Select Committee on Welsh Affairs Second Report


Relationships between the different tiers of government

      • 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 (paragraph 12).
    1. The size of the Assembly's block grant

      • 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 (paragraph 14).
    2. Administration of the Objective 1 Programme in Wales

      The application process

      • 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". 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 (paragraph 17).
      • 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 (paragraph 20).
    3. Match funding

      • We believe that there are four features of match funding arrangements which will help to promote the success of Objective 1 programmes:
    4. (i)    co-ordinating and drawing together the various sources of match funding so that applicants can find out easily, and at an early stage, where they might find funding;

      (ii)  integrating the application process for match funding as closely as possible with the application process for structural funds—for example through the parallel processing available to some types of project in Wales or the co-financing arrangements in South Yorkshire;

      (iii)  flexibility in offering approval in principle to projects where match funding is highly likely to be forthcoming but has not yet been secured, or where it has been secured only for part of the project; and

      (iv)  supporting applicants in developing their match funding applications during the pre-application stage.

      These are areas which we recommend should be addressed in the UK forum of Objective 1 regions (paragraph 25.(d)).

      Involving the private and voluntary sectors

      • From the wide range of possible approaches to complying with the Commission's advice on the composition of partnerships, the Assembly Government has decided to adopt a fairly rigid set of rules. The First Minister told us that one of the main benefits of this was that the system in Wales was robust against challenges from the Commission, but witnesses from the Commission told us that they had never challenged the composition of a Member State's partnerships and suggested that to do so would be difficult because the issue of subsidiarity was involved. Despite its inflexibility, the composition of the partnerships in Wales seems to be highly regarded by both the Commission and the English regions. The Assembly has been particularly successful in securing a gender balance on the partnerships. We are concerned, however, about the obstacles to participation by representatives of the private and voluntary sectors. It does appear that for many small businesses the cost of participating in the partnerships is prohibitive and that there may therefore be a case for some more systematic form of reimbursement for loss of earnings and out-of-pocket expenses. Likewise, it is important that the proceedings of the partnerships are readily comprehensible to those people who do not have a great deal of experience of participating in EU funding programmes (paragraph 30).
    5. Progress of the programme: rate of commitment and spend

      • In terms of rate of commitment and rate of spend, Wales appears to be performing well in comparison to its English counterparts. Caution should be exercised when comparing rates of commitment between different Member States as the meaning of "commitment" may be different in different contexts. Avoiding decommitment—"use it or lose it"—is clearly an important target for all Objective 1 programmes, but the rate of commitment and spend is only one measure of a Programme's performance. Far more important than these financial indicators is the performance of the Programme against the measures related to the seven Priorities, such as the creation of new jobs and businesses, improving the ICT infrastructure, regenerating deprived areas and improving the participation of women in the labour market (paragraph 34).
    6. State aids

      • It is important to recognise that Objective 1 status does not automatically entitle the Government or the Assembly to introduce state aids in West Wales and the Valleys. Nonetheless, where there is an opportunity to use tax credits, loans or similar policies as tools of economic regeneration in Wales, they must not be overlooked and we continue to urge the Government to look favourably on any request from the Assembly for the use of state aids under the Article 87(3)(a) derogation (paragraph 40).
    7. What happens after Objective 1?

      • We welcome the Secretary of State's commitment to ensuring that the National Assembly for Wales will play a significant part in formulating the Government's position on the best policy for dealing with the current Objective 1 regions once the current programming period ends. We recommend that National Assembly Ministers should be able to make a direct contribution both prior to and during negotiations with the Commission on this issue (paragraph 43).


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