Select Committee on Work and Pensions Minutes of Evidence

Examination of Witnesses (Questions 130 - 159)



  Q130  Chairman: Can I immediately apologise to our second group of witnesses for delaying them. We have got Ms Tamara Flanagan, who is the Chair of the Third Sector European Network and Director of the European and Statutory Funding, of Community Service Volunteers. We have got Ms Sandra Turner, who is Assistant Director, European Funding, Community Service Volunteers. Mr Ray Phillips, who is the Director of the London Voluntary Sector Training Consortium; and Barbara Love, who is ESF Development Officer, in the Scottish Council for Voluntary Organisations. You are all very welcome. Ms Flanagan, to make the best use of the time that we have got together, we have got one or two areas of questions we would like to run through, but perhaps you would like to open the proceedings by telling us what the perspective is from the voluntary sector in relation to ESF and Structural Funds generally?

  Ms Flanagan: I suppose the first thing to say is that the voluntary and community sector in the UK is exemplary. You have been to other countries, I know, and you will know that their voluntary and community sectors have nothing like the access directly to European Funds that we have. And that is a tribute to the Department's commitment to partnership over the years, DfEE and now the DWP, they have taken particular measures to make sure that the voluntary and community sector can be fully engaged, and the partnerships in the regions reflect that also. And it is this partnership then that drove us to make the submissions to the Select Committee, because it is our perception, that of TSEN, that the access of the voluntary and community sector at large is challenged by some of the policy changes that we have seen in the last year, notably co-finance. I must say, and you may be surprised to hear the voluntary and community sector speaking with one voice at this table, that there are voluntary and community organisations who can well use co-finance, for whom it is an advantage. Our particular preoccupation is with the hardest to reach, people with disabilities, it is around community projects and capacity-building where we perceive that the use of co-finance, with Government programmes as the main match funding, is not readily accessible to those particular groups, and that is our particular concern. A note of caution that I wanted to sound at the beginning of the proceedings is about figures. I have noticed in evidence from last week and today that often you are being given figures, and it is our sense that really it is quite difficult to have reliable figures at this time because direct bidding in this programme has just been running until the end of 2002. So when people talk about "the period" are they referring to a period when the voluntary and community sector was very heavily involved through direct bidding, or less involved because more co-finance is being introduced, what are the comparators? Are they talking about the whole of the UK, taking your point earlier, England, Scotland and Wales, or are they talking just about England; and, in terms of co-financing organisations, are they talking about the 47 Learning and Skills Councils, who have 47 different ways of doing things, or Jobcentre Plus, or the Local Development Agencies, such as here in London, or the Regional Development Agencies in other regions. We will give you figures too, but just a note of caution, in terms of the availability of reliable figures, when we discuss the impact, as we perceive it, on the sector. Just one last thing, since you asked me to do a bit of a round-up. I think it is fair to say that the voluntary and community sector has been very, very heavily involved with ESF. In the last programme, we were responsible for 35% of the expenditure, and that is because the voluntary and community sector were driven into the arms of ESF, as we often say, by the fact that government programmes did not suit the constituencies with whom we worked, they the programmes needed to be worked with for long periods, they needed very hard outcomes, in terms of things like outcome-related funding, and there were quite narrow perspectives about employment and training focus for individuals engaged in training programmes. It was European funding that enabled us to work very successfully with hard to reach groups, people with mental health problems, people with disabilities, people in difficult communities. We found this exceptionally useful, which was why, despite all of the, you might say, arcane difficulties with ESF, we went wholeheartedly into using it, we can give you the numbers of projects. But perhaps Ray has something to add, from a regional perspective, in terms of the overview here.

  Mr Phillips: Thank you, Chair, and thanks for the invitation to give evidence to you. In the London context, we are still in the process of putting a full picture together, and so, in our particular written evidence to you, we were mindful of the fact that we did not really want to quote figures too much. We are very much aware, for example, as you heard from the previous contribution, that 66% of Jobcentre Plus's returns at the moment are located against the voluntary sector; what we are not sure about is 60%, of how that configures, in terms of a voluntary sector contribution, but also, on top of that, what we are not clear about is, whenever we look at these percentages, percentages of what. I think the biggest concern we have got in London and elsewhere is the total visibility of the programme. We are invited, both my colleague and myself, to the National Monitoring Committee, and are aware of the fact that at the minute it is not easy to see the full picture, the 100% picture, because of IT failures, and I believe they are being remedied. But, of course, until that comes through and you actually see the full 100% picture, you cannot be very convinced about what the ESF programme looks like at the moment. We do know in London that we are well on line for the N+2 targets, and on many occasions we have been reminded that that is because of the initial impact of direct bidding and what it was able to achieve, in the very difficult, early situations of the programme. One other thing I would like to mention, and I will come back to, I think, it is very much a feature of the London discussions and elsewhere, nationally, we are very, very concerned that in the development of new procedures we do not lose sight of the social inclusion agenda, and, I think what we would like to say, in words of very few syllables, is that there is not enough "joined-upness" in the way in which the DWP operates across the employment and social inclusion agendas. We are aware of separate discussions that go on between the voluntary sector and the employment side of DWP, of separate discussions that go on with the social inclusion side, we are aware of the National Action Plan on Social Inclusion, saying that they want to see the Structural Funds used for social inclusion, yet we do not get a sense of "joined-upness" within the Department about this and the need to see more promotion of the social inclusion agenda. It is this part of the agenda that we feel is at risk if the small groups and the voluntary organisations that we work with within the regions get disengaged from the Fund.

  Q131  Chairman: I am very interested just to follow that. My understanding is that social inclusion actually is the Office of the Deputy Prime Minister as much as it is the DWP. I stand to be corrected about that.

  Mr Phillips: There is a special section within the DWP that is in discussion with the voluntary sector, discussing the National Action Plan on Social Inclusion (NAPSI). And a lot of the groups that come out of the socially excluded are asking for resources to develop the work and the infrastructural support, and there is no obvious, forthcoming technical assistance model available to them, because it seems to be a bit of a closed book when you move out of one section of the DWP into another.

  Ms Flanagan: The National Action Plan on Social Inclusion was actually co-ordinated by a member of staff from the DWP.

  Q132  Chairman: So, if you have identified the problem, is there an obvious remedy, or does that have to be in the hands of whatever is happening?

  Mr Phillips: We are going to be meeting, as a sector, with members of the Department, making this issue clear, that in the context of the National Action Plan on Social Inclusion you will not deliver the mobilisation of relevant actors, which is the current, if you like, banner under which so much of the work on the employment and social inclusion sides go, and it includes us. You will not get that to happen unless you offer support out in the field.

  Q133  Chairman: I want to come on to co-financing in just a moment, but is that lack of co-ordination a product of having changed the system, or does this track all the way back to the beginning of time, with Social Funds, Structural Funds, generally?

  Mr Phillips: I think there are all sorts of opportunities available now to Government, with the DWP, bringing those two agendas together, and in London we had our London FRESA[30] launched by Ivan Lewis, and he commented on the capacity of the Government, with the DWP, to bring those two agendas together. But our fear is that it is not happening, not in terms of delivery, and in particular our concern, within the context of the Social Fund, is that a lot of the groups that we work with on the social inclusion side of the ESF agenda are being squeezed.

  Ms Flanagan: It is fair to say, when the first National Action Plan on Social Inclusion was written, it was written rather rapidly, because it was requested by the European Union very quickly, and much of the implementation that was described in that National Action Plan on Social Inclusion was linked to the existing policies already, particularly those elaborated in "Opportunities for All", which may be a policy document you are all familiar with. And so there were not laid down particular ways of financing the implementation of the NAPSI particularly, although the second one, which is in the process of being put together, we might well imagine, with the Lisbon Agenda, which is what Ray is talking about, mobilising all actors, might well be looking at some resourcing of policy implementation.

  Q134  Chairman: That is something we will certainly take up with the Minister when we see him; but you are offering that, it seems to me, in a constructive way.

  Mr Phillips: Yes, indeed.

  Q135  Chairman: These things are not easy, and, if people are acting in good faith, sometimes that can be taken into account. That is very helpful.

  Mr Phillips: Absolutely; constructive.

  Q136  Chairman: Do you get the sense, I am beginning to pick up a little bit of a sense, and it is true of your written evidence, which is also very helpful to have, that you are being shoe-horned? Some of the work that you would really, really like to do, left to your own devices, with a small parcel of money, you could get on with, but you are shoe-horning your efforts, simply to stay within the rules, and we have all got to stay within the rules, I think everybody understands that, and that you might be able to be more effective if you were left a little bit to your own devices, in terms of the work that you want to do, particularly with the hardest to help groups; is that right?

  Ms Flanagan: I think, as we said earlier, that is what characterised our involvement with the programme. It might be that somebody, in terms of the providers, could give you a bit of a perspective about the extent to which our projects no longer fit the bill, particularly with competitive tendering in some of the co-finance organisations, where we have very narrow specifications.

  Q137  Chairman: Have you got any examples, Sandra, of projects which you have tried to put into the new system and had rejected because they do not fit the criteria?

  Ms Turner: Since July 2002, when the biggest direct bidding round came to an end, obviously we have been looking at the new opportunities that were opening up, we were not against co-financing, on the contrary, open to it, and obviously we have been looking for opportunities. I think the example that is most worrying is about a project based in Bristol, an example of a café based in the community, in existence for over 20 years, and a part of the work of the café has been financed under ESF, and particularly they work with people with learning disabilities, people who have Down's syndrome. And, through the help of ESF, these people have the opportunity to get out of the usual drop-in centre, they actually have the opportunity to receive meaningful training and put into practice their skills in a real working environment. Now we have tried the co-financing options, but, unfortunately, the LSC at that time said to us that that was a target group that they were not covering. Thankfully then, in that region, in the South West, there was still direct bidding, and we were able to prolong the life of this particular project for another 12 months. Our worry, however, is that, because co-financing is becoming more and more diffuse and direct bidding is on the go, after the end of the project, in June, all other projects which work with similar types of groups, people with mental health problems, etc., etc., from December 2003, we simply do not know what is the future of the project, and we could face a situation where not only projects are closed but doors are closed to these types of client groups.

  Q138  Mr Dismore: Just to pick up there; what you are telling us now seems to be very different from what we heard in the previous evidence session. I do not know if you were here and were listening in, but the impression we were being given by the Government Office for London representatives was that these hard to reach groups are still able to access ESF through the co-funding arrangements, and what you are saying is that is not correct?

  Ms Turner: I am not saying it is not correct, I do not have the information to tell you whether it is correct or incorrect, I can only speak from my experience and the experience of an organisation which has been working with these groups for over 20 years now. And it seems to me that, all of a sudden, our options to continue to use ESF to do the work that we want to do are becoming slimmer and slimmer, and we cannot quite understand why, because, obviously, we have been funded for a long time, that means that we have been delivering good projects, with good outcomes. So that is what I am here to tell you, that is my experience.

  Ms Flanagan: It may be worth adding that there is segmentation in the market, and one of the things that we did, in preparation for this meeting, actually, but also for the mid-term evaluation, was look at the coverage the co-financing organisations offer in each of the regions; and it is in this segmentation of different co-finance organisations targeting particular activities in particular areas, maybe geographical, maybe communities of interest, maybe skills needs, that these groups which Sandra is describing fall between. There are whole regions in the analysis that we sent to you for example not covered in the South West they have retained direct bidding, which happens to cover this eventuality, but in London there is no longer direct bidding at the moment, so that there are people falling between the narrow specifications of particular co-financers, covering particular kinds of interests. I think it was in Enfield, I should send you a note on this, because I do not want to give you incorrect information, but one of the London analyses showed that there would be no direct training of beneficiaries at all, only trainers, in that particular co-finance organisation. So there is this segmentation that we describe in our submission which gives rise to these gaps, which could be underpinned by direct bidding.

  Mr Phillips: In the original design and, if you like, in the original prospectus for co-financing, there was the argument put that there would be a percentage of the programme reserved for direct bidding, particularly in the context of a CFO programme not being able to meet all contingencies, that there were gaps, and I think it was a fairly sensible arrangement to have a fine-tuning system. We regret, in London, that at the moment there is not a direct bidding arrangement that can pick up gaps. What we are grateful for, with the Government Office, is that we are now mapping to see if there are gaps, but, of course, the problem is going to be that if we find gaps it is going to be rather late. But I think the important thing to bear in mind, in London, we had a European programme that had a well-publicised, pan-London, regional bidding round, we have now got ten CFOs who issue prospectuses and tenders. There are all sorts of problems out in the field now, and if you are seriously suggesting that it is simpler for a bidder out in the field now in London to access the Fund, when they have got to look in ten different directions, ten different timetables, ten different sets of priorities, that is—

  Q139  Mr Dismore: Does that include the LSCs?

  Mr Phillips: There are five LSCs, we have got Jobcentre Plus, the Association of London Government, the London Development Agency, Connexions, and also Business Link for London. We have ten co-financing organisations; it is a logistical problem, almost, one might say, nightmare, it is not easy, it is certainly not simple, and I think the issue is how do you get the delivery to match the ambition. But what we are saying, as a sector, is that, okay, everybody is taking on the challenge and moving it forward, but why get rid of the fine-tuning mechanism that could have been there with a direct bidding round; and it is not just London. London at the moment has got that situation, but, as I understand, where the regions are headed, there is going to be very little room for manoeuvre around a direct bidding fine-tuner. And I think, in programmatic terms, that is overambitious.

  Ms Love: We do not have co-financing in Scotland, here is a contrast. What we found in Scotland, and we are completing the figures on this, is that for ESF in the Objective 3 area 40% of the total grants are awarded to voluntary sector organisations. They are very successful; in the Highlands and Islands Special Transitional Area, in their ESF section, 23% is awarded to voluntary associations. We are completing research at the moment to show how much of the match funding for that comes from the types of bodies who would actually co-finance if it were the same system as in England; and some of the evidence that we are getting is that the bodies are actually providing their own money, so the likes of the Scottish Council for Voluntary Organisations do not need a co-finance match because they are using the ESF money as additional money.

  Q140  Mr Dismore: In the old match-funding way?

  Ms Love: The match funding comes from their own Association, and ESF is additional.

  Q141  Mr Dismore: Yes, that is what I am saying, an old, traditional match funding?

  Ms Love: Yes.

  Q142  Mr Dismore: But the message I am getting from Ray, and I think from the others, is that the answer to this is probably, if co-funding is the way, to make sure that you have got a direct bidding safety-net to catch the things that fall through. To what extent do you think that the voluntary and community sector are speaking with one voice on the whole issue of the merits and demerits of co-financing? I seem to get that impression from you three, but do you think that is the general view?

  Ms Flanagan: Can I say, at the outset, that there are people who can use co-finance and who find that welcome; but equally there are a large number of voluntary and community organisations who were, happy to look for match funding. In the East Midlands, we found when we did an analysis of the projects who were using Policy Field 2, which is the inclusion policy field, that less than 2% of their match funding came from mainstream programmes, they were using things like the Community Fund, they were using SRB, they were using trusts and foundations. And one of the issues that some of our members raise is the shrinkage, in terms of those funds going to other places, now that they are not being required to match, or, in their terms maybe, not being doubled by being attached to ESF.

  Q143  Mr Dismore: That is the next question really. To what extent do you think that the effect of co-funding has been to increase the overall amount being accessed by the ESF, or reduce it, compared with the traditional direct bidding way of doing things?

  Ms Flanagan: I am sorry, I do not quite understand that question.

  Q144  Mr Dismore: I think what I am saying is, one of the criticisms of the old way of doing it was that not all the money was being spent, effectively, through ESF; so do you think that the effect of switching to co-funding has meant that more money is now being accessed through ESF than previously was the case?

  Ms Flanagan: Not by the voluntary and community sector; certainly more money has been committed, whether or not it has been spent we are yet to know, we have not seen the report on that, because large sums have been committed to Learning and Skills Councils, or other CFOs, to organise the expenditure. In terms of the access to the funding, the difficulty is that the mainstream government programmes exist anyway, for example, Modern Apprenticeships exist, Work-Based Learning for Adults exists. And, since they add the match to the ESF, the direct ESF used by a co-financed project will last less long, that is one of the difficulties, because actually they are using 100% ESF to run the programme, with the exception of those CFOs who are able to match with what is called a Local Initiative Fund, which is a kind of more free pot that some Learning and Skills Councils certainly have, and there may be examples of that being used for co-finance. But, by and large, we are actually talking about a part of the programme which is in situ, and then the ESF funds being used 100% to run the other part.

  Q145  Mr Dismore: But you are not saying that the effective ESF is simply to be subsumed into existing programmes?

  Ms Flanagan: No.

  Mr Phillips: I think also it would be fair to say that we are looking at exactly what the full picture is going to be, because at the moment it is not easy to see what the 100% picture is, we are waiting to get the information out when the IT is up and running. But, the issue about whether the voluntary sector speaks with one voice, let us make it clear who we are. We are regional training networks who work very closely with Regional Government Offices, and we are funded through technical assistance; we are in a partnership arrangement to secure the delivery of the programme. Now it would be fair to say that you have seen evidence from a number of the Regional Training Networks, we are provider-based, therefore we are very conscious of the problems of delivery, we are accountable to delivery agents on the ground, so we are very, very open to the problems of the slip between cup and lip, what happens when you actually try to carry out an ambitious programme on the ground, does it run or does it fall. These are the concerns that we have got. I mentioned earlier on the problems of a number of different co-financing agencies coming together in one region, the lack of what has now become parlance, the lack of a road map, there needs to be some sort of guidance at regional level. Now we are working on that to improve things, but, as I say, we would like to see the option of direct bidding retained as a fine-tuner. There are other issues, practical issues, about co-financing that have to be borne in mind. The value of the previous system, where you could draw in match funding from a number of different sources, is that, effectively, you were locking in the programme to a lot of other agencies on the ground, so that was almost, through the financial mechanism, some local accountability, instead of money being dropped down through national programmes, which might not actually correspond as finely as they might with regional priorities. And that was very important, so there was a financial accountability that went out. The other issue is, of course, that the ESF is a difficult programme to get going, and when you are match funding and you have got some funding in place, and you are trying to negotiate the start of a programme, there are delays. We had a 30% upfront facility, which meant that when the match did come, very often late, we had a lump of it coming through and we could rely on the other match that was already running; because of the issues of timing, that was never entirely satisfactory. But what it has been replaced with, in some significant cases, is now on long negotiating periods with CFOs, with no money on the ground whatsoever, because you are waiting for 100% of the money to come through, and this actually has caused a lot of pain and a lot of grief for a lot of organisations, certainly in London. It is attention to that sort of detail that needs to be borne in mind. If you look at some of the early guidance that was put down by the DWP, on the fact that providers should be no worse off than before, two significant things are missing with the CFO system, as a general rule, lack of upfront funding as an automatic position, because, according to the Social Exclusion Unit as well, the voluntary sector needs upfront funding to survive, because you cannot build up reserves.

  Ms Turner: Can I just add to what Ray was saying. I think an unhelpful way of paying for projects from the voluntary and community sector is, I am not sure whether all of the co-finance organisations have this system in place, but we certainly know of some that pay projects on delivery of outputs, so you get a certain amount for starters, you get a certain amount for completers, and a certain amount for qualifications; and that is fine, but it is not fine for very disadvantaged groups, whose progress perhaps could be measured in a different way. There is no measurement for soft outcomes, that the last direct bidding, certainly, we got to a stage where the DfEE was working on a tool-kit and we had some measures of outcomes; what has happened to all that, it has just simply disappeared.

  Mr Phillips: A further important issue is the lack of appeals systems. We are really very concerned about the lack of appeals systems. The programme essentially is a social justice programme, and I know this is a discussion that went on at the national evaluation of co-financing the first time round because I was representing the sector on that group. The concern was, why should you have an appeals system, in the commercial world you do not appeal against a contract going elsewhere. But the group had to be reminded that we are talking about a social justice programme here, and, in that context, there needs to be a mechanism for reviewing decisions, or, at least, giving a chance for projects to come through; and that intransigence, that inflexibility, is one that needs to be attended to. It is not to say that it cannot be done within co-financing, but in a number of significant cases, and Jobcentre Plus has been mentioned, that scheme has not been volunteered, and it does put the field at a considerable disadvantage.

  Q146  Mr Dismore: My last question, following on from those points, is, do you think that the way co-financing is working is operating within the EU rules?

  Ms Flanagan: The Department have been at great pains to work with the Commission to ensure that the situation that they have with co-financing is within the EU rules, they spent a lot of time talking to the Commission about what would be a satisfactory system. I think it was part of those negotiations that actually gave rise to these quite narrow tenders that we now see when contracts are being let, because in order for co-financers to take responsibility for the audit of those who are their providers, and in order for them to secure contract costs, not just the actual costs spent, it had to be that co-financing organisations were involved with not grant-giving but contract-letting. It is the competitive tendering element, which I know was agreed on the basis that that would suit or would be consistent with the European Regulations, which has given rise to some very specific sorts of contracts which, the ones we are seeing, are ending up being exclusive rather than inclusive. Not to name names, but there was an example given of a contract let by one Learning and Skills Council for a specific skill, brick-laying, on a specific estate in an area, for women, and it was our determination that if some of the resources of the co-financing organisation are being used in these very precise ways it does not leave much room for getting on with helping the most disadvantaged that you said yourself, Chair, earlier.

  Mr Phillips: One of the most difficult rules is additionality, and I do not think, until we see the whole 100% programme, we will be able to come to firm conclusions about additionality.

  Q147  Mr Goodman: I was going to ask if you were aware of any particular projects that are losing out as a result of co-financing, but I think Sandra has already given a very telling example of that, unless there is anything else anyone would like to add?

  Ms Flanagan: I know there is a project from the South West that we were asked to mention, which was described as a flagship project, in terms of working with people who were being rehabilitated after drug use, and this project, which featured as one of the examples of best practice which we showcased at our conference in September, was taking people who were coming out of rehab. and working closely with them in a pathway, integrated approach to developing their skills and their ability. And, I might say, some of them becoming employed by the project and then moving out into other, not sheltered, employment, genuinely applying for posts and getting them, and then moving out obviously into other employment areas. And they were, interestingly, showcased also in one of the Department's newsletters as a very good example of how European money was being used to work with excluded groups. The Regional Director of SAVAGE, who made a submission, mentioned to us at our last meeting that this project now does not know how it will be able to continue, because it is not being able to fit into the criteria delineated locally for ESF-using projects.

  Mr Phillips: One of the class of organisations in the voluntary sector in London that is facing problems at the moment are what used to be called Sponsored External Institutions, they had a special relationship with the Further Education Funding Council, which meant, in effect, that they were getting grants, a post-box, through the local college, and effectively they were recognised as being able to run their own programmes. The current arrangements in London, which are taking them into mainstream funding, are not recognising the difficulties of those particular groups, and there are several big ones in London, the Newham Women's Training and Education Centre, East London Advanced Technology Training Centre, they are having difficulties picking up cover for the sorts of accompaniment costs, like childcare and others, which they cannot claim through the main programme in London East. And so I think it would be useful to address the situation facing external institutions, as recognised previously by the FEFC, in the current regime.

  Q148  Mr Goodman: As well as projects that were inside the rules, as it were, and now are in danger of falling outside the rules, do you think there are types of activities, or projects, that should be funded by the ESF and are not, or types of projects that are funded and should not be?

  Ms Flanagan: There is certainly an area of projects that we have been concerned with and we have been talking to the Department about, which is the capacity-building projects, the whole notion that European funding, as it was used in the previous programme, the famous Priority 4, can be used to help communities develop their response to their own identified needs, and, in that, using organisations who may not usually be engaged in the kind of European-funded activities of employment, training, careers advice, and so forth. And these kinds of projects were very successful, quite a number were built up under the last programme; there was not a specific capacity-building programme in Agenda 2000 but rather it was mainstreamed into all of the policy fields, but, in fact, we have seen that the focus on capacity-building is no longer as sharp as we would like it, and certainly it does close down this route of communities developing their own responses.

  Q149  Mr Goodman: You mentioned discrimination and work with the disabled particularly in your evidence, did you, in that regard?

  Ms Flanagan: Yes; there are a number of measures, activities, to combat discrimination, for instance, which co-financing organisations do not seem to get much involved with, and working with those with disabilities equally. In some co-financing organisations, because I do sound that note of caution, and in London I know, for instance, that co-financing organisations are quite heavily involved with specific sorts of groups, refugees, asylum seekers, the disabled, there may be difficulties around the universality in this, people falling in some places between stools.

  Mr Phillips: Further to that, we are in discussion with the European ESF Division on this issue of capacity-building, and in the submission that we are making we have drawn attention to the conclusion of research commissioned by the DfEE on the old Objective 3 Priority 4, which did focus on capacity-building, and their suggestion that they made that `we feel it should continue as a separate priorital measure'. And the feeling is that there needs to be some space created for the issues around capacity-building, particularly in the light of mobilising communities, the new thrust coming through the employment guidelines, and also as a bridge across into this social inclusion agenda and the work that the DWP is doing, wearing another hat, so to speak, on another side, with the National Action Plan on Social Inclusion.

  Q150  Mrs Humble: Ms Love, earlier in your evidence, you said that just over 40% of the schemes in Scotland were delivered through the voluntary and community sector. Do you think, and I am going to ask everybody else the same question, that there is an optimum level of work that can be done through the voluntary sector, and do you think it is going to go up or down?

  Ms Love: I do think there is an optimum level. If you further analyse these figures, what you find is something like 50% of the applications come from 19 organisations, so there is obviously a capacity element, in that there are only certain organisations in the voluntary sector that feel they are able to go into the ESF field, either because of the types of projects that they want to deliver, or because of either the actual administration or the perception, that maybe the administration is too onerous for them actually to take on board, and that they can get money from an alternative source.

  Q151  Mrs Humble: In England, because of the problems that you have outlined with co-financing, I got the impression from you that you feel that the work of the voluntary sector is being marginalised. Do you think that there is more that you could do, or do you think that the level of your input is going to go down rather than up?

  Ms Flanagan: In the last programme 35% of the programme was delivered by the voluntary and community sector, that is to say, the applicant on the application form, as we understand it from the Department, was voluntary and community sector. I think, as Barbara says, there is an optimum point, and I would not expect us to be delivering the whole programme. But I suppose one thing that is worth saying, taking Ray's point about social inclusion, is that the major funds from Europe are actually all about plant, they are about buildings, they are about building roads, factories, estates, and so forth; the human resource ones are actually very, very minor, in terms of the amount of money that they represent ESF. And the increasing coalition, in the European Commission's mind anyway, and perhaps in some others, is about the human resource funds being much more targeted on these combatting exclusion questions. There is a reality, which is that many of the voluntary and community sector organisations are in a good place to respond to that kind of demand; less so, I would still say, the mainstream government programmes which require a deal of preparedness already on the part of a trainee joining a government programme, not least because of the requirement to have fairly timely solutions, shall I say, and the achievement of hard outcomes, which are a number of the drivers of those programmes. I have just come from awarding ceremonies at the Arsenal to young people who were all part of a young people's work-based training programme; they do not use any ESF money, they have a great time, they are doing sports and leisure delivery in that setting, they are achieving their NVQs, they spend about 18 months in that project, and that is great, that is a government programme that is working. But, equally, we have a programme very similar to that, in another part of London, working with people with quite entrenched difficulties, who may need to spend two years and not actually achieve NVQ2, or 3, in that time, and they are the ones who are not going to suit government programmes.

  Q152  Mrs Humble: Following on from that then, if we were to argue that more ESF funding should be channelled through the voluntary sector, what arguments would we use, in what way do you add value, in what way are you doing something different and better than the statutory sector can do?

  Ms Flanagan: I thought that I had answered that to an extent by talking about reaching the different groups and being able to provide different sorts of integrated programmes to bring people from not being the most able and close to the workforce to being more able and close to the workforce. I would say, that would be one of our major strengths; although also helping communities frame their own responses, in terms of this capacity-building discussion, would also be something that I would say we are much better placed to do than perhaps mainstream programmes. But you are going to add something, Ray.

  Mr Phillips: Yes. The question is obviously loaded, when you say different and better, obviously you are seeking out our value position. A lot of voluntary organisations are coming out of street-level activity with concerns for particular disadvantaged groups. ESF has given the voluntary and community sectors an opportunity to get into dialogue with local training institutions and establish partnerships, which involve a lot of local people, and it is this sense of ownership that comes through the sector. Now this has been seen as complementary to the thrust of mainstream—ESF work has been described as `non-mainstream'—and, in that sense, has been very valuable in bolstering and building up that sort of activity in the community. It is precisely the agenda that is coming across the Channel, in terms of the new employment guidelines—the two national action plans on employment and social inclusion. It is this that we wish to continue to contribute towards. In a London context, at our optimum level, we used to contribute about a third; when Agenda 2000 came in there was a hiatus, because of the changeover from the old TECs to LSCs. Once these came in, the sector delivered about half of the programme for that particular bidding round and this has put London in a good position to reach its N+2 requirements, with the new system only now bedding in. So, I think, it is important to accept that the contribution of the voluntary sector is a significant one, it is not the same as the statutory sector, it complements the statutory sector, and it makes training sense.

  Q153  Mrs Humble: We have been hearing a lot of contradictory evidence this afternoon, and some of it has just come out now as well; because, on the one hand, you, Ray, have just said, in answer to my question, that you feel that the way that ESF funding is structured is actually encouraging the voluntary and community sector to get involved, but, on the other hand, the new co-financing regime seems to be discouraging involvement, or, at least, putting obstacles in the way. How would you like to see that problem resolved, or is it a problem?

  Mr Phillips: It is a problem and it is being attended to, there are discussions going on about how to improve systems, and so forth. I think we have been in dialogue with the architects of co-financing now for some time, we have been going along to meetings, pointing out some of the difficulties, the systemic problems, as we see them, in terms of upfront funding, appeals systems, building them in. We have not stopped asking for those things, because we still believe that the new system is bedding down. ESF has been attractive. I have been involved with ESF for 20 years, mainly at street level, and it has been a very good way of opening up discussions between match funding bodies, local agencies, on the statutory side and the voluntary sector, and that has been very much valued. And it is not to say that it is going to go away, but the new systems, bedding down, teething problems, there are certainly difficulties of that kind that we are facing at the moment; we are trying to see through those actually to identify beneath them what are the systemic problems. And, as I say, returning to an earlier point, this issue of some residual, direct bidding route, as a fine-tuner, we feel is essential.

  Q154  Mrs Humble: Is part of the systemic problem actually a possible cultural divide between the way that the voluntary and community sector works, from that bottom-up approach, your grass roots work, and Government and the new co-funding organisations being top-down?

  Ms Flanagan: I think somebody said, in one of the submissions, that strategy is always seen as top-down, but we think it can also be bottom-up, and that is a very clear explanation that you have just given, about some of the difficulties with which we grapple, and, indeed, I might say, sometimes not only us. An evaluation was done for the Department by Fraser associates about the implementation of co-finance and they did remark that even some Government Offices felt that co-financers may be driven more by their agendas, which may derive from other places than the local region, than by the regional development programmes, which, in European terms, are usually the vade-mecum of the European programme in that area.

  Mr Phillips: Just going back to the cultural divide, I would be much more in favour of talking about rich mix. In the early documentation about co-financing, there is this recognition of the need for top-down and bottom-up to work together, I cannot remember the precise page, but certainly it is in the early documentation; but, the reality is, it is difficult at the moment to get that actually to work. This is our preoccupation at the minute, to try to get that partnership up and running, with new institutions that are not, in a sense, locally streetwise yet; in terms of some of the institutions in London, they have been going around for many, many years, whether as co-financers or not, but others are very much new kids on the block, and it is a case of trying to work out that new partnership.

  Q155  Mrs Humble: Apart from your observation about an appeals process, is there any other, specific request that you could make to us about how to improve that situation, for us then to consider?

  Mr Phillips: Why should voluntary organisations have to work so hard to get the issue of upfront funding recognised; it is something that has been recognised elsewhere, in some of the other government literature about the importance of upfront funding for the voluntary sector that cash flow activity, and monthly funding regimes are not what a lot of voluntary organisations want, quarterly regimes are much more friendly, and that makes upfront funding also more important. So I think that is an issue that, for us, has stuck in the throat somewhat, that the European Commission makes money up front available to national government, they made the Agenda 2000 regime more friendly by moving money across to Member States early on as an upfront contribution, I think the percentage was 7%. But when it comes down to provider level we cannot get that upfront funding, it has really to be argued for, and you have to go cap in hand to make the case, and we are not sure that the case is recognised when it is put.

  Ms Love: Can I come in here and say that, in Scotland, that was a point that was very strongly argued by the voluntary sector and other sectors, and if you have an ESF project in Scotland, on the date you begin it you get 30% up front, then you do quarterly claims and you receive the actual expenditure about a month after you put in the quarterly claim, until you reach the 80% limit. So, in actual fact, the cash flow in Scotland has been greatly improved by the change that they made when they put in this new system.

  Q156  Mrs Humble: But, Tamara and Ray, are you saying that does not happen in England?

  Mr Phillips: We have lost it.

  Ms Flanagan: It can happen but it does not always. This talks to the wide variety of CFO arrangements, because what Ray was saying earlier about our involvement with the architects of co-finance is absolutely correct, we were invited by the Department to sit on all the boards and discuss with the authors of the handbooks what things would be stipulated; but it has to be said that the wide variety of CFOs, in different areas, with different preoccupations, do not observe all of the things that are in the guide to the running of co-financed projects. So in some parts of the country that 30% will just not be an automatic right; in other parts of the country, it might. And the same thing goes for different sorts of match funding, it actually says in the co-finance guidance that providers should be allowed to bring match funding of their own, to enrich a programme; this is not observed by most co-financing organisations. The use of volunteers, time, quantified, which is the most brilliant notion thought up by the DWP a couple of years ago, which enables volunteer organisations to attract cash to pay for small numbers of staff, or whatever; it ought to be allowed, according to the guide, it is not, in some areas, actually in most areas.

  Q157  Chairman: One of the things that the Department told us, and I was interested when, I think, Ray mentioned it earlier, or maybe it was Tamara, that some of the stats are still provisional, they said to us that monitoring of data indicates that 90% of beneficiaries are completing their courses and three-quarters find work or move into further education or training; now these are big claims. Do you have any sense that those figures, given the provisional nature of what we have got at the moment, in terms of the data, are anything like right?

  Ms Flanagan: I am not sure that we are the people to answer for the whole of the DWP's programme delivery.

  Q158  Chairman: But using your own experience?

  Ms Flanagan: In terms of our sector, the figures are not that high, but, of course, the ESF programme is delivered across a range of sectors, and is that referring to the previous programme which ended in1999?

  Q159  Chairman: I do not know, that was the interesting point that Ray raised with us and we will need to check that. Okay; so that is a difficult question for you to answer. Let us just speed on; two quick, very important but brief responses. Firstly, what is your experience of the assessment procedures that are visited on you by the monitoring process, are they overburdensome?

  Ms Flanagan: They are rigorous.

30   Frameworks for Employment and Skills Action. Back

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