Hansard

I will outline the research questions that the committee asked us to consider before talking briefly about the methodology and looking at an overview of the structural funds programme in Scotland in 1994 to 2006. I will then focus on the research findings on the implementation structures, the programmes and the case study projects that we looked at. As John Bachtler said, he will then look at some issues for the future.The main focus of the study was the impact of the structural funds programmes from 1994 to 2006. We were asked to consider several questions under that heading. First, how appropriate were the delivery and implementation frameworks for delivering the funding? Secondly, how well had the programmes performed? Finally, what were the effects of four major projects that showed evidence of good practice?Our methods were conditioned in part by the fact that the study lasted for two months, which included Christmas and new year. A lot of the work was desk research on existing evaluation studies and reviewing information on the Scottish programmes and the international perspective. Therefore, we looked at evidence on other EU programmes at EU level and for specific countries. We took that approach to the delivery structures and the programmes themselves.For the case study project, we looked in detail at five different projects—one for each set of programmes. That work was based on interviews, monitoring data and various documents and discussions. The methods were affected by some weaknesses in the monitoring data and evaluations; we might want to come back to that later.I will give the committee an overview of the structural funds in Scotland between 1994 and 2006. Slide 6 lists all the programmes during that time, of which there were quite a few. A feature of the structural funds is that they are rather complicated—not only are there several different programmes, but different areas come under the different objectives of EU funding. In addition, EU resources are channelled through different EU funds such as the regional development fund or the social fund. There are various complexities in the structure of this type of funding.When funding is allocated for a period of years at a time, each programme is divided into a series of thematic priorities, which are then subdivided into measures. Within each of those measures, people can apply for funding for projects. The programmes therefore fund hundreds, if not a couple of thousand, of projects each. They are very large and complex entities.Slide 7 shows a picture of the Scotland structural funds areas between 2000 and 2006. Obviously, the areas were slightly different between 1994 and 1999 and they will be different again between 2007 and 2013. Again, some of the complexities can be seen. For example, if different partners are involved in a project, one of them could be located in a different area, which could lead to all kinds of complexities in setting up a project and getting it running.On the research findings, I will talk first about implementation and delivery frameworks. Our general conclusion was that the delivery systems in Scotland worked well from 1994 to 2006. That is not to say that there were no problems; clearly various administrative issues arose during that period. However, we found that the systems worked well overall and the problems that arose were not unusual from an EU perspective. It is fair to say that all member states and regional authorities have some problems with EU rules and procedures, and linking EU rules with domestic rules is a challenge. However, we found that the delivery systems worked well.It is interesting to consider features of the Scottish system that are, to an extent, similar to those of the systems in other parts of the UK but distinctive from a European perspective. One issue is the challenge fund approach to resource allocation, which simply means that funding is allocated on a competitive basis. In many EU member states, funding has basically been channelled straight into the existing budget lines or programmes of public entities, which is very different from what has happened here. In Scotland, most administrative tasks have been undertaken by the programme management executives, which are separate administrative entities that were set up specifically for the structural funds. However, not all member states have taken that approach.I will not go through every feature, but a particularly interesting one is the number and type of beneficiaries. Scotland's structural funds programmes have had a strong emphasis on community development and the participation of voluntary and community groups, but that approach has not always been taken in other countries and regions. A lot of funding elsewhere has been channelled into infrastructure and support for medium-sized or even large businesses. Although there has been business and infrastructure support in Scotland, there has also been a lot of funding for community development, which involves a different type of organisation.The next component of the research findings relates to the programme level. The research on the programmes' quantitative effect is based on existing evaluations and studies of the programmes. We have provided data on matters such as the number of jobs that have been created and firms that have been assisted. There is a lot of information in the report, but I do not want to bore you with lots of figures. The annex to the study contains one-page overviews of each programme, which give a list of indicators and outputs and results that the programmes generated.One issue is that, during the 1994-99 period, problems arose with data monitoring. For example, different programmes used different indicators, so it is difficult to bring together all the information, even at programme level, but certainly for all Scotland. The issue seems to have been addressed for the 2000-06 programmes, for which the Executive set a relatively limited number of indicators that were to be used for monitoring all the Scottish programmes. It is therefore possible to draw out better information for the 2000-06 programmes. On the other hand, the 2000-06 programmes are not yet completed—they will continue to spend resources until the end of 2008. Various other monitoring and evaluation issues arise, which we could discuss further if members are interested.The qualitative evaluations of the structural funds programmes found several benefits. There is clear evidence that the programmes targeted and ring fenced funding for certain areas, social groups and categories of spending that might not otherwise have received funding under purely domestic programmes. One feature of the programmes is that funding has been guaranteed for a period of years, which gives a certain protection from the pressures of annual budget setting. Another feature is that funding has been levered in from other external sources, such as lottery funding. Some money was given by the EU and money was then drawn in from other sources.One effect seems to have been the stimulation of new project ideas and, to an extent, an improvement in project quality. That has happened partly through the work of the programme management executives, which have put a lot of effort into generating projects and bringing together people with similar project ideas. Evidence also exists of a more strategic approach and of efficiency gains as a result of matters such as improved project selection. However, there have also been efficiency losses, because the EU rules add an additional layer of administrative cost that is, to an extent, unavoidable. There is always a bit of a trade-off—more money is available, but more effort must be put into administering the programmes. The kind of evidence that we have for Scottish programmes is not unusual—we would expect such evidence for similar programmes in other parts of Europe.Slide 11 deals with our case study projects. There was one for the Highlands and Islands, one for the east of Scotland, one for the west of Scotland, one for the south of Scotland and one for objective 3, which relates to labour market interventions. All the projects were relatively large, because that was the remit of the study, and all showed evidence of good practice—that is what we looked for when selecting the projects. We found that most of the projects would not have gone ahead without structural funds. Some might have gone ahead, but probably at a later date. It is also likely that they would have been of poorer quality or less developed.We found some longer-term impacts on development. The projects provided the basis for further development and investment by public and private actors. In some cases, they changed the attitudes of individuals and groups, so that they were more open to new labour market opportunities or opportunities for private investment. The projects improved the quality of life for individuals in communities and provided longer-term resources for development of infrastructure and funding for business or more trained workers. It is difficult to say whether the projects that we examined were representative of all the projects that are funded, given that we looked at only five projects, in which there was evidence of good practice. However, other studies have provided evidence of other projects with good practice.I will highlight a few issues that the case study projects suggested, which are the main lessons that we drew from them. First, many projects seemed to depend not just on partnership, but on leadership and a strong commitment by project holders to their local communities and areas. That came through strongly in a number of cases. Another issue is effective planning, identification of real problems and creation of solutions. It was interesting that some projects came up with complicated and interesting solutions to complex problems. The quest for employment project in west Fife, which offers employability support to young unemployed people with specific problems, provides targeted, tailored support to individuals, and works with local businesses to get them to provide work experience and a means of getting into work to the young people who are being trained. In other words, the project works with businesses to change their views of young people from disadvantaged communities, as well as with those young people to improve their skills and their motivation to look for work.Other issues that we identified were the need to look at longer-term effects and the potential for follow-up projects, and the possibility of encouraging a greater willingness to take risks, in a managed way. That is a slightly difficult issue, because we do not want to encourage massive risk taking using public money, but there were cases in which the profitability of a project was perceived to be too low for it to be undertaken by private sector actors. Structural funds have encouraged projects that have ultimately proved successful to go ahead.Another issue is the links between different types of interventions and funding sources. A lot of the projects found ways of complementing domestic policy frameworks. There is a need not to reinvent the wheel or copy the domestic programmes but, instead, to link the structural funds projects with the domestic interventions.John Bachtler will talk about some of the issues for the future of the structural funds.