Making it work: the European Social Fund - European Union Committee Contents

Examination of Witnesses (Question Numbers 160-179)

Mr Mark Yeoman, Ms Carolyn Webster, Mr Steve Arnott, Mr Greg Burke and Mr Shay O'Rourke

7 JANUARY 2010

  Q160  Lord Inglewood: And, given that the concerns you are addressing now are wider because of increasing unemployment, you have used the financial windfall from the exchange rate to push things in favour of those who are threatened with redundancy, and have you still left the same amount of money going towards the long-term and most difficult propositions, or have you, in fact, cut back on that?

  Mr Arnott: One of the consequences of the recession and the downturn is that there has been more pressure from unemployed people and recently unemployed people, in a sense more people looking for support through the ESF, and, looking at our statistics for South Yorkshire in terms of the participants we are helping, I think the one area where we are supporting fewer people proportionately than we were expecting to at the start is in terms of the economically inactive. In terms of other disadvantaged groups like disabled people, ethnic minorities, older workers, the figures have held up quite well, but the figures we have at the moment are only just starting to feed through so I would like to see them over a slightly longer period. The economic circumstances have certainly meant that there were more unemployed people and people becoming unemployed who were probably looking for ESF support than we might have anticipated when the programme started. The extra money that we got through the exchange rate changes has helped us to support that client group but also to try and maintain the focus on those that are a long way from the labour market.

  Q161  Lord Inglewood: Is that the experience of those of you from other parts of the UK?

  Mr O'Rourke: I would very much echo what my colleague says but I would add one more thing, and this particularly came to the fore in the North West. I am sure you know that we have a high academic concentration around Greater Manchester, graduates, and it became pretty apparent fairly quickly that the graduates were also finding extreme difficulty in finding work. What we have been able to do with additional funding is get together—

  Q162  Lord Inglewood: Is that the additional funding because of the exchange rate or is this other money?

  Mr O'Rourke: This is in addition to that. This is what is known as the innovation transnational and mainstreaming programme. What we have been able to do through that funding is get together a consortium of eight higher education institutions in the North West, one of which is in Liverpool but it does cover the whole of the region, to give specific support to unemployed graduates. Again, one thing that I think became fairly clear as well was that as graduates were finding it difficult to get jobs they were moving into lower level jobs and by definition they were then blocking those lower level jobs from the less academically qualified, so what we are hoping to try and do, albeit in a small way, is try and free that up a little bit.

  Q163  Chairman: Could I just ask for clarification? One of the issues we are interested in is where our government funding comes in as part of this as against the European Social Fund, and I am just not clear as to whether that is European social funding or a combination of government and ESF funding or government funding.

  Mr O'Rourke: No; it is the ESF money but it is specifically identified for innovation projects.

  Q164  Chairman: And that ring-fencing priority has been set by our own central Government or by your region?

  Mr O'Rourke: No; this is the national ESF programme.

  Q165  Chairman: That is interesting in itself; thank you. Can I just ask one other thing? Do any of you have a view about the fact that it took 14 months for the money to be allocated, from it becoming clear it was available to getting it to the "front line"? Did it feel that there was a gap or did you feel you got the money to fit your programmes in good time?

  Mr Yeoman: From the Cornwall and Isles of Scilly's perspective I am not sure the 14 months is entirely right but with all European programmes it always takes a while to get it sorted out and it just comes with the territory, really.

  Q166  Chairman: So you have got used to it?

  Mr Yeoman: Yes, and you make the best of what you have got.

  Q167  Chairman: You have got used to the inefficiency?

  Mr Yeoman: I am not saying it is inefficiency. It is just the way the game is played and you play to that environment. Just to go back to the previous question, if we could, from a Cornwall and Isles of Scilly perspective, what I would do is concur with what my colleagues have said, that the exchange rate variations have been very helpful in terms of being able to respond to the changing economic and financial climate, but also from a Cornwall and Isles of Scilly perspective we have been very fortunate in having this strategic approach that Carolyn alluded to earlier,[3] because it has meant that when new initiatives come on stream, whether it is due to exchange rate variations in the case of the European Social Fund or central government initiatives, because we know what the landscape looks like in terms of provision for the economically inactive we know what the needs are and we can help use the new initiatives to hit need rather than, as sometimes may happen, just provide duplicative support. Carolyn can probably give you a little bit of hard evidence if you would like that in terms of performance.

  Chairman: We would love to receive written information of hard evidence. At least you are well prepared to respond quickly when the money does arrive.

  Q168  Lord Inglewood: Do you have trouble with matching funding, given that you have got more euros coming along?

  Mr Yeoman: Not for the European Social Fund because it is through co-financed activity.

  Q169  Lord Inglewood: But you are not finding trouble down the line from the fact that more sterling is available?

  Mr Yeoman: No. If we were talking about the European Regional Development Fund my answer might be different, but for the sake of this set of discussions we have not had that problem.

  Q170  Baroness Young of Hornsey: We have got the European Commission consultation paper on the Jobs and Growth Strategy, which aspires to achieve "a new sustainable social market economy, a smarter, greener economy", the knowledge economy, and so on, and we have become over-familiar perhaps with some of those terms, but do you think that is the right aspiration and the right objective and achievable objective in each of your respective regions? Could you also say a bit about how you would see the ESF supporting the development of those green skills, particularly in those cases where you have got a low level of skills? We touched on this earlier on. I have another question which relates to that but if you would start with those two that would be helpful.

  Mr Burke: I think the first part of your question is a policy question to raise with the DWP Minister when he comes to give evidence, but, in terms of what we have done at a regional level, we have recently redrafted our regional framework for ESF and we have very much put green jobs at the centre of what we are looking to develop and take forward in the next phase of the programme. In terms of our own implementation, we absolutely see green jobs as being very much a key part of our development, and, although it is not in the actual Merseyside area, we do have a specific project that we are supporting called Green Ways to Work, which is developing this whole idea of green jobs as being a key part of the strategy, so we will very much pick that up in the development of the next phase of our work.

  Q171  Baroness Young of Hornsey: You have got the pool of labour within your region. How long do you think it will take to get up to speed on that? Are we talking about long-term or long, long-term, or what?

  Mr Burke: I think we are seeing this as being a potential growth area of employment both for people who are long-term unemployed and people who are nearer the job market. We have got strategies to bring green jobs in for both groups; it is just that the timescale is different depending on the group we are working with. One of the interesting aspects is the Social Cohesion and Connecting Communities agenda which can be achieved through some of this investment. It is about helping people to work and develop skills on properties that they then might live in or that they are living in so it becomes not just a job and skill development programme but part of making the communities and houses that they live in better places as well. One of the things we are looking at is developing programmes around how we make communities work better so people are developing skills but also it is improving the environment they live in through this green agenda. That is very much starting but it is quite an exciting area of work that is kicking off.

  Mr Arnott: I think it is a similar story in South Yorkshire as well. Like colleagues in the North West have said, we have got an innovation project looking at green skills and how the curriculum and courses and so on can be adapted to pick up on green skills. We are talking to the Dearne Valley College in South Yorkshire. Dearne Valley is a former coalfield community which I think aspires to be the lowest carbon community in England as part of its own strategy. We are talking to them about similar ways in which we might be able to develop and integrate green skills more effectively into the broader agenda. One of the areas where I have picked up potential for better skills training around green issues is in the construction industry, particularly in installation issues, where increasingly equipment is being installed in domestic and commercial properties which have green issues, like solar heating and water storage and retention systems and so on, and I know the LSC in Yorkshire at the moment is commissioning research to see how we can develop specific skills modules that can be built into training to give people who might have general construction skills an edge in terms of future employment. It is something that we are all going to have to work at. We know that there will be in the longer term probably tremendous job opportunities around the green agenda, and we have obviously got to try and plan and prepare to take those opportunities as they come along.

  Mr Yeoman: From a Cornwall and Isles of Scilly perspective in terms of policy argument, yes, is the simple answer, and I know Cornwall Council are particularly keen on the vision that has been articulated through the consultation on the EU 2020 strategy. In terms of is there a role for ESF, I think there is probably more of a role for ESF than there has ever been because we are moving away from a linear education/employment/retirement type of life to one that is much more about training and retraining, and there are horrible terms like "portfolio career" and things like that, but I think that sense of iteration through one's working life and the need for new skills, both from an employer's point of view and an employee's point of view, is going to be really important. In terms of looking at the strands that are built into the EU 2020 consultation, I think the knowledge based economy is really important and what that means, and there needs to be a whole strand of skills around that, also around IT. We are looking at, I think, another quantum leap in terms of infrastructure for IT, if you look at the broadband strategy for the UK. I suspect that the digital economy will take another leap along with that infrastructure. As far as the green economy is concerned, I think it is important to look at the skills needs for a green economy, not simply green skills. Just to try and unpick that a little bit, in Cornwall and the Isles of Scilly we have a number of really important embedded sectors for employment, particularly around agriculture and food processing and tourism, and all of those traditional industries need to become greener and that is about doing what you are doing now but doing it in a slightly different way. Even if you look at some of the very highbrow activities in the City, things like trading, carbon trading is going to be really important and that is probably just about re-engineering those trading skills that already exist in the City of London; as well as looking at those new technologies that will come along with low carbon technologies and renewable energy. I think it is important to look at the skills needs from that point of view, as a green economy, and not green skills per se, because otherwise we will not play the game properly; we will end up silo-ing green over in the corner somewhere and not putting it across the whole of the economy. If the low carbon agenda is real it must be pushed across all parts of the economy, the existing parts of the economy that we want to keep as well as those new areas, and, as with colleagues, we are already starting to look at the second half of the European Social Fund for the present round to make it more integrated with what is going on in the European Regional Development Fund investments, through ERDF Convergence, as well as the needs of the existing economy.

  Q172  Baroness Henig: I am sure you are all familiar with the suggestion that richer Member States such as the UK should not receive European Social Fund funding in the future. Obviously, I might guess at your response to that, but I am interested to hear it formally. Can you say what the ESF offers that cannot be delivered through domestic programmes? Also, how effective do you think the transition process has been for your sub-regions and what lessons does your experience offer for areas if funding does decline steeply in the future?

  Mr Arnott: On the question of whether money will shift to the poorer Member States, I guess that probably will be a political decision at the end of the day but it has happened in this current programme. The fact that we have got ten accession countries with low levels of GDP and so on has inevitably meant that money has shifted away from the UK, and the ESF programme, not in South Yorkshire in the first half because of transitional funding, has been cut by about a half compared to the previous programme. I personally think that the structural funds should focus on the least developed in the main and on those who are hardest to help, so I would support that general proposition.

  Q173  Lord Inglewood: Do you think the UK should drop out? That is the crucial question.

  Mr Arnott: I do not really think that is for me to answer, to be truthful, but we are having to adapt to some extent in the current round because of changes and we will no doubt continue to have to adapt in the light of future changes. What I would say is that ESF has to be additional. It is absolutely clear in the regulations that it must not be used as a substitute for domestic funding, so it has to be additional, but then I think there is a choice about what you do with that additionality. You can do several things. You can just buy more of the same, I suppose, is one way forward, or you can do things that are slightly different or add value to what is already there. I think in South Yorkshire we are doing probably more of the latter than the former, so, for example, with a lot of the employment programmes we are using ESF to enable people to start on those programmes more quickly than they would be able to do under the normal rules. We are also, through adult training and Train to Gain, trying to support activities that are not possible under the main Train to Gain rules. We are buying additional provision with ESF but a lot of it is to support people more quickly or to support people who would not normally get support through ESF, so I do think it adds value in that way. If I could make one final point about our experience with the money. Clearly the transitional money that we have received in South Yorkshire as a phasing-in region has been tremendously helpful. If you look at the level of ESF funding that the sub-region received under Objective 1, if we had gone back to the general level for England it would have been an extremely sharp drop and I think it would have caused difficulties in the marketplace and in the provider network and so on. The only comment I would make is that I still think that the funding profile for the transitional money that we are getting is quite steep. It comes to an end next year and it would have been preferable, I think, to have had a slightly more gradual decline in funding, but we have to live with the funding profiles that come from Europe.

  Q174  Baroness Henig: I wonder if there is a different view from Cornwall.

  Mr Yeoman: I would take a slightly different approach. Firstly, we will be looking in great detail at the spending profiles of the transitional areas in the present set of programmes because Cornwall and the Isles of Scilly will almost certainly be in a similar position next time round and we would like to learn the lessons that we can from this. In terms of the bigger question, Steve is entirely right, that will end up being a political issue, but I would personally like to make a number of observations on the value of cohesion policy because I think that it really does set out the test from a local UK perspective of whether cohesion policy and structural funds should be concentrated just on the poorer Member States. That is really the big question that you are asking, and Steve, quite rightly, just batted that away into the long grass and said that would be a political issue. Personally, I think you have to stand slightly back and say, "What are the gains of cohesion policy?". Cohesion policy is a big meta-European policy agenda which at the moment has great value from a European perspective applying across the entire European Union, so everybody is treated in an equal way. If you are a lagging region in a relatively well developed Member State, like Cornwall and the Isles of Scilly and Yorkshire and Humber and Merseyside have been in the past, you are treated to that European perspective and that does provide a commonality of interest and a way of tackling economic regeneration that goes beyond your immediate area, which I think is terribly important. There are then two other big picture items in cohesion policy that are really valuable to learn the lessons of. The first one is that cohesion policy has always been built on two complementary but different strands of intervention, recognising that you need those two different strands of intervention working together. One is based on people and giving people opportunity, the equity-type activities that the European Social Fund invests in, and then there is the need for more competitive business, which is what the European Regional Development Fund invests in. At a local level from a Cornwall and Isles of Scilly perspective, the fact that we have been able to integrate those two different but complementary strands of investment together over two programme periods has been very valuable, because you are looking at equity issues and business competitiveness issues together, and, to be honest, in any economic regeneration activity it will only work if you look at both of those two things together. Somebody once said to me, "What if we build a factory and nobody comes?". You can build the buildings but if you have not got the businesses with the right levels of support and, if necessary, things like equity investment or other investments going into those businesses or those businesses do not have access to the right skills in their workforce or, if they are expanding, people entering the labour market to become part of that workforce, then it[4] will not work. Equally, if you are training people with the most up-to-date skills that are market relevant but you have not got the businesses which need them because you are not growing the businesses, then you will not get economic regeneration either. Personally, I think cohesion policy, recognising that you need those two big complementary but separate sets of intervention, is really valuable. The next bit, just as a check list, is what else do structural funds—the European Social Fund and the European Regional Development Fund as they are at the moment—actually give you as an area? They give you an agreed multi-annual budget, which is incredibly powerful. You know what you are going to do for seven years, which gives a sense of purpose to economic regeneration, and as those investments roll out it gives a sense of confidence to an economy and that is what you are really buying at the end of the day. It also acts as a magnet for domestic funding and for cohesion around the private sector in terms of investment. Also, the way the governance works is quite remarkable. If you look at the Programme Monitoring Committee for Convergence in Cornwall and the Isles of Scilly, around the same table in a room not a dissimilar size to this you have the Chief Executive of the Regional Development Agency, you have people from CLG, from BIS and from DWP, you have the Chief Executive of Cornwall Council, you have the leadership and portfolio holders from Cornwall Council, you have social and economic partners, including the TUC and the voluntary community sector, you have representatives from the Commission and you have representatives from the environmental sector, all talking about one thing and that is the economic regeneration of Cornwall and the Isles of Scilly. Just bringing that power together to concentrate on one single area makes sense at a community level, because Cornwall and the Isles of Scilly does have a sense of place, as many of you will realise. All of those things I personally think are tests. If you want to re-nationalise structural funds, and cohesion policy is what is going to be replaced, is the replacement going to achieve the same thing?

  Chairman: We may want to pursue some of those issues, and Lord Kirkwood particularly is going to talk about the future alignment of the European Regional Development Fund and may want to pick up some of the points you have made, but we may also want to come back to this issue about what happens if the fund ends because I think some of the things that you have just illustrated highlight some of the other anxieties that have been raised, which are whether these regional models, which you have just described and which seem to function as local models will continue if the separate funding is not still available, and how we sustain those.

  Q175  Lord Kirkwood of Kirkhope: Absolutely; that is a very powerful argument. It resonated with me because in a former existence I had a rural consistency where I saw some of those. We had Objective 2 in south east Scotland, and I recognise some of your points are very powerful—bringing people together is very powerful. I really want to ask you a question about the alignment of ERDF and ESF because even in my own experience I could see that there always are going to be tensions about the competitiveness agenda and the investing in people side of things. We, as a Committee, chose to do this report because I think we are at break point in the second half of the ESF. I think the whole European budget going forward post-2013 could be potentially completely recast, so we could have an opportunity that does not come very often in terms of reconfiguring things. We have got a lot of experience as a Committee now from the Lisbon agenda, which is morphing into the 2020 agenda, and that is an important part of the debate too, and we have got experience of how the programmes have gone. Speaking for myself, just in parenthesis, I think there is a bit of evidence that the Government has grabbed all of this and some of the niche players in the localities are beginning to lose out and that is something that we are looking at, but if there was one thing that you could change from each of your perspectives about how the ESF works with the ERDF concept and you could do anything you liked but you had only got one wish, how would you change things post-2013 if you had the power in order to make those two strands better aligned in future?

  Mr Yeoman: By hook or by crook or by regulation I would personally make it a condition that each Member State brought those two strands together and considered cohesion policy as a whole. Implementation is divided even at the European level into ERDF through DG Regio and ESF through DG Employment, and then if you look at the UK model ESF comes through DWP and then it goes through co-financing. If you look at ERDF it goes through CLG and BIS plays a part and then it goes down to the RDAs as intermediate bodies, and it is only at the bottom (and I do not use that in a pejorative sense) in terms of Cornwall and the Isles of Scilly, the bottom left-hand corner of the UK, that we start to join it up again. What I would like to see is the Government, the Member State, try to understand those complementary but different interventions in the economy in a more joined-up way.

  Q176  Lord Kirkwood of Kirkhope: Have you got a problem with subsidiarity about that potentially if the centre is telling—

  Mr Yeoman: No. All I am asking is that they discuss it.

  Q177  Lord Inglewood: Does this happen with other Member States in the same way as it does here?

  Mr Yeoman: I do not know, to be honest. All I am saying is that from my perspective of working across two and a half programmes now the policy is right, the strategy is right, cohesion policy seems to make a lot of sense to me, as I have tried to illustrate to the Committee this morning, and maybe I am a born-again cohesion policy believer and to a certain extent I am a little bit too enthusiastic, but in terms of the two strands, which I think are terribly important, why not join it up at the government level as well?

  Q178  Lord Kirkwood of Kirkhope: That is a good answer.

  Mr Yeoman: Thank you.

  Mr Arnott: I think there is plenty of evidence of it being joined up at a local level.

  Mr Yeoman: At a local level, yes.

  Mr Arnott: The description of how a monitoring committee works is replicated with every programme. I think the mechanisms are there now to achieve effective integration between the two programmes. At a practical level, one of the issues that I always feel with ESF and ERDF is that the interventions that ESF can make to support the harder infrastructure investments that ERDF make tend to come later in the programme but the funding profile is the same for both programmes. Looking at our own ERDF programme in South Yorkshire, I think there will be many more opportunities to get better linkages between what ESF does on the back of what ERDF has done in the second half of the programme when the ERDF investments start to come through than has probably been the case so far.

  Q179  Lord Kirkwood of Kirkhope: It is only a timing issue you are concerned about?

  Mr Arnott: There is a timing issue about it, certainly.

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4   Economic regeneration Back

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