provinces, the Italian regions and the Austrian Länder. The UK NUTS II regions are generally single counties or groups of counties. Back

3   It is described in Agenda 2000 as the "reference framework" for measures taken under the Title on employment inserted in the EC Treaty by the Treaty of Amsterdam and under the European Employment Strategy. Back

4   West Wales and the Valleys covers about two-thirds of the population of Wales. Only the following local authority areas are not included: Flintshire, Wrexham, Powys, Monmouthshire, Newport, Cardiff and the Vale of Glamorgan. Back

5   Merseyside is now in its second round of Objective 1 status. Back

6   First Report from the Welsh Affairs Committee, Session 1999-2000, HC 46. Back

7   Ibid, paragraphs 8 & 9. Back

8   Ibid, paragraphs 12-20, 24, 28 & 29. Back

9   Ibid, paragraph 32. Back

10   First Report of the Welsh Affairs Committee, Session 2000-01, Wales in the World: the role of the UK Government in promoting Wales abroad, HC 38. Back

11   First Report of Session 1999-2000 (HC 46), paragraph 31. Back

12   See, for example, First Special Report from the Welsh Affairs Committee, Session 2000-01, The Work of the Committee since Devolution, HC 81, paragraph 13. Back

13   Printed at Ev 47-57. Back

14   Private meeting with WEFO at the National Assembly for Wales, 29 October 2001. Back

15   The regulations for the current Programme were agreed on 21 June 1999, as Council Regulation (EC) No 1260/1999. Back

16   Q 137. Back

17   This has been the subject of a Report by the Trade and Industry Committee: Seventh Report of 1997-98, Reform of European Structural Funds, HC697. Back

18   Management of the European Social Fund in Wales was transferred to the National Assembly as part of the 2000 Spending Review. Back

19   QQ 2 & 62. Back

20   QQ 59 & 65. Back

21   Ev 23. See paragraphs 35 to 40, below, on state aids. Back

22   Q 59. Back

23   West Wales and the Valleys Objective One Programme 2000-06: Annual Implementation Report 2000, WEFO, 2001, paragraph 7. Back

24   Q 58. Back

25   For a complete list of the local and regional partnerships, see Objective 1 Guide 2001, Welsh European Funding Office, June 2001, pp. 26-29. Back

26   QQ 59-61. Back

27   Q 2. Back

28   Q 58. Back

29   Q 11. Back

30   Ev 21, paragraph 10 & Q 97. Back

31   Q 13. Back

32   Spending Review 2000. Prudent for a purpose: Building Opportunity and Security for all, HM Treasury, paragraph 21.3. Back

33   The Barnett formula provides that, in settling new plans for public expenditure, Wales should receive a share of the planned cash changes in provision for equivalent public services in England which is proportionate to its population. In other words, Wales's share of changes in relevant planned spending in England is the same proportion as its population represents of England's population. The formula applies only to changes in spending plans, not to the underlying baselines which remain unaffected. See Principles to Govern Determination of the Block Budgets for the Scottish Parliament and National Assembly for Wales, HM Treasury, December 1997. Back

34   For a detailed analysis of these issues, see Bristow G, 'Bypassing Barnett: The Comprehensive Spending Review and Public Expenditure in Wales', Economic Affairs, September 2001, pp. 44-47. Back

35   Minutes of Evidence taken before the Welsh Affairs Committee, 21 November 2000, (HC 995, Session 1999-2000), Q. 15. Back

36   Q 63. Back

37   QQ 69-73. Back

38   Priority 7 relates to the management of the Programme itself, and is intended to promote the its effective management, raise awareness of the Programme and carry our relevant research. Back

39   These views were put to us in informal meetings by representatives of the Federation of Small Businesses, among others. Back

40   For an explanation of the different roles of local and regional partnerships, see paragraph 10. Back

41   Objective 1: A Simple Guide to Private Sector Involvement, WEFO, March 2001, pp. 10 & 11. Back

42   QQ 18-20. Back

43   South Yorkshire Objective 1 Service Commitment, South Yorkshire Objective 1 Programme Directorate, December 2001, p. 15. Back

44   Q 124 & Ev 42. Back

45   Ev 42, paragraph 4. Back

46   Complete aims and objectives for the Unit are published in Objective 1: A Simple Guide to Private Sector Involvement, WEFO, March 2001, p. 16 and on WEFO's website at Back

47   Q 19. Back

48   See, for example, QQ 19-21. Back

49   Ev 62. Back

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