Select Committee on European Communities Minutes of Evidence

Examination of witnesses (Questions 180 - 205)



  180.  The problem is measurement. The fact is that, if you spend 100 million on one programme and ten million on another, the ten million programme might be more valuable than the bigger one. I understand the difficulties of measurement. How do you measure whether or not the regulation of 1996 is being met?
  (Mr Coverdale)  Attached to the memorandum we sent you was a list of environment projects and we can see that there is an emerging and growing portfolio of projects which are four-square in the environmental area, within the country programmes, which would not have been there before 1996. You are quite right. There is a problem of measurement. There is also a problem of classification. As our Chair said earlier, some environment projects will have health benefits. If you get into a classification system, are they health projects or environment projects? In a way, if you lean too hard, people will begin to reclassify things into the categories they are being asked to emphasise, but I think that list attached to the memorandum does indicate that the portfolio is changing and that this is being taken seriously. It becomes rather harder to continue to measure it on a year on year basis.


  181.  Can I pick up the budgetary point? My understanding is that the budget which has just been published has a 30 per cent cut in the democracy programme under TACIS, which is rather a surprise to those involved in the democracy programme. Is it likely that such a swingeing cut will occur in other aspects of TACIS?
  (Mr Lowcock)  I would like, if I may, to preface what I am about to say by saying that we can give you more written information on this point. I think it is in any case the fact that the budget that has been published is yet to be approved. There is a complex annual process involving the Commission, the Member States and the European Parliament before the budget is approved. In a number of cases which we too have spotted from our examination of the 1999 preliminary draft budget which you refer to, which the Commission has produced, budget lines which are based on sectors, like democracy or, in other parts of the world for example, health and population appear to have been reduced, but our understanding is that at least in some cases this has been offset by increases in the regional budgets themselves. The intention may be to fund the same sorts of activities from within a more flexible, regional budget. We are still trying to clarify whether, in all cases, this does not mean that there will be a reduction of funding for programmes of the sort that would have benefited under, for example, the democracy line: if this is just a shift of funds, in other words.

Lord Walpole

  182.  Is TACIS, in your opinion, sufficiently demand led and do Member States and the Commission ensure that advice and assistance offered is what the recipient countries actually want?
  (Mr Coverdale)  I do not think there is any doubt that TACIS endorses the principle of ownership of the programmes by the partner countries and has set up institutional arrangements to try to achieve that, which we have touched on already. At the same time, clearly the Member States expect to promote their own particular concerns and interests within the programme and the outcome necessarily is a compromise between the wishes of the partner government, the Commission, the Member States and hopefully the eventual beneficiaries. The interim evaluation of TACIS in May 1997 did acknowledge that the programme was essentially demand driven. I think there is one particular point to make on the environmental side. Often, there is a lack of institutional capacity in these countries on the environmental side, maybe more than in some other areas, a lack of capacity to define and prepare projects and maybe also to define problems and to see problems clearly. There is clearly scope for a dialogue there in working up the programmes of assistance.

  183.  What is your view on the effectiveness of the various parts of the selection process, both of projects and indeed contractors?
  (Mr Lowcock)  The selection process for contractors in TACIS needs to balance on the one hand transparency and propriety, because there are big contracts at stake, with on the other hand flexibility and effectiveness. I think our judgment is that the TACIS approach stands up relatively well in terms of transparency and propriety but, in relation for example to the procedures of many other development agencies, it stands up less well in relation to flexibility, speed and effectiveness probably. We would like to see a greater streamlining and more flexibility in TACIS implementation procedures in general, including on the key aspect of procurement, which is the framework that the contracting and consultancy contracts are under. We would like to see greater delegated authority, for example, so that more projects can be subject to lighter procedures which can be quicker. A very large number of TACIS projects are subject to heavy contracting procedures involving construction of long short lists, long expiry periods while people collect information, long periods of assessment of bids and so on. The elapsed time between a project being approved and it being implemented can be very long because of that. Especially for smaller projects, we would like to see those processes streamlined. We would also like to see greater flexibility over processes for amending contracts once they have been agreed. We get a fair number of complaints from various sources that it is very time consuming and difficult to amend contracts once they have started, regardless of how widespread the agreement might be on the need to amend the contract because, for example, circumstances have changed in the project and it makes more sense to provide expertise in one area rather than another. The difficulty of amending these contracts is an important constraint on the effectiveness of the programme, in our view. Taking a wider view, also we would like to see greater consistency between procedures that apply under TACIS and those that apply under other programmes that the Commission manages, whether it be in the PHARE region, in the Mediterranean, in Africa or in Asia and Latin America. At the moment, the Commission has a wide variety of differing procedures which impose additional costs for everybody. The organisations bidding for contracts have to learn all these different procedures. It is more complex for the Commission to run a whole different set of procedures and it is more difficult for Member States as well.

  184.  What is your view of the quality of advice given by the Commission to potential bidders, including the quality of technical and other documentation provided? Are there problems?
  (Mr Lowcock)  I would say it is difficult to generalise because practice does vary quite widely. Problems do arise not so much in the nature of the basic documentation that may be available, which is often comparable with the sorts of documentation that would be available for a bidding process from other agencies, but often in terms of follow-up questions or having a dialogue with the Commission about what the documents really mean and in terms therefore of getting a really good understanding of what the partner country and the Commission want, so that bidding organisations can put together the best quality bid. In principle, a lot of information is available, including on the Internet. In principle, clearly companies can go to the Commission and ask for clarification, but we are often told that in practice it is quite difficult to get answers to some of the key questions. We would like to see an improvement in this.


  185.  It is partly because of under-staffing in the Commission. Certainly in relation to the PHARE programme we found the minimal number of staff, many of whom were on temporary attachments trying to run an enormously complex programme.
  (Mr Lowcock)  Yes, I think there is an important issue here. This is not entirely something that the Commission can address because staffing levels arise from the overall budget which Member States and the European Parliament have a key say on. There is an issue there. We think also there are things that the Commission itself could do to make life easier in this respect. We have mentioned in the memorandum the creation of this Common Services Directorate which will be a major change to the way the Commission runs all its external assistance programmes and provides opportunities for improvement. There is also in this regard a discussion about to begin in earnest about changes to the financial regulation which is, if you like, the set of rules which governs the ways in which the Commission can spend money contributed by Member States, which are widely criticised for being inflexible and making it difficult for the Commission to run programmes effectively. We would like, during the process of the revision of that, to make these procedures more user friendly.

Lord Walpole

  186.  Can I just ask, if you had not too large a project, and I know you are biased about this, would you in fact, you being a Russian, apply to the English Know How Fund rather than TACIS because it is simply easier to understand the application and all the rest of it, or is that putting it too simply?
  (Mr Lowcock)  I think that is what I would do.

Chairman:  I think you have a biased witness though, do you not?

Lord Middleton

  187.  May I very briefly go back to Lord Walpole's first question which was is TACIS sufficiently demand-led? It seems to me there may well be an enormous amount of room for conflict between what the recipient countries think they want and what the Member States and the Commission think they ought to want. Do you find that this is a basic difficulty?
  (Mr Coverdale)  What happens in practice is that indicative programmes are often drawn quite widely, somewhat vaguely, and because the indicative programme includes the different interests of the different parties that is the basis of the agreement of the indicative programme. I am not aware in talking to TACIS representatives in the countries or the heads of EU delegations that this is a difficulty. They mention other things as difficulties but they have not mentioned that.

Countess of Mar

  188.  You seem in your memorandum to be in favour of experienced groups, managers, experts, administrators, in the People to People programme. In some of the submissions we have had a number of criticisms about professional consultancy firms and it is said that they create barriers in what is supposed to be a people to people approach. Is this criticism fair and, if so, what can be done to alleviate the situation?
  (Mr Coverdale)  I find the meaning of the phrase "people to people approach" a little elusive I have to say.

  189.  Yes, we were playing with it earlier.
  (Mr Coverdale)  To the extent that the TACIS programme represents a transfer of knowledge, of expertise, from European experts to counterparts in the TACIS countries, the description is accurate if that is seen as embodying the people to people approach. Indeed, the TACIS interim evaluation, which I referred to earlier, which was just last year, concluded "the one main strength of TACIS lies in this approach", which is the people to people approach, "tens of thousands of NIS managers, expert administrators and some politicians have met their EU counterparts". I think our own view would be that there are pros and cons and, to mix metaphors, it is also a matter of horses for courses. The consultants do sometimes come expensive and their input can be quite short term but, on the other hand, particularly large consultants can offer a very competent management capability, a wide geographical experience, and access to highly specialist knowledge. Those thoughts certainly frame our use of the Know How Fund where we have a whole range of British agencies involved in our programme but certainly not excluding the use of consultants. There is some perceptible reaction in these countries against foreign experts on occasion. I think that probably has more to do with ill-designed projects which do not really yield benefits commensurate with the cost of the western experts going in than it has to do with the use of consultants per se. There is a general recognition in TACIS of the need to move towards developing a wider range of partnerships. We would see that including Government departments, environmental NGOs and the private sector but also, as I said, there are pros and cons and there are constraints to using these organisations too in practice. I think it should be decided really on a case by case basis.

  190.  You just mentioned ill-designed projects, is there anything being done to tighten up on that to make sure that such events do not occur? It is a waste of everybody's money and time, is it not?
  (Mr Coverdale)  Within TACIS?

  191.  Within TACIS. The selection of ill-designed projects.
  (Mr Coverdale)  I did not mean to make a momentous comment there. Sometimes projects are ill-designed with the benefit of hindsight because the world changes around you. Sometimes, as Mark Lowcock said, there are delays between design and implementation, so the world has changed in that respect.

  192.  Is there any system of refereeing proposals as there would be, for example, with a medical research or scientific research proposal?
  (Mr Coverdale)  Projects are written up as project proposals and laid before the TACIS Management Committee on which we have a place. If we had comments on that project we would register them at the Management Committee. More profitably we would try to talk informally to the Commission at an earlier stage about the projects in the pipeline and about what they have in mind. Particularly in areas where we are doing work or we have relevant knowledge we would try and have a little bit of a dialogue because often when projects come to the Management Committee that is quite late down the project preparation process. We are working quite hard to have an informal dialogue at an earlier stage.

  193.  So there is not a check by peer groups, so to speak, if a contractor has put in a proposal? The feasibility of the proposal is not checked by people who know what they are talking about. I hate to say that to you. So often you get a situation where civil servants make decisions about things when they do not have on the ground experience of major engineering works, for example. Do you see what I mean?
  (Mr Lowcock)  All I was going to say is we would like to see in general in the Commission's programmes for development that they are involved with all over the world, including in TACIS, more technical expertise. DFID, to take the example we know the best, has large numbers of social development specialists, economists, numbers of environmental specialists, engineering specialists and so on. A characteristic of the Commission bureaucracy is that they have more generalists. We do feel that in order to ensure that the technical aspects of projects when they are being designed and then when you are selecting consultants to implement them are really being addressed effectively you need internal technical expertise. We would like to see the Commission have more of that sort of expertise.

  194.  In your memorandum you covered quite a lot about NGOs and highlight the ineffectiveness of the TACIS countries' NGOs, mainly because they are simply in their infancy. How much scope is there in TACIS for participation by environmental NGOs? Do you see TACIS as a vehicle for NGO capacity-building?
  (Mr Coverdale)  There is a reasonable amount of scope. Many of the projects tend to be large but there is scope for NGOs to be involved as part of the consortia that bid and implement the projects. Indeed, where a larger consultancy firm is addressing a project where NGO advice and involvement would be useful hopefully that would strengthen their bid. They certainly know that with DFID when they come to us with proposals. There are also a number of small project programmes that the Commission has which are designed to support NGOs directly in relation to civil society, education and training programmes. TACIS is supporting a network of regional environmental centres which will support environmental NGOs in TACIS countries. That should be a vehicle for NGO capacity-building. Underlying this I suppose there is something of an imbalance between the size and scale of the TACIS programme and the particular needs of individual NGOs. That gap is sometimes difficult to bridge.

Lord Mackie of Benshie

  195.  Mr Lowcock has in fact answered quite a few of my questions. I admire the restraint of the language you use when you are talking about appalling situations. "EC aid is a complex management structure", you can say that again. Then you say that you are "concerned that the project cycle was split in two", I imagine you were raging mad about it. It is quite extraordinary that you should have this complex structure of evaluating which has led to long delays and then another structure which looks better, and I assume Mr Soubestre is a competent chap, or maybe a competent chap and he has some chance, but the troubles are going to be the same. When you say there is a considerable delay, typically longer than two years, this appears to me that it will go on. Then a damning phrase in 11.5 which says "There is no evidence that TACIS has actively incorporated any lessons learned from PHARE experience in its own programme". What I want to ask is you have expressed your concern, is there any improvement possible with this extraordinary mixture of bodies carrying it out?
  (Mr Lowcock)  I would like to focus on the positive approach we are trying to take to improve matters. We hope, firstly, that the establishment of the Common Services Directorate will be an opportunity to streamline and harmonise procedures, reduce delays and become more flexible. The influence that we are able to bring to bear on the way the Common Services Directorate is established will be with that in mind. Our Permanent Secretary, John Vereker, is going to Brussels in about ten days' time and he will be seeing Phillipe Soubestre within whose overall responsibilities these sorts of issues will lie. That will be a key part of the discussion that they will have. Secondly, we would like the review of the financial regulation, which I mentioned earlier which is a key constraint behind a lot of the problems you mentioned and on which a review is due to get under way later this year, to be much more radical in terms of making procedures more flexible and faster when it comes to payments and auditing and accounting and the whole range of financial management issues. We would like to see the procedures that the Commission has for its external assistance programmes brought more into line with the best practice of other agencies.

  196.  You think that the new structure for contracting, monitoring and evaluation will be useful if you can get the actual identification done quickly?
  (Mr Lowcock)  As we have said in the memorandum, we are concerned that it is less than ideal to split the project cycle into two. Frankly, it does not make terribly much sense in the real world to imagine that you can spend time with one group of people designing a project, then that group of people somehow disappear and another group of people are given a blueprint and told "this is what you have to do" because in the real world things move on and change. I know from talking to him that Soubestre, and he is a person for whom we have a very high regard for his experience in external assistance, is alive to this as well. We will do what we can to address the problem but there is, as you point out, a basic structural difficulty in splitting the project cycle in this way which, as we have made clear to the Commission, is a matter of concern to us.

  197.  There is a need obviously but is there any follow-up when a project is complete to see how effective it has been?
  (Mr Coverdale)  There are procedures for monitoring and evaluation which have been strengthened in the recent past. TACIS set up the monitoring and evaluation unit last year and that unit has already conducted comprehensive reviews of various country and sector programmes. Our concerns really about that process are about the objectivity of the process. We would like it to be more transparent to Member States. We would like the Commission to ensure that the lessons learned are fed back efficiently into the way that they administer the TACIS programme. I think again the Commission is constrained by a shortage of technical staff inhouse, which Mr Lowcock referred to earlier, and it is often dependent upon consultants to do this. The essential task of quality control and judgments about effectiveness we believe are rightly done inhouse with inhouse staff. Our view on this is that progress is being made but there is probably a way to go yet.
  (Mr Lowcock)  Can I just add on this point that we would like the TACIS programme, as others in the Commission, to focus more on what is being achieved: are the rivers being made cleaner, is the pollution in the factories being reduced and so on? That means putting more resources into the monitoring and follow-up questions. We would like a greater focus on those sorts of issues rather than a focus which has been the characteristic in the past of looking at how much money have we spent or committed.


  198.  Could I ask two further questions about the Common Services Unit. Where is it to be located? Can one assume that this split is due to the internal politics in the Commission, that the various directorates are not willing to give up their role of allocating projects? It seems to me that is what it is about, an internal power struggle presumably within the Commission and individual directorates want to be able to hang on to allocating money but not be responsible for actually seeing whether it is wisely spent. Two questions there, the first one is a precise one about structure and the second one is a much more general one which you may prefer not to answer at great length.
  (Mr Lowcock)  On your first question, geographically when we last discussed this there was no decision on which building this outfit would be in. In terms of reporting structures and how they fit together bureaucratically, Phillipe Soubestre will report to the Directors-General of the External Relations Directorate Generals of the Commission. That means he will report to three people essentially: one person who is responsible for the Commission's aid programmes in Africa, the Caribbean and the Pacific, another who is responsible for programmes in Eastern Europe and the NIS and another who is responsible for the programmes in Asia, Latin America and the Mediterranean. These three people in the way the thing has been set up are to jointly manage or supervise Soubestre's work.

  199.  It sounds like a nightmare.
  (Mr Lowcock)  Some people in Brussels informally suggest that possibly the creation of the Common Services Directorate is a move on the way to having a single Directorate General within the Commission for managing all the external assistance programmes, which is how the Commission used to be organised until somewhere between five and eight years ago as I recall. That is also the way that many other organisations have their external assistance programmes managed and has a certain logic to it. In terms of how the decision to set the thing up in this way came about, I think it is difficult for me to say much more than this is not something on which Member States had a say, it was regarded as an internal matter for the Commission, but views were expressed about the ideas that were circulated before the decision was taken.

Lord Ponsonby of Shulbrede

  200.  I think you have answered most of the questions I had in mind about the lessons that have been learned from PHARE and whether you share the criticisms of the European Court of Auditors or the European Parliament. I also wanted to ask about the role of the European Environment Agency but I think, Mr Lowcock, you answered that as well when you were talking about a greater monitoring role and trying to monitor what has been achieved. I assume that would be a role for the European Environment Agency possibly.
  (Dr Reynolds)  Perhaps I could add a word. I think the main role of the Agency is in relation to producing reports on the state of the wider European environment. I think this week they are publishing the latest report which will feed into the Conference of Environment Ministers in Denmark later this month. They received TACIS support for collecting the NIS data that went into that document. They will be producing further reports, although it is not decided in quite what form, in the coming years. Again, TACIS is providing some long-term support to try and build up the quality of data coming from the NIS countries. I think that is where the agency fits in.

  201.  When Mr Lowcock was talking about the increased monitoring role——
  (Dr Reynolds)  The Agency is concerned with environmental monitoring, it does not——

  202.  I think Mr Lowcock was talking about environmental monitoring.
  (Mr Lowcock)  I was really referring to the monitoring of the projects as they are implemented.

  203.  Sorry to interrupt you but I think you gave examples of air pollution, monitoring of rivers and things like that.
  (Mr Lowcock)  I beg your pardon. The point I was trying to make was that in general for projects which the Commission is funding we would like them to look at what the goals are and whether the goals are being achieved. If in a particular case there was a project to tackle pollution levels from certain factories we would like the questions asked on that project to be about are the pollution levels reducing rather than about how much money have we spent. On the question about sources of expertise the Commission should use in monitoring projects, we would like the Commission itself to have more expertise internally because we think that if it is to be able to act as an intelligent customer of services being provided by consultancy companies it needs to be able to read detailed technical reports and understand all the technical issues. In some cases they may be able to draw on expertise on particular issues from outside organisations, including the European Environment Agency, to supplement their internal expertise.


  204.  It is very difficult to staff the Commission with large numbers of experts in a very wide variety of fields, is it not, because on the whole they will have to be dependent to some extent on external experts, will they not?
  (Mr Lowcock)  Yes, but most development agencies take the view that they need to have a sufficient core of internal expertise on most of the areas they are working in so that they can be an intelligent customer so they can know if they have had, to give an hypothetical example, a detailed report done on the specifications for building a road somewhere, someone within the organisation can read that report and make a professional judgment about whether things have gone according to plan or not.

  205.  It is one of our regular criticisms of the Commission that the science on which their Directives are based is unclear, we are not allowed to know who the scientists are and so on. We regularly have a go at them about this. I think greater transparency would help. One thing that does occur to me, of course, is that Eastern Europe and the old Soviet Republic are stuffed with very good engineers and scientists who perhaps could be drawn on in some way to provide monitoring and evaluation.
  (Mr Lowcock)  We would certainly like to see greater use of local expertise.

Chairman:  They are not short of that sort of expertise. It might be useful. Thank you very much indeed for extremely fascinating evidence and again for your splendid memorandum which will be absolute bedtime reading for us for the next two or three months. We also look forward to Dobris+3 which I gather is very gloomy as well. Thank you very much indeed.


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