Examination of Witnesses (Questions 100
WEDNESDAY 21 MAY 2003
Q100 Andrew Selous: Have you ever
detected from any of the smaller voluntary and community organisations
that the level of financial management and audit that you need
to have over them is burdensome or intrusive at all; is that a
common complaint you get from the voluntary sector?
Mr McVey: It might have been a
complaint we received pre-co-financing from small organisations,
in fact, I suspect that pre-co-financing there were some very
small community organisations that were not engaging with ESF
because of that issue. But I think Jane referred earlier on to
the fact that we do now see new organisations that were not previously
benefitting from ESF actually picking up ESF funding through the
Learning and Skills Councils, six in Devon and Cornwall spring
to my mind immediately, and I am sure there are examples from
Alison's perspective as well.
Ms Henderson: In fact, one of
the umbrella bodies in the South West, SAVAGE, has actually commented
that things have improved greatly, as the Fund has developed,
and has given praise for quick turnaround, so I think things are
improving, never perfect, but I think we are going in the right
Ms Biddulph: Voluntary and community
sector organisations in my part of the country have welcomed the
opportunity of co-financing, because actually it has solved for
them a difficult problem of match funding. The LSC, or indeed
Jobcentre Plus, can provide that at source; and in a recent study
commissioned by the West Yorkshire LSC to evaluate the effectiveness
of co-financing, 94% of the people who applied for funding said
they would apply again, which is a pretty high success rate.
Q101 Mr Dismore: I want to go on
to the issue of co-financing with you, and perhaps you can give
us a snapshot of how it actually works in your own individual
Ms Biddulph: In Yorkshire and
the Humber, the Objective 3 co-financing approach, which covers
West Yorkshire, North Yorkshire and the Humber, the co-financing
Q102 Mr Dismore: And East Yorkshire?
Ms Biddulph: The East Riding,
East Yorkshire; we call it the Humber now. We operate our co-financing
approach, we monitor it through our Regional Committee, and we
have a separate co-financing sub-group, again involving co-financing
organisations and regional partners, such as our Regional Development
Agency, and the voluntary sector forum, and local authorities.
They actually look at the management and implementation of co-financing,
they agree and provide recommendations to the Committee on the
share of resources that should be allocated through co-financing,
and they put recommendations to the Committee and then the Committee
takes a monitoring and overseeing role, and at each Regional Committee
meeting we will take reports from the respective co-financing
organisations on how they are performing. That is the role in
relation to the Regional Committee. Also we have a role as a Government
Office to ensure that co-financing is implemented properly. We
observe all the relevant co-financing appraisal processes and
selection of the bids to ensure that there is fair play, also,
following the selection of bids, we go out and we inspect a sample
of successful and unsuccessful projects to ensure that the projects
that are being funded are fulfilling the aims of their original
proposal to the LSC and that they remain eligible, and, indeed,
we look at the unsuccessful ones as well. That describes briefly
some of the ways in which we organise and monitor co-financing
in this region. Does that answer your question?
Q103 Mr Dismore: It answers that
part of my question, yes; does anybody have anything radically
Ms Henderson: Yes; one or two
Mr McVey: I was just going to
mention in terms of actually where we are with co-financing that
as well as the LSC, on which there has been a lot of attention,
because we have Jobcentre Plus now operating as a co-financing
organisation across the region, and also we have two local authorities
in Wiltshire and Swindon operating as co-financing organisations,
but the process and the way we are carrying things out is pretty
much along the same lines as Alison. And we are just at this stage
now, going through a series of annual review meetings with the
local Learning and Skills Councils to assess progress over the
Ms Henderson: I think I am right
in saying that also we sit by invitation on the co-financing organisations'
Mr McVey: We do.
Ms Henderson: So we get a view
of the types of projects that are coming through as well.
Q104 Chairman: It is an important
question for us that Andrew Dismore is asking. Just help me; where
does the money come from, do you get a per capita allocation
in Yorkshire and the Humber, wherever that covers, do you expect
the national ESF cake divided by a percentage, or what, does the
money fall out of the sky? How do you get your hands on the money?
Ms Biddulph: The ESF money is
allocated to us nationally, according to a formula and framework
that was devised at the beginning of the programme; that framework
is being reviewed currently as part of the mid-term evaluation
Q105 Mr Dismore: Where does the co-funding
money come from?
Ms Biddulph: The co-funding money
comes via the co-financing organisation, from domestic sources
Q106 Mr Dismore: So, in the case
of a local authority, will it come from the local authority's
general funds, or will the local authority get money from central
government to spend on co-funding, for example?
Ms Biddulph: Can I ask my colleague
from the South West to answer that, because they have local authority
co-financing organisations; currently, I do not.
Mr McVey: It might be helpful
just to say what the specific example is that it is working in,
and, I am sorry, I cannot remember if it is Wiltshire or Swindon,
we can clarify later.
They are co-financing projects that are specifically about helping
people with disabilities to get back into the labour market, and
the co-financing money is coming out of existing social services
budgets, so it is not additional money, but it is the ESF that,
of course, is the additional money that is helping them to make
extra interventions with people.
Q107 Mr Dismore: Where does the LSC
money come from?
Mr McVey: The LSC money comes
out of the LSCs' national allocation.
Ms Henderson: That is by design,
because when the ESF was set up on this programme it was meant
to complement national programmes, so it fits nicely with the
Q108 Mr Dismore: One of the suggestions
we have had is that voluntary and community organisations, especially
working with hard to reach groups, potentially are losing out
through co-financing because of the way that it is channelled
through these bigger organisations, and I think one of you made
a comment about having to deal with a relatively small number
of groups now, or organisations, rather than a whole plethora
of them. Is the implication of that that smaller groups are now
finding it harder to access ESF money?
Ms Henderson: Certainly, it is
not our experience, just to be clear what I meant to say earlier,
I might not have been clear; that instead of having lots of different
projects we have now fewer actual projects, but that does not
mean necessarily there are fewer organisations involved. What
we are finding is, it is the more grass roots types of community
organisations that are being discovered through the consultation
process co-financing has generated, and some of them are coming
on stream for the first time. I think Phil mentioned that there
are six in Devon and Cornwall who are now in the game, as it were,
that were not involved before. If you look at the figures, and
I will ask Alison for these, they show that the share of funding
going to the voluntary sector is at least as high as it was before
co-financing. I do not know if you have got them to hand.
Ms Biddulph: I have some figures
from the Yorkshire and Humber region that suggest, in North Yorkshire
LSC, both the actual share and success rate of bids have improved
within the voluntary and community sector. North Yorkshire, like
the South West, is an area that has a strong rural dimension,
deep rural areas, difficulty in accessing services, and there
was a lack of skills and capacity especially within that sector
to access funding, and in the latest bidding round from North
Yorkshire over half the community and voluntary organisations
who applied for funding were successful. And North Yorkshire was
an area in the past where many of the notional or indicative amounts
that we had set aside for North Yorkshire were not taken up; that
is no longer the case.
Q109 Mr Dismore: But, going back
to my original question, what about the smaller groups, the ones
working with difficult, hard to reach clients, and you may have
a different configuration but as a result of that configuration
you may even be spending more on voluntary and community groups,
but is the configuration different so those sorts of people are
Ms Henderson: No. I think we can
give you a number of examples which show precisely the opposite,
projects which are reaching out to people with mental health problems,
to disaffected young people, and so on. We could give you a note
or we could mention some of them now.
Q110 Mr Dismore: I think, if you
will give us a note, that will be fine?
Ms Henderson: We will do that.
Ms Biddulph: Can I say that very
much the emphasis and what we are trying to fund is not just groups
but our aim is on the end beneficiary and target beneficiary,
and we are finding that, through co-financing, Learning and Skills
Councils are able to use their money and their ESF money actually
to connect the most disadvantaged groups to employment-creating
opportunities. I think round about 35% of people who enter ESF
have no formal qualifications and yet the ESF element is able
to reach out and provide them with support.
Mr McVey: I think, if I might
just add, in closing this question, earlier we were talking about
Learning and Skills Councils but Jobcentre Plus, of course, are
coming on now as a co-financing organisation, and the early evidence
is that, in particular, they are reaching those groups we are
talking about. For example, in London, the latest co-financing
bidding round, 66% of the allocated funding from Jobcentre Plus
is going to community and voluntary sector organisations, so it
seems to be reaching right down.
Ms Henderson: It might also be
worth adding that there is a capacity-building element to the
budgets of most co-financing organisations; in our region, we
insisted that there should be such an element, which varies between
4% and 12% of the budget, depending on the LSC in question. So
we are trying to generate capacity out there.
Ms Biddulph: The same is true
of our region as well.
Q111 Mr Dismore: The original idea
was that ESF spending should be additional to existing programmes,
or programmes that would have happened anyway; and I think there
is a risk, through co-financing, that ESF programmes become submerged
or subsumed into existing programmes, and, bearing in mind what
you were saying about the sources of funding, that seems to me
to be a potential risk. To what extent can you assure us that
ESF programmes are in addition to what would have happened anyway,
rather than simply substituting ESF money for what would have
been, effectively, government spending anyway, and from what source
Mr McVey: I think probably fully
to answer the question I would have to trawl all through the project
selection process, which is something I think we do not want to
do this afternoon, but certainly the project selection and appraisal
process and the way that our Regional Committees are fully engaged
in selecting how ESF should be used in the region is the first
check, if you like, to ensure that that is not the case, followed
later on by the monitoring process that happens, and Jane talked
about visiting individual projects and seeing what is happening
on the ground. But certainly it is one of the key first checks
on any application for ESF to ensure that it is additional to
what otherwise might happen.
Ms Henderson: The essence is,
the ESF programme actually requires the Fund to be used in support
of national programmes, so what we are looking for is the added
value on that which we know those programmes would normally offer.
So it is extra support, it is reaching people who would not be
reached, it is engaging groups that are not engaged or are not
well catered for; and I can assure you that the Regional Committees
are pretty astute and sharp in looking for any evidence of people
just trying to substitute for the normal funds in the main programmes.
Ms Biddulph: The ESF element must
be fully auditable as well on the European requirements and regulation.
Q112 Mr Dismore: So each of you can
give us an absolute assurance that none of the ESF money is being
substituted for what would have been mainstream funding?
Ms Henderson: I think my answer
stands for itself.
Ms Biddulph: Yes.
Mr McVey: Yes.
Q113 Mrs Humble: Can I ask you about
the mid-term review that is taking place this year, and I just
wonder how Government Offices' experience of ESF is being fed
into the process of the mid-term review?
Ms Henderson: This is Objective
3 we are talking about here.
Ms Biddulph: The Objective 3 evaluation
is taking place at the level of England, and it follows a number
of strands. It is being co-ordinated by the DWP Analytical Services
Division, who are independent of the ESF operation. They have
pulled together a number of strands, as I said, and Government
Offices are involved in the steering groups for those different
elements. There is an overall Evaluation Standing Group, it is
called, which actually monitors and oversees progress of the evaluation.
It is expected to report in September, and there will be an opportunity
for the Committee to look at the findings and consider the recommendations,
and the final report will be sent to the Commission in December.
The mid-term evaluation provides an important opportunity to look
at how the programme is performing and whether there have been
any key strategic changes that have taken place, for example,
in the labour market, since the start of the programme in 2000.
Q114 Mrs Humble: Can I ask you a
follow-on. I understand that there is a thing called a performance
reserve, this is 4%; is that having an effect upon you, does it
incentivise you in the sort of work that you are doing?
Ms Henderson: It means that we
have to try to achieve our outputs, yes, certainly, and that is
what we would want to do anyway, but it always helps. What we
do not know, of course, is just how the performance reserve will
be allocated, so that keeps the incentive particularly sharp.
We think that, as far as we know, the UK is on target to meet
the requirements of getting the UK share of the performance reserve,
but then it will need to be allocated at national level, and we
are awaiting guidance from the Commission on that. And clearly
we will want to look at the mid-term evaluation when that concludes
and consider what that implies for the way funds are distributed
Q115 Mrs Humble: Has that affected
in any way though the way that you have used ESF funds so far,
the fact that this 4% is being held out there?
Ms Henderson: Apart from focussing
attention on outputs, I am not sure.
Ms Biddulph: I would only reiterate
what Jane says. We have had a major challenge in implementing
the new system of co-financing and getting performance underway
anyway; this would be the icing on the cake, really. I would not
say it is distorting or diverting our energies and resources.
Mr McVey: I think what it has
done is added to something I said earlier on, actually, about
ensuring that we work really fully with projects to help them
deliver the outcomes that they want to deliver with their ESF,
and has put even more emphasis on the monitoring and support of
projects and knowing where we are with the programme.
Q116 Chairman: Could you just confirm
for me that the performance reserve of 4% would be unlikely to
be awarded to any nation state that had underspent significantly;
is that your understanding of the rules?
Ms Henderson: I think so, but
I am not an expert on this.
Ms Biddulph: It is a difficult
question to answer at this stage because we are still waiting
for firm guidance from the European Commission. Certainly, on
Objective 3, we are very confident of our spend position and feel
well placed to access funds.
Q117 Chairman: But are you not tied
umbilically to the nation states of Scotland and Wales, in terms
of the performance review, because, presumably, from a Commission
point of view, it is a national question whether you qualify for
a performance reserve bonus or not, and were it to be the case,
perish the thought, that our colleagues in Wales and Scotland
were not as efficient, if that is the way of describing it, at
making use of the Funds then we might all get dragged down by
poor performance in other parts of the United Kingdom?
Ms Henderson: Chairman, to be
honest, I am not sure we are the right people to be asked that
question, but I am sure we could get the Department for Work and
Pensions to give you an answer to that.
Chairman: Sure; it is just of interest
to me, in passing.
Q118 Miss Begg: This is just a quick
question about EQUAL. I know that the EQUAL initiative is not
applying in the UK, but, from your perspective, is there a distinctive
contribution made by EQUAL, or has what it is doing already been
undertaken in the UK under the Objective 1, 2 and 3 programmes
that we are carrying out already? I presume the reason we are
not doing a full EQUAL initiative here is because it has been
a judgment by national government?
Ms Henderson: You are quite right,
this is not a programme Government Offices actually run, so we
are not as close to it as we are the others, but we are making
an effort to keep in touch with it and draw learning from it.
Mr McVey: Firstly, we did do some
work with voluntary and statutory organisations prior to the programme
starting to identify how we might learn lessons from EQUAL once
projects actually got up and running, because, clearly, it is
testing new ways of working, new ways of helping people who are
disadvantaged back into the labour market. It is probably too
early for me to say whether or not the things that are being carried
out are all things that might not always be done, because we have
yet to move to the dissemination stage, which is the stage where
projects start to share the activities. But what we will be doing
in the region is identifying the sorts of activities that have
begun in the region with EQUAL partnerships, even though they
are not necessarily just working in the region, and seeing how
we can share that into the Objective 1, 2 and 3 programmes as
they move into the second half of the programme.
Q119 Mr Stewart: I would like to
ask about some bigger picture issues. You will know that the programme
period runs out in 2006, we have also got the influence of enlargement
in the EU, with the ten new accession countries. The sort of landscape
I would predict post-2006 would be we will see a massive run-down
in Objective 1 areas, with the possible exception of Cornwall,
a reduction in Objective 2, albeit with some traditional support,
and a reduction in Objective 3 as well, apart from some community
initiatives. So it is going to be a big hit on ESF, and there
will be a big statistical effect with the ten new accession countries,
because their GDP, by and large, is much lower than ours, and,
as you know, Objective 1 is roughly 75% of average European GDP,
Poland has about 40% of average GDP, so the statistical effect
will mean a massive reduction in Objective 1. The Commission have
predicted 37 million Europeans will lose Objective 1 post-2006;
this is a real shock to the UK economy, and indeed the European
economy. What is your view on this, would you agree with my assessment
of the landscape, or, if not, what is your assessment of that?
Ms Henderson: The first thing
to say is that when people went into the current round of Structural
Funds they knew this was going to happen, so I would not say any
of the programmes in my region would be surprised to know that
money was going to be very much less, if it continued, and indeed
that we were not preparing for that eventuality by trying to mainstream
what we are doing and build capacity. I think the way ESF runs
is very helpful in that way, it is building capacity in co-financing
organisations who will continue afterwards. But, of course, as
I am sure you are aware, the Government has launched a consultation
on the UK position, putting forward a suggestion that, you might
say, the wealthier countries look after their own regional needs,
though with an underpinning guarantee from the Treasury, but either
way it is going to mean a lot less money. So, yes, to that extent,
I agree with your analysis.
5 Please refer to the supplementary memorandum submitted
by the Government Office for the South West (also on behalf of
the Government Office for Yorkshire and The Humber) (ESF 20),
at Ev 54. Back
Please refer to the supplementary memorandum submitted by the
Government Office for the South West (also on behalf of the Government
Office for Yorkshire and The Humber) (ESF 20), at Ev 54. Back
The mid term evaluation is over seen by the Evaluation Standing
Group who monitor the progress and quality of the research. The
Evaluation will be completed by September 2003. The National Programme
Monitoring Committee will then consider the findings and identify
whether any changes to the Programme are needed in the light of
this work. Back