Examination of Witnesses (Questions 41
- 59)
WEDNESDAY 7 MAY 2003
MR KEN
PASCOE, MS
CHRIS MINETT
AND MR
DAVID CRAGG
Q41 Chairman: The evidence from the
Commission was important for us in getting an overview of this
very important subject. For the record I should say that we have
in front of the Committee Mr David Cragg who is the Executive
Director, Learning and Skills Council for Birmingham and Solihull.
We also have Ms Chris Minett who is Assistant Director, Structural
and Learner Support Funds, and Mr Ken Pascoe who is the National
Director of Operations, at the Learning and Skills Council, National
Office. Ken, you very kindly volunteered to give a brief overview.
First, I would like to ask you what you see as the purpose, from
your perspective, of the ESF funding stream that you have, and
would ask that you say a little bit about the processes that are
involved in the application stages as that would be most helpful
from our point of view.
Mr Pascoe: I am perfectly happy
to do that. Having listened to the earlier questions I will try
to pick up one or two of the themes that I thought were emerging.
First of all, if I could just explain that the Learning and Skills
Council is a relatively new body; we were only formed on 1 April
2001 out of the FEFC/TECs[11]
and parts of the Department and Education and Skills. Our responsibilities
are funding post-16 learning and we have a budget of around £7.5
billion covering things like school sixth form funding, modern
apprenticeship work-based learning and its provision. We operate
through 47 local offices. We have a national structure; it is
a single organisation but it does have 47 local offices with 47
local councils and it is at the level of the local office that
we operate as co-financing bodies, not as a national organisation.
I want to say that within the Learning Skills Council we were
very enthusiastic when the Department suggested that they wanted
to see co-financing as the preferred model of operation. Although
we only formed on 1 April 2001 and have had many other things
to occupy us, we did actually put a great deal of effort into
ensuring that we seized the opportunity afforded by the co-financing
operation and the ESF funding. The reason that we are enthusiastic
about it is that—and this touches the point of additionality—this
is additional money. It is an extra 150 million a year to add
to our budget. That may not sound like a lot of money against
a £7 billion budget, but in reality it does actually have
a lot more effect than perhaps that might suggest because most
of our core funding is already predicated on continuing to run
schools and FE institutions and workbased learning, so it does
have a very big effect indeed. We are therefore enthusiastic about
it; it enables us to further our key objectives which are about
improving participation in learning, improving achievement, and
the objective of all that is really to contribute to the economic
well-being of our country and for the benefit of individuals.
In terms of processes, we believe that co-financing has reduced
the administrative burden on providers and there are examples
that we can give, for example, around the simplification of the
application process which has come down from a 70-page form to
a 6-page form. Earlier the issue of match funding was mentioned.
We now provide the match funding at the level of the local council
rather than organisations actually having to go out and search
for that match. Some of the administrative burden is now undertaken
by the LSC rather than by the providers. I think on that score
we have seen improvements. I think the other point to make is
that it has actually enabled us to work with new providers. Very
often we need to get to those who are not engaged and that often
means working with community organisations who would not otherwise
be in our core funding stream. I think those are the reasons why
we are highly committed to this and why the organisation, the
LSC, committed at the outset and put a lot of effort into trying
to make this work. I would like to say in conclusion, since you
are the Select Committee for the Department for Work and Pensions,
that our relationships with colleagues who are responsible for
this in DWP have been very helpful indeed.
Q42 Andrew Selous: Can you explain
to us how co-financing improves the administration of ESF compared
with direct bidding? Can you tell us how that is worked out across
the country?
Mr Pascoe: David might like to
give some examples of how it has been working in the Midlands.
Mr Cragg: The key point certainly
is around the overall management and administration. Once you
have a clear co-financing plan and a framework in place organisations
are not—as I think the Commission witnesses very eloquently
put it—looking at the time of bidding either to secure an
in-principle commitment from another public body or equally, having
secured the European Social Fund, seeking to find appropriate
match funding. I think even more importantly at the level of audit
and at the level of management—as Ken has already described—this
a very substantial simplification from the point of view of any
organisation managing that funding stream. For example, if you
take a conventional approach to European Social Fund then you
have had a very, very complex and elaborate audit regime and contract
management regime where the actual costs of the provision had
to be evidenced not just at the level of the project but actually
at the level of the individual participant. That, for small organisations—let
alone large institutions—has been enormously challenging.
We have, on the basis of the co-financing plans we presented,
a clear agreement—and we have had this through the good
offices of both Government departments—from the European
Commission to what we might describe as contract cost. That is
a huge simplification in the management and the administrative
burden required to run any European Social Fund project. The other
thing which we believe is very, very helpful—and I think
we have exercised a high degree of care in its implementation—is
that the conventional approach to the European Social Fund has
required all organisations to receive their money in three tranches,
with a first advance, a mid-point payment and then retrospectively
a payment of the final tranche of money. What we have been able
to introduce, aligning it with all our normal mainstream contract
management arrangements, is an agreed profile of payments with
the relevant organisation. For example, if you take a very small
organisation which may have potential difficulties with cash flow,
that allows us to do two things: to do what the old regime did
which is to put in a first advance which accommodates any potential
cash flow difficulty, but much more importantly it takes away
any kind of risk from the point of view of those kind of organisations
of a very lumpy profile of payment by having a monthly payment
made to those organisations. Therefore there is a lot of simplification
around contract management, substantial reduction in the bureaucracy
associated with that, and most importantly the contract cost rather
than the individual participant cost needing to be justified.
Finally—which we think is a huge benefit—the matching
of funds takes place at the level of the co-financing organisation
which means effectively that you can strategically manage all
those funds. If you are looking at a voluntary or community organisation
we can de facto allow them to use 100% European Social
Fund and match that against other eligible activities wholly allowed
and reasonable and agreed within the European Commission rules.
That allows us therefore to take a big picture view—a strategic
view—of any particular area of work and apportion the funds
to meet the need rather than being driven by projects and by administrative
expediency.
Q43 Andrew Selous: Does co-financing
get a pretty much universal thumbs up?
Mr Cragg: I think it would be
reasonable to say, as with any change of system, you will inevitably
have some wrinkles. I think it would be our judgment that the
more it settles down the more it is enjoying a very positive response
right across the piece. If I can give you a personal flavour,
I can point to at least 25 new organisations simply on my local
patch within Birmingham and Solihull which had had nothing to
do with any mainstream education and training funding, let alone
with the European Social Fund. I could point just to the level
of public engagement which we have secured. We had 300 organisations
attending our second consultative conference on the European Social
Fund and contrary to some press reports there is still a huge
over-subscription—about a five times over-subscription—in
the last bidding round for the funds which were available.
Q44 Andrew Selous: The memorandum
that we received spoke of inconsistency so far as the different
government regional offices are concerned in their dealings with
the Learning and Skills Council. Could you just elaborate on that
for us and tell us what your experience has been?
Mr Pascoe: I think some of this
relates back to the point that David was making earlier, that
when bringing in a new process and system clearly people are going
to be worried about what is involved and whether or not they will
be able to manage the programme effectively. I think it is probably
fair to say that in the early days there was quicker progress
in some government office regions than in others. On the other
hand it is probably fair to say that we had our own capacity problems
because although we committed to do this in all 47 of our offices
we did not necessarily have in every office an ESF expert and
we had to try to draw regionally on the capabilities of people
within that locality to try to make it happen in all of our local
offices. I think those early difficulties have been pretty much
overcome and we do not have any of those difficulties now at all.
Q45 Ms Buck: On this issue of co-financing,
one of the criticisms that has been expressed to us in the evidence
is that use is being made of mainstream programmes as a sort of
notional match funding. It seems to me—who finds these things
quite opaque—that that is in a sense a breach of the additionality
principle. Can you convince me that it is not?
Mr Cragg: There is only one pot
of public funding and there only ever was. I really do not see,
for example, that there is any difference between what might have
happened previously, that a college would have received an allocation
of public funds via the normal processes and it would have bid
at a project level. The same pot of money, before it is devolved
to the institutions and allocated out, is being used as the matching
pot. The additionality principles are absolutely adhered to in
the normal processes which were agreed with the European Commission.
I think the thing which is novel to everybody is the idea that
you take a strategic approach to how you use the European Social
Fund and how you create new entry routes, new progression routes,
new areas of participation and how they are much more inextricably
linked to a local strategy and a regional strategy across the
broader swathe of education, training and employment.
Q46 Ms Buck: I can certainly see
the advantages of this approach in terms of strategic planning
and I can see a simplicity and I can see all the arguments for
not requiring small organisations to make their own bidding arrangements.
That is absolutely right. Having been on local ESF boards I am
a little bit cynical about the way in which—I am not accusing
anybody here—match funding is sought and the way in which
existing mainstream programmes are used as match funding. I understood
that the principle of match funding has always been that you have,
in this case, ESF money and additional money is sought in order
to provide new services that would not otherwise be provided.
Mr Cragg: If you look at the strict
terms of the European regulations it is eligible public match
funding. At an enormously marginal level—and this is not
meant to be a scientific analysis—I suspect a level of less
than one per cent, other sources of match funding might have traditionally
been applied. The overwhelming majority of match funding is conventional
public sector investment and that meets all the additionality
criteria. Without going into a history lesson, I think the thing
which brought the system into disrepute was the practice throughout
the late eighties and the nineties of so-called government take
where there was no identification of match. There was no additionality;
there was effectively a subsidy against government programmes
which was retrospectively justified. We are not remotely in that
kind of situation at the moment.
Mr Pascoe: No, and I allocate
the £7.5 billion; that is one of my jobs. All the ESF activity
is additional to that mainstream activity.
Q47 Ms Buck: The evidence that we
would have had about the concerns about those programmes, you
would argue that that is a sort of historic reflection on the
way in which programmes might have been funded in the past.
Mr Cragg: Every member state conventionally
manages European Social Fund. I would like to add something which
is missed out. What this is doing, especially for those organisations
who have conventionally sat outside the mainstream of post-16
education and training, is substantially bringing them into the
mainstream. If I look at the internal leverage, for example our
flexible and discretionary funds at a local level, I can say—again
on my local patch—a million pound's worth of those funds
is going into voluntary and community sector organisations, over
and above European Social Fund.
Q48 Mr Goodman: I would like to ask
a few questions about the range of ESF funding and what it does.
Is it fair to say at all—and if so to what extent—that
ESF funding is being used to meet government objectives on training
and employment at the cost of further actions to counter social
exclusion?
Mr Pascoe: Quite the reverse,
I would have said. I would say we were putting a lot of this money
behind programmes that are actually about including people, bringing
people into the net who would not otherwise be there. I think
that is part of the point I was making about the way in which,
although this is only an additional two per cent of our budget,
the leverage is significantly greater because much of our money
has to follow the existing needs of learners in sixth forms or
whatever. A lot of this money is actually going into organisations
that may be working in the community that can get it, perhaps
young people who opt out of education, who are not going to come
to the mainstream programmes. They are just not going to come
to a FE institution; somebody has to go out there, get them, engage
them, build their confidence, give them some basic skills in order
to get them to a point where they will then come into the mainstream.
Q49 Mr Goodman: Such a claim would
not, in your view, be true at all?
Mr Pascoe: No, it would not.
Mr Cragg: Another point which
is well worth making is that I think there is a commonly held
misconception that objective 3 European Social Fund is all about
social disadvantage. It is actually an integrated programme which
has brought together what was the old objective 4 programme which
is all about up-skilling those in work. So a very important and
significant strand within this programme is going towards addressing
issues like basic skills in the workplace, qualifying those who,
although in work, are not qualified and do not have transferable
skills, and making therefore a wider economic contribution in
terms of key sectors of employment and key occupational areas
where people are not adequately skilled.
Q50 Mr Goodman: I think if I asked
you if there were any types of projects being funded that should
not be funded your answer would be "no". If I could
turn the question on its head, are there any types of projects
that you would like to see funded by ESF but which are not?
Mr Cragg: I think this is a very,
very broad range of strategic elements within a programme. If
I were to take the first part of your question, are there any
things which should not be funded, I think the thing which pleases
us in terms of a significant step forward under co-financing is
that within our co-financing plans we are required to specify
not just volumes and numbers and—to put it in the normal
parlance—bums on seats, but actually the outcomes which
are expected in employment and especially in skills and qualification
terms. I think that is a very helpful discipline. There have been
some tensions around it but I think we have worked our way very
successfully through it and have moved from a bidding process
which is based on a simple tick-box approval process to a much
more strategic appraisal of what outcomes any individual was going
to yield. There will be projects which will inevitably fail and
we will have to take action against those particular projects
and either re-profile them or re-distribute funds. However, in
large measure that new arrangement is a much tighter discipline
than existed before.
Q51 Mr Goodman: What role does ESF
play, if any, in providing child care facilities and is there
any prospect that it will be used to fund the capital costs of
childcare provision?
Ms Minett: The remit of the European
Social Fund objective 3 is not to fund capital expenditure, it
is there for training and ability to train people in childcare
skills and so forth. It could very well be that we have a number
of projects that are in that area but I do not have any figures
with me, although we can find some if you would like some and
send them to the Committee.
Q52 Mr Dismore: I want to ask you
a bit more about the community and voluntary sector. How much
do you think is actually allocated to the community and voluntary
sector from ESF?
Mr Pascoe: We do have some evidence
on that. I think the previous witness talked in terms of the way
in which the voluntary sector had increased its involvement from
13% to 20%, making a comparison between the current programme
and the previous programme. The evidence we have suggests that
31% of the funding is going via the voluntary sector and it does
vary with 38%, for example, in London. We have more difficulty
in making comparisons with previous periods because our predecessor
bodies are no more. However, the voluntary sector in the West
Midlands did some work and produced a paper which suggests that
they have seen their involvement increase from 23% to 35%.
Q53 Mr Dismore: How easy do you think
it is for the voluntary sector to get to hear about ESF and access
the programme?
Mr Cragg: As I think I said earlier,
we have been delighted with the level of response just in terms
of expressing interest. We can let you have the West Midlands
European Network Evaluation of Co-financing which goes into some
considerable detail. I should emphasise that that is the voluntary
sector's own European Network for the region. Its paper shows
very clearly a very high level of awareness and equally importantly
gives you substantial detail. For example, the proportion of successful
applicants against the whole number of organisations bidding is
the same level as it is for all the rest of those organisations.
Q54 Mr Dismore: What is the proportion
between those bidding and those expressing interest?
Mr Cragg: Bids received, 42% of
voluntary sector bids. Total bids received . . .
Q55 Mr Dismore: No, expressions of
interest first of all.
Mr Cragg: There is no formal expression
of interest. The West Midlands European Network has given a detailed
analysis of awareness of and attendance therefore at awareness
raising events and responses to bidding rounds. I think that would
be the most helpful way to provide you with the background data.
Q56 Mr Dismore: The reason I am asking
these questions is that, certainly from my experience in my own
constituency, it is very, very difficult for people to access
this money. We have a memorandum from one of the voluntary groups[12]
in my constituency who spent years trying to access the money
and have been given a complete run around from the LSC to the
Government Office of London to the DWP to the EU and all the way
back again. They have been told they are too big, then too small.
Basically it could not have been more difficult if you had locked
the forms—which are apparently enormous—at the bottom
of an unlit staircase and written "Beware of the tiger"
on the door. The chances of actually being able to get their hands
on this money seems to be very, very unlikely indeed. I would
like to know what is being done to try to simplify the bureaucracy
to enable people to make claims.
Mr Cragg: Just to remind you of
the previous observation which is that there was a 70-page application
form and it is now a 6-page application form.
Q57 Mr Dismore: There is also the
story of the people from the LSC not calling back; the Government
Office for London not calling back; no-one giving proper explanations.
If this is typical—and I have no reason to doubt that it
is from other conversations—then it is an appalling story.
Mr Cragg: I think we can provide
you with very substantial evidence about levels of engagement
and I think we can show you also that not only is the 38% a very
clearly evidenced figure—that is for London, it is 35% for
the West Midlands—but underpinning that I think you will
find in a number of cases, whilst you may have a lead applicant
organisation for example in the voluntary sector, it will be linked
to a whole network of local voluntary and community organisations.
That is certainly my experience and both in the London and in
the West Midlands context as well as across the rest of the country
there is very substantial evidence about the extent to which capacity
building funds have gone into voluntary and community organisations,
7% in London for example.
Q58 Mr Dismore: I had better give
you a copy of this memo and then you can investigate it in more
detail.
Mr Pascoe: That would be helpful.
We would like to investigate that case for you and come back to
you personally.[13]
Q59 Mr Dismore: From discussions
in the voluntary sector in my constituency, I do not think this
experience is untypical.
Mr Cragg: Can I add a small item
on capacity building issues? One of the things we did at the outset
of co-financing—and I speak very much from a local perspective—is
that apart from having separate consultations we worked with the
voluntary sector to positively facilitate the whole of the voluntary
sector network under the auspices of the voluntary service council
coming together to create a long term strategic pot of funds which
the voluntary sector could manage itself. That two million pound
fund, which we have enhanced further with our own discretionary
fund, means that we have a Community Learning Consortium—as
it calls itself now—which is funding a large scale black
and minority ethnic management training programme; it is running
a whole range of programmes to develop voluntary organisations
as service providers with the increasing externalisation of services
and the whole women's network of training organisations. That
is a programme spread over three years; that is something which
was initiated by us as part of that capacity building.
11 Further Education Funding Council/Training and
Enterprise Councils. Back
12
Please refer to memorandum from Clubhouse (ESF 16), at Ev 33. Back
13
Please refer to the letter to Andrew Dismore MP from the Executive
Director of North London Learning and Skills Council (ESF 15A),
at Ev 33. Back
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