8 Post 2006
107. The current programming period runs to the end
of 2006, although some ESF payments under the current programme
may continue until 2008 under the N+2(years) rule. In 2004, the
Commission is expected to publish its proposals for the next programming
period, which is likely to be for the years 2007-13. During the
next few years, a number of applicant members will join the EU.[213]
One consequence of EU enlargement is that spending plans for EU
structural funds under the next programming period are expected
radically to alter the level and pattern of structural funds that
are currently allocated to existing member states. For example,
in the case of the UK, it is possible that after 2006 only Cornwall
will receive Objective 1 status and that the coverage for Objective
2 will be greatly reduced, with some reduction in Objective 3
spending. Some transitional assistance may be available to some
areas. Mr Lönnroth, (European Commission) indicated that
there was a need to concentrate funds on the objective 1 regions,
whatever they might be, but also that problems of social cohesion,
including problems of criminality, poverty and lone parents, extended
across the EU. [214]
In describing what happens to the areas outside Objective 1 regions,
Mr Lönnroth, said:
There are two options - presuming that there
will be something outside these objectives - one is to take the
Lisbon Strategy and the European Employment Strategy and other
strategies at the top as an umbrella. The European funding would
be based on these themes: managing change, alleviating poverty,
pockets of criminality and social exclusion, and then the zoning
would be left for the member states. Or you would have the other
option which would be to define in advance the regions, including
the mountainous areas, the sparsely populated areas and so on
and then within those areas there would be a set of criteria which
the member states would then fund. I cannot take a stand on this
because this is something which the leaders - the political decision
makers - will decide at the end by unanimity.[215]
108. The Commission's proposals for the next programming
period will be made in the Third Cohesion Report with draft legislation
and decisions made sometime in 2005-06. The detailed timetable
is set out below:
"Following the Third Cohesion Report, it
is expected that the Commission will move swiftly to publish draft
Structural Fund regulations for the next financial period, possibly
in early 2004. Negotiations will then begin between Member States
and the Commission, with a European Council meeting in the second
half of 2005 expected to agree the Structural Fund budget. If
this timetable were adhered to, then the process of setting up
the next Structural Fund programmes should be able to get underway
in 2006 for a 2007 start. The Commission has committed to trying
to get a prompt start to the next Structural Fund programmes after
the lengthy delays to programmes experienced at the start of the
current programme period. "[216]
109. As part of the continuing debate on the future,
the UK Government set out its position in "A Modern Regional
Policy for the United Kingdom'.[217]
In its paper, the Government highlighted "its commitment
to a modern devolved and decentralised regional policy".
The Paper proposed that a new EU framework for Devolved Regional
policy should form the basis of the UK position on reform of EU
regional policy. In broad terms, the Government proposes to repatriate
regional funding and concentrate funds on the poorer countries
of the EU. According to the Government, its proposals were based
on the following key objectives:
- an EU regional policy that
fully supports, and adds value to, the ambitious devolution, decentralisation
and regional development agenda already being pursued domestically.
- significantly simpler and more flexible implementation
and monitoring arrangements, which are proportionate to the amount
of funding available and which allow integration with other policies.
- EU regional policy that actively supports the
EU's agenda for higher productivity and employment and for developing
human resources.
- continued need for strong regional policy in
all Member States, which is both fair, and the most effective
use of funds, to concentrate the EU's limited financial and administrative
resources on the poorest Member States, where they will add most
value.
- ensure that expenditure on EU regional policy,
as with other elements of the EU budget, achieves a fair budgetary
deal for the UK taxpayer.[218]
110. The Government's consultation document contained
no reference to the social inclusion agenda and only a few references
to ESF specifically. Mr Philips (LVSTC) told us that apologies
for the omission of the social inclusion agenda had been given
at meetings. He added:
"I think that, in a 100-page document, it
is more than an apology that is needed not to have mentioned the
social inclusion agenda. So one wonders where a lot of the vision
is, in terms of the future, on the governmental side; on the voluntary
sector side, I think it is a real challenge, because, as we said
earlier, we have never had a big stake in the capital investment
that goes on through the Structural Funds. We are minor players
there, if players at all, where the main contribution has been
in the revenue side, the human resources side. Essentially what
is happening with the Structural Funds is that they are homing
in on social inclusion and the issues of inequality, and the fact
of the matter is that we have become a prosperous but more unequal
society, and there are major issues there that we have got to
tackle. We would see the sector making a major contribution in
delivering on that equalising agenda, and we would expect the
Structural Funds to come in, across Europe, to address this particular
agenda."
111. The consultation period on the Government's
proposals ended on 4 July. The Department for Trade and Industry
made a brief statement analysing the responses to its proposals
on 17 September.[219]
A more detailed statement is expected sometime in the autumn and
is expected to cover how employment, skills and social inclusion
priorities would be incorporated in the new approach. According
to the Government's analysis, most respondents commented on the
contribution that structural funds had made to particular projects.
Many respondents also stated their belief in the added value of
the Structural Funds, particularly the way that Structural Funds
were operated. The benefits included the use of strategic programming
with EU-wide priorities, the value of partnership working and
policy innovations that were supported by specific funds (technical
assistance, Regional Innovation Strategies, the PEACE Programmes
for Northern Ireland). As regards employment, skills and social
inclusion, the analysis also stated that many of the stakeholders
interested in ESF:
"asked for more information on how the
types of projects funded under Objective 3 or through the European
Social Fund in Objectives 1 and 2 areas could be supported under
the Government's proposals. Some were not convinced about the
Government's commitment to the social inclusion agenda and felt
that it had historically been driven by the Structural Funds rather
than by domestic initiatives."[220]
112. Relatively few of the written submissions to
our inquiry commented on the position of the ESF after 2006. Of
the few that did, one commented that enlargement "will inevitably
shift the majority of resources to the East" but reaffirmed
the need for cities such as London to exploit structural funds
to combat unemployment and poverty.[221]
Mencap expressed concern that "ESF funding is due to come
to an end in 2006".[222]
It mentioned that Mencap's Education and Employment services relied
heavily upon ESF funding. It called for reassurance that funding
from DWP would be made available to replace ESF funding after
2006.
113. It became evident during the course of our inquiry
that very little forward planning has been done on what happens
after 2006. To some extent, this is understandable given that
the uncertainty about the various scenarios that may emerge. However,
despite the uncertain future, we did sense a strong belief in
the case for a robust regional and employment policy in the UK,
regardless of whether the policy is devised domestically or at
a European level. Ms Henderson (GOSW) told us:
"Some of the benefits of European Funds
one would not want to lose: one is the fact that it is a partnership
approach so it involves lots of people and locks them into a strategy
for an area, or a theme. The other advantage is that it is generally
cross-cutting, going back to the question you asked a moment ago,
we are not looking just at skills alone, or building alone. But,
inevitably, there are bits of process associated with European
Funds, even though we are mitigating some of them, and match-funding
used to be the bugbear but co-financing is helping address that.
The other one tends to be the monitoring regime, which sometimes
can seem to people rather onerous, though we try to make sure
that it is not excessively onerous in relation to the risk."[223]
114. Mr Philips (LVSTC) told us that ESF had 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."[224]Clearly,
the details of any detailed proposals from the UK Government and
the European Commission will need to be assessed and compared,
but we were left in no doubt that public funding will still be
needed to support employment, training and social inclusion. Although
the ESF grant represents a relatively small proportion of the
spending on training in the regions, it still represents, on average,
some £500 million of spending in England per year. However,
we are concerned that some worthwhile projects may be too dependent
on ESF funding, especially those outside the mainstream and that
after 2006 they may be left stranded without adequate funding.
Of course, projects should do all they can to find alternative
funding streams. But Government also has an important role to
play. The Minister told us that lessons from ESF should be learned,
but that it would be too early to say what transitional arrangements
would be in place. [225]The
Minister said that while there were some organisations that would
find alternative funding, "there will be other organisations
for whom .[.]. it is going to come as a bit of a shock ..[..]..
and we need to make sure that those organisations are aware first
of all that this particular umbilical cord is going to have to
be cut after2006."[226]
115. Ms Jane Evans, Head of the European Social Fund
Division,, Joint International Unit pointed out to us that the
Government's consultation paper offers some comfort in that if
the Government's proposals were adopted by the EU, it proposes
what is called the net funding approach - that "no country
or region of the United Kingdom should lose out as a result of
the change." She also pointed out that the DWP and
DfES have also indicated their strong interest in ensuring some
sort of similar arrangement that reflects the Structural Fund
money that comes into their particular policy areas.[227]
As regards transitional funding, the Minister told us that "
It does not mean that it is not going to be there, but all that
can be guaranteed at this stage is that arrangements will be put
in place to ease that transition."[228]Although
we were told that the Government's proposals contained some comfort
about levels of future funding, we are concerned that that they
provide a less than full commitment to providing comparable funding
and as such are likely to provide only cold comfort to service
providers and their clients. The next Comprehensive Spending Review
(CSR), which will cover the years 2005/6 to 2007/8, coincidentally
includes the final years of the current programming period and
the start of the new period. In our view it is essential that
the Government reduces the financial insecurity that may blight
service providers, especially those in the community and voluntary
sector, over the coming years, by using the next CSR to identify
the funding that it will make available to support ESF activities,
regardless of whether the Government's proposals for reforming
regional policy within the EU are adopted or not. Although the
decisions determining the next programming period are unlikely
to be made before 2005/6, we believe that worthwhile projects,
many of which are already in a fragile financial position, should
be given greater certainty about their future funding stream.
Such projects should not be left without funds in the run up to
the new programming period, while negotiations are under way within
the EU. As the Minister acknowledged, a factor behind the Government's
consultation paper on regional policy was the wish to minimise
the effect on the UK's contributions to the EU budget following
EU enlargement. While this desire is understandable, we are concerned
that the social agenda issues, which were not addressed in the
consultation paper, may be neglected. We request that the Government
explains the reasons for the omission of the social inclusion
agenda from the Government's consultation paper. We also recommend
that the Government assures us that work on the labour market
and countering social exclusion, which is funded by the ESF, will
not be lost under the Government's proposals for the post-2006
regime and that proper transitional funding will be in place in
good time.
213 The enlargement of the EU in 2004 will not affect
the Structural Fund allocations of the current member states in
the 2000-06 programme period. Separate funding has been allocated
for accession members. Back
214
Q38 Back
215
Q39 Back
216
Ev 117 Back
217
A Modern Regional Policy for the United Kingdom, published March
2003. Back
218
http://www.dti.gov.uk/europe/sep_statement.html Back
219
http://www.dti.gov.uk/europe/analysis.html Back
220
Some commented that tackling social exclusion and promoting sustainable
development and equal opportunities should be higher up the agenda
than they are now compared to economic growth. Back
221
For example, Ev 73 Back
222
Ev 156 Back
223
Q123 Back
224
Q153 Back
225
Q216 Back
226
Q217 Back
227
Q217 Back
228
Q218 Back
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