Select Committee on Work and Pensions Minutes of Evidence

Examination of Witnesses (Questions 78 - 99)



  Q78  Chairman: Good afternoon, ladies and gentlemen. Can I call the Committee to order. The Committee is in the midst of a European Social Fund inquiry. We are delighted to have in front of us this afternoon three witnesses who, in their various professional guises, work for Government Offices in England looking after ESF. We have got Ms Jane Henderson, who is the Regional Director at the Government Office for the South West; Ms Alison Biddulph, who is Director of the European Secretariat at the Government Office for Yorkshire and the Humber; and Mr Phil McVey, Acting Director, Young People and Skills, Government Office for the South West. You are all very welcome. It would really be of interest, particularly to me and my Scottish colleagues on the Committee, because we do not have practical experience in our constituency work of Government Offices in England, if not to the rest of my colleagues, Ms Henderson, if you could say just a little bit about the work that the Government Offices do, and then we can look at what specific role they play in distribution, administration and implementation of ESF programmes?

  Ms Henderson: Certainly. Thank you very much. Government Offices, as you imply, Chairman, are in the nine regions of England, not in Wales and Scotland where there are devolved administrations, and we represent, I think, nine Whitehall departments in miniature, doing different pieces of work for each of those departments but with a general remit to draw things together, join them up and work with partners in the region to secure the prosperity and welfare of the region. So where does ESF fit in well, we administer the European Social Fund on behalf of the Government in its capacity as managing authority for the Fund in the UK. It is our job to put in place a regional management structure for the Fund, and that includes key decision-making bodies, foremost the Regional Committee for Objective 3, or the Programme Monitoring Committee, as it is called, for Objective 1 or 2. These committees embody the partnership approach to the Funds, and the Government Office chairs these committees. Also, we provide the secretariat function for managing the whole project selection and monitoring process, taking decisions or issuing grant letters, and so on; we process grant claims, we monitor expenditure, we inspect projects in accordance with the regulations. But over and above all this we have an important function working in partnership, facilitation and brokering, with all the regional partners: that is the Regional Development Agencies (RDAs), Learning and Skills Councils (LSCs), further and higher education, local authorities and other regional partners, to make sure the programmes have a strategic focus and are benefitting the region. And that would include, for example, encouraging bodies to bring forward bids for technical assistance to help build capacity and bring a clear focus for the programmes in the region. That might be enough by way of introduction; I will be very happy to elaborate on what it means in practice.

  Q79  Chairman: Help me to understand how the ESF funds fit into your Government work, because, if I understand it, the purpose of ESF funds really is to underpin and support European employment policy, which is dictated not from His Master's Voice in Whitehall, but from Brussels. And you are a Government Office and you are taking your instructions, as you have explained to us, as regional versions of government departments, to what extent does that mean that you are operating with somebody else's policy, and to what extent does that produce tensions in the implementation?

  Ms Henderson: I think the word I would use is, it all "nests" nicely, you have got the European Framework, and the National Employment Plan which fits within that, and at regional level we have a Regional Development Plan, which expresses what this means for our region. So it would look at the conditions in the region and in my region, for example, you would look at things like rurality and sparsity of population you look then at how that fits into the Employment Plan and derive from that a set of regional priorities, down to thematic level, like what are we going to do in rural areas, and indeed sub-regional level as well, what particular priorities are; so it is a natural hierarchy. But, of course, it also fits into the wider economic strategy of the Regional Development Agencies, and one of the activities all the regions will be doing over the next few months is seeing how they can integrate the FRESAs, the Frameworks for Employment and Skills Action, that the RDAs have led on, with the ESF Regional Development Plans.

  Q80  Chairman: So that all sounds quite easy?

  Ms Henderson: It is not something where there are going to be massive conflicts, it is a question of checking that in all cases the FRESA has taken into account what partners are trying to deliver under ESF and vice versa; and in my region, for example, we are likely to do that, coming up in the autumn, as part of our annual review of the Regional Development Plan.

  Q81  Chairman: Are there any circumstances where you could contemplate an underspend on Objective 3 ESF funds in the region?

  Ms Henderson: It is certainly logically possible. In my region, at the moment, that is not seen as an immediate threat, Objective 3 is spending well. I do not know, Phil, if you want to add anything to that.

  Mr McVey: Thank you, if I may. At the moment, I think, in common with most other regions, on the Objective 3 programme, we are spending very well, as a consequence of having got off very well at the beginning of the programme and having worked with regional partners to put the programme together, therefore we know that what is being delivered is what the region needs, at the same time, as Jane mentioned, fitting together with the European and national context, and there is every sign that that good spend will continue.

  Ms Biddulph: I would echo that for Yorkshire and the Humber region as well. We are 95% towards meeting our 2003 targets, which is very good progress at this stage in the calendar year, and we are confident that we will achieve and meet the N+2 target, and we are working very hard to ensure that we are well positioned to meet it next year as well.

  Q82  Andrew Selous: Ms Henderson, just very briefly, when you talk about sub-regional level, what area of geography are we talking about; is that a county, or what is it?

  Ms Henderson: The Learning and Skills Council in my region broadly follows county boundaries. It varies slightly in different places, if you have got a conurbation it might be a clutch of unitary authorities, for example.

  Q83  Miss Begg: I have got a few questions about how your organisation works. Can you describe briefly the process whereby Government Offices decide how much of the Structural Funds to allocate to the various activities within the region?

  Mr McVey: I will give the answer in relation to the Objective 3 programme, because I think that captures the sort of process that takes place. Jane has mentioned already that we have a Regional Development Plan that sets out the conditions in the region and also takes account of the European and the national context as well. That then leads you to draw conclusions about the various activities that you might want to carry out within the already pre-set policy fields within the programme and, in discussion with regional partners, draw conclusions, as I say, about the precise activities you would want to carry out, and also try to do some analysis of how the expenditure ought to be spread across the region, to what sort of degree you should drill down to sub-regional level. So that analysis of the regional conditions enables the sorts of activities you should carry out, and sub-regional conditions follow through into some estimates of how expenditure might pan out across the programme.

  Q84  Miss Begg: It is different in Scotland, I know, and different presumably in Wales, because of, obviously, the Scottish Executive, and the Welsh Executive too; what are the differences there, how do they operate, do you know?

  Mr McVey: I am sorry, I am not able to answer that.

  Ms Henderson: I am afraid not, sorry.

  Q85  Miss Begg: So we are going to have to ask those questions elsewhere; but what about the co-ordination between yourselves and the DWP, how do you ensure that the DWP is aware of what you are doing and how do you feed back through them?

  Ms Henderson: The DWP does chair the National Programming Committee for Objective 3, on which all the regions are represented, along with social and economic partners, but beyond those formal meetings there is a great deal of networking at all levels, from strategic level, practitioner level, by theme, by different and all sorts of levels of networking, so very frequent meetings, in fact, to share good practice and make sure we are all in line.

  Ms Biddulph: In a recent audit of the Government Office, Yorkshire and the Humber, the audit team felt that the DWP provided very strong and positive support to regions in helping them to carry out their implementation of Structural Funds.

  Q86  Miss Begg: So you do get the chance, as regional bodies, to meet and to share good practice. What about a chance to go abroad and see what is happening in other European countries, to find out what they are doing with their money?

  Mr McVey: We do get the opportunity to do that, and it is always a valuable experience, obviously. I think I would say, very often, that is done actually through exchanges of information at meetings in Brussels, rather than necessarily visiting particular projects in other countries, but it is the same opportunity.

  Q87  Miss Begg: And how much have we learned from them or have they learned from us; is it a bit of both, or are we at the forefront of this? Are we the ones that are actually setting the pace with regard to good practice, or any particular, good countries that perhaps are doing it differently?

  Ms Biddulph: Can I say that actually it is a mixture. One example was a conference around equal opportunities, which actually was for the UK, that was held in May 2002, which looked at issues around gender mainstreaming, and indeed the European Commission has done a lot of work and sets high store by gender mainstreaming in its policies, so there is an opportunity to learn from them. But, equally, I think, the Commission can learn from a lot of the policies that operate within Great Britain as well; indeed, some of our policies are better advanced in particular areas.

  Q88  Miss Begg: And one of those policies actually is the fact of partnership with Co-Financing Organisations (CFOs). Do the Government Offices and CFOs experiment in the ways that you manage your European Social Fund responsibilities, or basically is there a standardised `one size fits all' across all of the nine regions?

  Ms Henderson: What is in common across all the regions is that there will be a project appraisal mechanism which will involve the social and economic partners; now in my region we do it by having independent panels of appraisers of projects, in other regions they might co-opt partners into their secretariat, but that is a common feature. And another feature would be the setting up of co-financing arrangements, and the way that those are consulted on and agreed within the region. I know you have heard about co-financing in a previous evidence session, but at regional level an organisation wishing to become a co-financer has first to apply for a licence to the Regional Committee; if the Regional Committee is satisfied that they will do a good job, they next bring forward a plan of broadly how they will set about the task, and once that is agreed it is up to the co-financer to apply at measure level for the activities they want to deliver, and that goes through the appraisal process. That is more or less the same, barring the detail, in all the Government Offices, for example.

  Q89  Miss Begg: The whole idea of co-financing is quite a new one, to what extent are you able to think of new ways of putting these packages together? Is there flexibility in the system to have that kind of experimentation?

  Mr McVey: I think one of the great strengths actually is that flexibility; so, although the system itself has a national framework which we all work to, the real way it is working on the ground does allow the local co-financing organisations to tailor what they are doing with ESF to the specific needs of their local communities, to individuals in their area, and to the general labour market make-up of their locality.

  Ms Biddulph: And if I can just back that up with the experience of West Yorkshire Learning and Skills Council, which, in its recent bidding round, determined, with its local and sub-regional partners, that it wanted to do something to improve the level of basic skills across the sub-region, actually it was able to reflect that in some of the themes against which it commissioned bids for co-financing.

  Q90  Miss Begg: I take it you are all very positive about co-financing. Obviously in Scotland they have not gone down that route; have you got any criticisms at all about co-financing?

  Ms Henderson: We think it is working well; it is very early days. I am not saying everything necessarily is perfect, things are still settling down; indeed, we are still rolling out co-financing. And it may be that when the evaluation that is going on reports this summer there is some adjustment that needs to be made, but, broadly speaking, it has brought about a welcome sea change in the programme. It used to be a programme where you would have hundreds of projects, each bidding separately into the funds, each separately being appraised, having to find their own match funding, without any particular strategic drive. Now, instead, we are moving towards looking at the main themes, the strategic drivers. What we are finding is that co-financing is bringing in not only new providers to the market, very often grass roots community organisations, but also extending to individuals that have not been accessed before. So a lot of benefits emerging, plus, of course, the fact that if you are a bidder now you complete only one application of six pages, rather than several of 60 pages.

  Q91  Andrew Selous: Ms Biddulph, before I go on to what I was going to ask, I suspect I may not be the only person who reads the transcript who is not entirely clear what `gender mainstreaming' is; can you just explain?

  Ms Biddulph: It is about making sure that the policies and practices that are run by organisations reflect the needs of women as well as men.

  Q92  Andrew Selous: That is very helpful, thank you. I would like to ask about the monitoring work which you have to do to ensure that this money complies with the European Union's Regulations. I think, if you do not comply, the money can actually be called back, can it not, ultimately, so I assume this is fairly important for you to do properly. How do you ensure that you are complying with the relevant Structural Fund Regulations?

  Ms Henderson: I will start and then I will pass on to Phil. We exercise financial stewardship at every stage in the process. It starts with, is this project potentially eligible at all for ESF, right through the project appraisal, and I have described the part peer appraisal mechanisms we use, through to checking expenditure is properly delivered, and a final 5% check. In all of that, in my region, we apply a risk assessment framework to any newly-approved project, so that we can reach a view on how deep and how frequent the monitoring should be for that project. We take into account how much money was involved, whether it was a completely novel type of project, for example, in which case we might visit it more often and see more of it. In other cases it will be a lighter touch so that we do not burden people unnecessarily. The other thing I should say is that all Government Offices have a separate financial monitoring team which does an inspection of the 5% of projects, as required under the ESF regulations, and that is an independent team from the day-to-day contract management. Phil, you might want to fill in a bit more.

  Mr McVey: Thank you. There is not a tremendous amount to add, really. Yes, it is useful to think of it in two halves, there is the 5% inspection that we are carrying out, we have a separate team to do that, then there is the monitoring of all projects that is being carried out. And, as Jane said quite rightly, right at the outset, when a project is first being approved, we will carry out a risk assessment exercise that bands it as being low, medium or high risk, based on a number of factors, then that leads us to make conclusions about how often we might want to visit a project and how much intensive scrutiny that particular project might be subject to. And I would like just to add about that aspect of the monitoring that we do take the view, that it is not inspectorial only, that it is very much about working with the individual project promoter to help them deliver their project in the best possible way, so it is a support mechanism as well as a monitoring function.

  Q93  Andrew Selous: The Learning and Skills Councils, when they came before us a few weeks ago, mentioned they thought there was a lack of consistency between what the Government Offices in the different regions were saying to the different Learning and Skills Councils; is that something we should be concerned about, or is that degree of freedom actually good and that you are applying what works in different areas?

  Ms Henderson: I cannot remember that part of the evidence, but what certainly is true is each region will have slightly different priorities, I do not know whether that is inconsistent, if so, it is a beneficial and virtuous inconsistency. But, as the Learning and Skills Council itself said, its own readiness to take on co-financing responsibilities has varied according to the stage of maturity of the local Learning and Skills Councils, so it is not surprising that they have been taken on at different points in the cycle. But I may not have understood your question.

  Mr McVey: I think I referred earlier on to working with regional partners, and the fact that we do work with our framework for co-financing, but each region will have a different set of regional partners who have different priorities for the region.

  Q94  Andrew Selous: I am very keen that we do not have too much jargon here, because I do not think we will understand it; so what are regional partners?

  Mr McVey: Yes, regional partners, for example the Regional Committee for the Objective 3 programme, which would consist of statutory bodies, public organisations, local authorities, the LSC, social partners.

  Q95  Andrew Selous: Are there other examples?

  Mr McVey: The community sector, for example, would be regional partners. So that Regional Committee, when it is looking at the needs of the region and how co-financing should operate, and maybe the sorts of features that we might like to see in co-financing bids from the LSC and others, that, quite rightly, I guess, could result in different statements being made to the LSC in different regions, but they would be a reflection of regional circumstances.

  Q96  Andrew Selous: When you look at a region, I represent a constituency which is right on the edge of a region, so you have probably guessed the direction I am coming from with this question, I have a lurking suspicion that when regions are looked at it is probably the bigger conurbations that get most of the focus, and if you are near the edge and perhaps you are smaller market towns, dare I say, rather than big cities, you might be a bit overlooked. Is there anything you can do to reassure me that that is not the case?

  Ms Henderson: Coming from a very rural region, we are certainly not all focused on conurbations, and we have got quite a lot of experience running Structural Funds in Devon and Cornwall, for example, so we often think rural first in the South West, and I think we may have some examples.

  Q97  Andrew Selous: My question really is about the edge, actually, rather than the reality of what happened?

  Ms Henderson: About the edge, sorry, I misunderstood.

  Q98  Andrew Selous: It is the edge of your region?

  Ms Henderson: Some of my edges are against the sea, and others, like Bournemouth and Poole and Swindon and Gloucester and Cheltenham, do abut other regions; but, curiously, we have quite large towns on the edge of some of our region, so that it is very difficult for us to ignore them. And, in fact, in Dorset LSC, we have one of the, I think, most active Learning and Skills Councils, who are doing quite innovative things.

  Mr McVey: I was going to quote Bournemouth, Dorset and Poole LSC as a good example of the fact, yes, it is on the periphery of our region.

  Q99  Andrew Selous: Every region is different?

  Mr McVey: Exactly, and they have been working with Hampshire Learning and Skills Council, and seeking to work together on joint initiatives and joint projects, so that we pick up those issues.

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