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Official Report (Hansard)

Session: 2007/2008

Date: 26 September 2007

COMMITTEE FOR FINANCE AND PERSONNEL

OFFICIAL REPORT
(Hansard)

Work of Special EU Programmes Body

 26 September 2007

Members present for all or part of the proceedings: 
Mr Mervyn Storey (Deputy Chairperson)
Mr Roy Beggs 
Dr Stephen Farry 
Mr Simon Hamilton 
Ms Jennifer McCann 
Mr Adrian McQuillan 
Mr Declan O’Loan 
Ms Dawn Purvis 
Mr Peter Weir

Witnesses:
Mr Pat Colgan ) Special EU Programmes Body
Ms Gina McIntyre )
Mr Adrian McNamee )

The Deputy Chairperson (Mr Storey): 
The Committee is pleased to welcome representatives from the Special EU Programmes Body (SEUPB). Its initialism is sometimes difficult to get off the tip of the tongue. Officials from SEUPB will explain the roles and responsibilities of their organisation. They will also outline the progress that the body has made in exercising its functions and future plans. Briefing papers have been provided. SEUPB has also made certain documents available that contain background information. Last week, Committee members expressed concerns that the Committee papers were too light. Today, however, that accusation cannot be made. All the relevant information is contained in members’ packs.

I am delighted to welcome the SEUPB’s chief executive, Mr Pat Colgan, its director of the managing authority, Mr Adrian McNamee, and its director of corporate services, Ms Gina McIntyre.

Mr Beggs: 
Chairman, I wish to register an interest as the treasurer of Carrickfergus Neighbourhood Development Group, which is in receipt of Peace II funding.

Mr Weir: 
I wish to register an interest as a director of North Down Local Strategy Partnership.

Ms Purvis: 
I want to register an interest as vice-chairperson of the Ex-Prisoners’ Interpretative Centre (EPIC), which is in receipt of funding.

Mr O’Loan: 
I want to register an interest as a member of Ballymena Borough Council and Ballymena local strategy partnership.

The Deputy Chairperson: 
I declare an interest as a member of the Peace II monitoring committee of Ballymoney local strategy partnership and of Ballymoney Borough Council. I am also a member of subcommittees and working groups of other bodies.

Mr Pat Colgan (Special EU Programmes Body): 
Thank you, Chairman and Committee members. It is a pleasure to be here. Today is the final day of my third year as chief executive of SEUPB. Tomorrow, I will begin my fourth year. It is, therefore, a good time for me to appear before the Committee to give an account of the work that my colleagues and I have done during the past three years.

Members have been given a briefing paper, which I will not read through. However, I will pick out some of its highlights. I am happy to deal with any questions or issues that members wish to raise.

The SEUPB’s role is to promote cross-border co-operation. It is one of the seven North/South implementation bodies to promote cross-border co-operation and build peace and reconciliation through the management and implementation of the EU Programme for Peace and Reconciliation — Peace II — and the INTERREG III programme. It is also the managing authority for those programmes and advises member states on new rounds of funding for new programmes. During the past 12 to 18 months, it has worked assiduously on the preparation of programmes for 2007-15.

Although the SEUPB was not involved in the Peace I programme, it has assumed a role in the technical functions of its closure. It also has a responsibility for monitoring and reporting on the common chapter, which is one of SEUPB’s publicly less-well-known functions. The common chapter is what it says it is: the common chapter in the Northern Ireland community support framework 2000-06 and the Republic of Ireland’s national development plan 2000-06. SEUPB’s role is to monitor and publish the results of co-operation that are provided for in the common chapter. Those are the SEUPB’s fundamental roles.

I shall discuss some of the key elements of our responsibilities. The SEUPB has been involved in the technical closure of Peace I, which was a complex programme that comprised almost 15,000 projects. Much of the Peace I funds were spent before the SEUPB came into existence. The process of closing down Peace I has been complicated. However, all that work has been completed, and member states are now in negotiations with the European Commission on the finer details of the programme’s closure.

The Peace II programme, including the Peace II extension, has €994 million available for disbursement. It has two main objectives: to address the legacy of the conflict and take advantage of the opportunities arising from peace.

The programme has funded 7,006 projects. The number of declarations of interest from the Committee members shows the sort of reach that it has had. Every one of you, and every one of us, has been involved, in one way or another, with the programme.

The programme has a complex structure and implementation mechanisms, and it was expensive to implement. There are very good reasons why that was the case. There were over 56 implementing bodies, including the 26 local strategy partnerships that represented the various local authority areas in Northern Ireland, six local authority task forces that represented the six local authority areas in the Southern counties, and a range of implementing bodies, including Departments, state agencies, the community and voluntary sector and non-governmental organisations (NGOs).

Why was it so complex? My understanding is that those who designed the programme wanted to build inclusiveness and cross-community participation. Most importantly, they wanted to build ownership of the programme from the bottom up. That came at a price. That is what we were paying for in the Peace II programme. A lot has been learned through the process.

The programme has been extensively evaluated and monitored. This morning I counted 16 auditors and evaluators who have examined our work, and that does not include the article 4 and article 10 checks. Article 4 checks are analyses and examinations of 100% of the expenditure in each project in the programme. Article 10 checks are sample checks that re-examine the article 4 checks. Therefore, the programme has been analysed and evaluated by external monitors and evaluators to the nth degree. That is only right, because the programme deals with public money from the EU, and it must operate under EC regulations.

In addition to those evaluations, we have commissioned and carried out several qualitative and quantitative studies on various aspects of the programme, a few of which are listed in the background paper given to the Committee.

One of those studies is the ‘Impact Evaluation of the Peace II Programme’. Another is the ‘Peace II Monitoring and Evaluation Framework’, which the Chairman will be familiar with. The third study is an analysis of community uptake of the programme, and the fourth is an assessment of issues facing the border Protestant community and issues relevant to the programme. The fifth study is an independent assessment of the impact of the programme on the attitudes of those who worked on projects in the eligible area. There is a great deal of literature about the programme from a range of independent bodies.

What has the programme achieved? Paragraph 4.12 of our paper lists the five priority areas for intervention and some of the quantitative measurements of the programme’s achievements. Under priority 1, on economic renewal, the programme supports 9,354 small and medium-sized enterprises (SMEs) and community businesses and about 2,581 jobs.

Under priority 2 — social integration, inclusion and reconciliation — 68,740 people participated in projects, of which 21,567 gained additional qualifications. So far, 10% of the total participants have made progress in employment, education or further training. I say “so far” because the Committee has the figures that we have collated to date. There will be a much more exhaustive and detailed analysis of the programme when it is finished, and we will have a much better understanding of its impact when that is done.

Priority 3 focuses on locally based regeneration and development strategies. The 26 local strategy partnerships have supported over 1,694 projects.

In priority 4 — the outward- and forward-looking region — there is a n extensive system of over 20 networks, many of which are international. I was recently invited to moderate at the launch of the INTERREG IVC programme in Lisbon. The extent to which the projects from the peace programme had established throughout Europe was evident at that event. There are a significant number of those projects, and that is something that can be built on for the future.

Priority 5 deals with the cross-border co-operation element of the programme. Ninety-nine thousand people have been involved in cross-border activities, and 6,759 of those have received accreditation.

Those are some of the quantitative figures that we can highlight. Some people might ask what the programme has supported and what it has done. I emphasise that those are the figures to date. There is a constant, ongoing, monthly monitoring of the physical implementation of the programme that is recorded on database, and it measures and tracks what progress the programme is making against its target indicators. When the programme finishes, that information will be analysed in detail.

The programme faces challenges, and, as we have proceeded through it, issues have emerged . As the managing authority, we are satisfied that all the EU moneys will be spent and that there will be no decommitment from the programme. All European regional development fund (ERDF), European agricultural guidance and guarantee funding (EAGGF), financial instrument for fisheries guidance (FIFG), and European structural funds (ESF) moneys in the programme will be spent.

However, some moneys, fondly known in the programme as “re-balanced monies”, were introduced by the Northern Ireland Ministers in 2003. Those of you who were involved at the time will remember that the programme had a late start and had to rise to some difficult challenges to ensure that that late start meant that money was not lost through decommitment. The Northern Ireland authorities stepped in and made a range of moneys available to the programme to make sure that that could not happen. That sum amounted to around £126 million, of which £114 million was spent. However, that money is still in the programme, and it has helped us to meet our targets. As we are coming to the end of the programme, we must ask what has happened to that money.

Given that all the EU moneys are committed, we are satisfied that it will be spent. However, there is a question over £16 million of those moneys. We are in detailed negotiations and discussions with the Department of Finance and Personnel in Northern Ireland to consider how that issue should be managed. We are also in detailed discussions with the implementing bodies that are responsible for those moneys, and we are considering alternative uses for the funds, should they not be spent in the areas to which they are committed. As we approach programme closure, that has become a management issue for us.

The Committee is aware of the other issues regarding the programme. We have faced significant challenges in encouraging participation in the programme by the Protestant community. That is an issue of uptake, and, consequently, we have — successfully — had to engage with and reach out to those elements of the community that were not natural participants. We have also dealt with the sensitive issues around victims’ and ex-prisoners’ groups. There have been, and there continue to be, difficulties with support for those groups.

As we proceed into new programmes and consider their shape, we must consider how to retain bottom-up participation and involvement and the partnership dimension that has been crucial in Peace II, while reducing the cost and complexity of programme implementation.

Those are the challenges that face us, and the issues that have been exercising our minds as we work towards implementation of the new programmes.

INTERREG IIIA is a less complex programme. It is one of a family of EU initiatives aimed at cross-border co-operation. It is similar in its implementation, as all such initiatives are driven by the same EU regulations and structural funds provisions. They are equally evaluated, monitored and audited. Nine audits have been carried out on INTERREG IIIA, excluding all EC Regulation 438/01 article 4 and article 10 checks, and also evaluations that have been carried out on the programme.

The programme is structured around three key priorities: integrated local development strategies; supporting physical structure and the environment; and civic and community networking. The programme has supported over 315 projects to date, and the total value of the programme is €187 million. INTERREG III has had successful involvement with cross-border partnerships. It is implemented by the three local authority based cross-border partnerships: the east border region (EBR), the Irish central border area network (ICBAN) and the north-west region partnership group (NWRP). The emerging partnerships in the north-east and councils of the metropolitan area (COMET) in Belfast have given us a unique model for delivering such European programmes.

The implementation of the new programmes will be a challenge for us, and we have had detailed discussions about that. Again, we are faced with the same issue of reducing the complexity of implementation structures and delivery mechanisms for the new programmes. There is also a need for a more strategic approach to the investment, which might provide an opportunity for local-authority-based partnerships and others to take a more strategic overview of issues in their geographical area and to introduce that strategy into the programme.

We have been working with the two member states in preparation for the new round of programmes, Peace III and INTERREG IV. Both programmes have been the subject of extensive public consultation. We have received over 90 written submissions on Peace III and around 60 on INTERREG IV. We have hosted consultation events throughout Northern Ireland, the border counties — and parts of Scotland, in the case of the INTERREG IV programme — to engage with people directly and to take on board their views. It has been an active and productive consultation process. We have developed draft operational programmes for both initiatives. Both programmes have been with those member states for some time. They have also been the subject of discussion with the European Commission.

My colleagues in the Department of Finance and Personnel tell me that Peace III has gone through all the national approval processes, but it still remains to go through North/South Ministerial Council approval processes. The European Commission has gone through all the formal negotiations and will make a formal decision in about four weeks.

INTERREG IV is almost ready. Discussions are ongoing at member state level about some aspects of it, but it is close to being agreed. We have also finalised our technical detailed discussions with the European Commission in relation to the INTERREG IV programme, and that should go for decision shortly. A meeting of the North/South Ministerial Council sectoral group for SEUPB will be held on 7 November. At that meeting, my progress report on our work to date, SEUPB’s corporate plan for 2008-2010, our business plan for 2008, and the two new programmes, Peace III and INTERREG IV, will be considered. It will also consider our recommendations in relation to resource requirements for meeting our obligations under the two new programmes.

Before I finish, I will say something on those resource requirements. We have proposed for both new programmes a slimmed-down implementation and delivery structure. It is based on a classic EU programme-management structure that is very common throughout Europe, and I think that it is something that we can do in Northern Ireland and the border counties now. The structure uses a joint technical secretariat as the locus of technical implementation and delivery to ensure that tasks are carried out. That takes away a lot of bureaucracy from the front line, frees up capacity for people to actually be involved in what they should be doing and puts bureaucracy back where it belongs — in the public service. That is what the joint technical secretariat does. That has resource implications for the Special EU Programmes Body, and there are proposals on the table as to how that might be dealt with. I am happy to take any questions in relation to that.

Finally and briefly, corporate governance is very close to our hearts in SEUPB. We operate on the basis of total transparency, and I have welcomed many elected representatives in to have a look at the way in which we do our business. All of our accounts, and all our various governance and corporate requirements, are up to date. We have a very active internal audit and risk management committee with two independent directors and an independent chairman. We are audited by the Northern Ireland Audit Office and have taken on board any audits, evaluations and reports that have been done, and we have clean audit certificates.

We are looking at issues around staffing. We were challenged about the make-up of the community background of the staff in the SEUPB, and we took a very hard look at that, discussed it with our elected representatives and the Equality Commission, and put in place an affirmative action plan. We now have a higher proportion of Protestant members in our employment at all levels of the organisation. I am quite satisfied that we are doing all that we can.

I have been asked to say something about the future of the SEUPB. We are unusual in that because we have seven-year programmes, we know what we are going to be doing for the next seven years. If the two years that are required for additional expenditure are added on, we know what we are going to be doing for the next nine years, and if another six months is added to that for final closure, we know what we are going to be doing for the next nine and a half years. Therefore we have a job of work to do until the middle of 2016.

We are very aware, however, that the St Andrews Agreement provides for a review of the North/South bodies, and we look forward to an active involvement in that process. Important and significant competencies have been built up within the body as agents for both member states and both Governments in the planning, co-ordination and delivery of a very wide range of programmes in a wide range of sensitive economic and social areas.

We have also proved ourselves to be good at managing money in compliance with best practice in governance, and with deference to all elements of equality. We look forward to building on those competencies in the future and to having active discussions and debates with those who will be carrying out the St Andrews Agreement review.

Thank you very much for your attention.

The Deputy Chairperson: 
There is an issue which causes grave concern throughout Northern Ireland, and that is the capacity that there will be at local level to access the funding under PEACE III, given that many of the intermediary funding bodies — the local strategy partnerships — have been removed, and clusters of councils are joining together in various parts of the country. A big issue, especially for councils in the east, is the 30% cross-border activity that is required, and how they would access the funding. As happens in most of these cases, some people are well aware of how to access the funding, and others are not. Are you satisfied that, with the larger organisation that SEUPB now is, there will be an equal distribution, and an equal opportunity, for all sections of the community, north, south, east and west, to access all the funding for all the programmes?

I am astounded that £16 million of rebalanced moneys may still be available. I welcome the assurances about the other moneys, but I am gravely concerned — as, I am sure, is the Committee — that those moneys may be lost. Was any Department involved in not spending that money? What intermediate funding bodies deal with such matters? Given members’ concern, perhaps the Committee will return to that matter at another time.

Mr Colgan: 
The SEUPB has had discussions with the local authorities on the best way to approach the disbursement of funds in the Peace III programme. We recognise that local authorities have an important role to play, and we take on board the policy direction that we have been given consequent to the review of public administration (RPA) in Northern Ireland. In the border counties, there is an increased emphasis on the role of the local authorities in such areas as community planning.

The SEUPB has also been working with local authorities on how best to approach clustering in advance of RPA. As a part of that, we are considering how to guarantee bottom-up involvement, and how to ensure that smaller local groups have access to funds. Ensuring that that happens is, perhaps, the concern to which you referred. We have issued clear guidelines to local authorities and established criteria for the approval of multi-annual strategic plans, which we foresee coming from those clusters of local authorities. One criterion is that they will have to identify satisfactorily — for the steering group that will be making the decision — what they have done to ensure bottom-up inclusiveness in their plans. Their proposals and bids for money will not be approved unless they fulfil the criteria. Therefore, we are building into the structures of the programme an element that will guarantee the criteria and mechanisms according to which the moneys will be disbursed.

Money that has been designated for development purposes in the programme will be given to offices of the Community Relations Council in Northern Ireland and Border Action in the southern counties to assist councils in developing their plans and, principally, to ensure that they achieve an inclusive, bottom-up approach. We have also urged the councils in Northern Ireland to take full advantage of the competence and expertise that has been built up in the local strategic partnerships (LSPs). The councils should take advantage of those experiences and use the competence framework that exists.

Therefore, we are doing all that we can, but the monitoring and steering committees must satisfy themselves that the criteria are being adhered to and that the principles are being practiced in the programme’s roll-out. The SEUPB is sensitive to the issues that are involved, and we are aware of our need to monitor and manage it carefully.

With regard to the £16 million of rebalanced moneys, it is our duty, as managers, to anticipate risk, to say that there might be a problem, and to ask what can be done about it. In flagging a risk, one raises the danger, or the possibility, of creating unnecessary problems. Everything that can be done to manage the distribution of money is being done. We have regular multilateral and bilateral meetings with the implementing agencies that are involved, and we are engaged in the constant analysis of expenditure. We are pushing the implementing agencies to deal with the SEUPB.

Moreover, provisions are also being made to make proposals to our monitoring committee and to the member states about what should be done if it looks as though money that has been committed to a project will not be spent. We will examine alternative uses for that money in the programme and take direction from the Minister, who, in this case, is the Minister of Finance and Personnel in Northern Ireland. The moneys are solely Northern Ireland moneys, even though it is a North/South problem. Therefore, we will take direction from the Finance Minister in Northern Ireland as to what he wants us to do with any moneys that are at risk.

You asked about the implementing bodies: there is a range of those in the community and voluntary sectors. The Department of Enterprise, Trade and Investment is involved in a project that has issues about planning permission and the technicalities of the spend involved. Those issues are being managed, and every effort is being made to ensure that there is no slippage.

The Rural Development Council is another implementing body and, in fairness, it took on significant additional moneys to ensure that the European agricultural guidance and guarantee fund (EAGGF) money would be spent. That was a demanding challenge. The council is doing a good job, but we will need to monitor the money carefully to ensure that it is not lost.

I accept the Committee’s concerns about the steps that we are taking. As managers, our job is to bring those matters to your attention, tell you what we are doing about them and keep our eye on them.

Mr Hamilton: 
From what Mr Colgan has said about the number of audits that the two schemes have had to go through, it seems that the economic renewal objective is probably best met by the accountants.

I want to turn to an issue from Peace II that has been mentioned in the presentation. It refers to problems that the Protestant community and victims’ groups have had with participation. There is a capacity issue in the Protestant community that we all recognise and accept. The Deputy Chairperson asked about working with councils from the bottom up. What will the Special EU Programmes Body (SEUPB) do about enhancing capacity and raising awareness, which is one of the weaknesses? What will the body do about increasing uptake in the Protestant community and the victims’ groups? As we move into Peace III, what positive steps is the body taking on those issues?

Mr Colgan: 
In respect of Peace II, the Special EU Programmes Body undertook a fairly extensive campaign to raise awareness in various community groups and sectors. We also introduced training and awareness for implementing agents and ensured that those issues were taken on board by those agents and those involved in making decisions about the allocation of money to specific projects. We were out on the road — talking to, and meeting, groups and their elected representatives.

We also introduced into the programme a robust mechanism for appeals procedures that enables people whose applications for money have not been accepted to go through an appeals process. The Peace II extension is a good example of that. Those appeals ended up on my desk at second stage review, and two other independent assessors went through those assessments. Several projects from the Protestant community found it difficult to meet all the detailed criteria and demands of the programme, but we felt that those projects were worth supporting, and we have taken decisions on them. We have a proactive engagement as individual executives and are also proactive through the implementing agents and various activities that we run. However, we also put the appeals procedures in place.

In relation to the victims’ groups and Peace III, a section in the new programme deals specifically with acknowledging and dealing with the past; that is intended to continue the work that we have done with the victims’ and ex-prisoners’ groups in the new programme. That programme will acknowledge remaining complex and difficult issues and will provide assistance. Quite a lot of competence has been built up in that area in Peace II. We have learnt a lot about how to do carry out these matters. For example, much work has been done on the standards to be used in dealing with such groups and on best practice internationally. There is a great deal of competence in Northern Ireland and in our projects in that area, and we want to build on that and take advantage of it.

The issues of ex-prisoners’ and victims’ groups are complex and difficult, and we are aware of the sensitivities involved. We have built those sensitivities and difficulties into the structures of the new programmes, and we have taken the issues on board in Peace II and the Peace II extension.

Mr Hamilton: 
It has been accepted that there has been a weakness in engaging with the Protestant community and victims’ groups. Can you assure the Committee that that weakness has been addressed and will be addressed positively in the future?

Mr Colgan: 
Participation was an issue, and the reasons for non-participation are many. You mentioned capacity — in the current peace programme, there is a measure to build community capacity and improve weak community infrastructure. Quite a lot of work went into Protestant communities. We needed to reach out to the Protestant community, engage with it, give it reassurance and encouragement, and let people know that the programme was for them and that they should take advantage of it. That is very much a part of the new programme also.

The Deputy Chairperson: 
Is there a specific programme for victims under Peace III?

Mr Colgan: 
No. However, a provision is made under the measure: “Acknowledging and dealing with the past”, which has been written into the draft programme. It is the second intervention under the first priority, and specific resources will be made available for that purpose.

Mr Weir: 
Thank you for the presentation, Pat. Given the scope of the subject, I suppose you could have spoken for three hours had you been given free rein. I am struck by the fact that you know precisely what you will be doing for the next nine-and-a-half years, which, I suspect will be more than most people know. However, I suspect that some people might say that they will have achieved Irish unity by 2016, and that they too have things fairly well mapped out. It remains to be seen whether their goals are a little bit less realistic than yours.

Simon mentioned victims, and as has been indicated, it is a sensitive subject. Victims and victims’ groups will have different expectations, needs, and sensitivities. Can we be assured that funding for victims will not necessarily be linked to particular outcomes that would leave them in uncomfortable situations? For example, certain groups may feel that they are getting pushed in certain directions and are being forced to work, or co-operate with, people who they see as perpetrators of the violence that made them victims.

Mr Colgan: 
That is a fair point. Owing to the sensitivity of the issue, we will need to recognise how to address such issues, how far people can be encouraged to go, and so on. We do not have any preconceived ideas on the actual shape and outcome of what the interventions might be. However, there are clear criteria in the programme, to which all projects must adhere.

I did not address the Deputy Chairman’s earlier point about the cross-border participation dimension in the programme, and it is worth mentioning that there is a provision in the programme that 30% of it should be cross-border in nature.

The programme is funded under the European territorial co-operation objective of structural funds, and there is a specific EU regulation governing that. Normally, there would be very strict cross-border co-operation requirements for a programme funded under that measure and under that regulation. However, derogation was given in the case of the peace programmes specifically mentioned in that regulation, which means that we do not have to adhere to all of the very strict requirements on cross-border co-operation in every single intervention and project.

We have set ourselves a programme-wide target that 30% of the projects should have a cross-border dimension; which does not necessarily correspond to every individual project. It will give us an opportunity to be sensitive to individual situations and to ascertain how we can move things forward. We will be considering the overall programme with that target in mind.

There are also issues of geographical closeness and so on. It takes time to build partnerships. I do want make little of the difficult challenges that we are taking on in the programme — we need to move things forward and we need to be seen to be doing that.

Mr Weir: 
You mentioned the volume of evaluation and analysis that has taken place. It is difficult to think of a public body that has undergone as much evaluation and analysis. You have already referred to that, but those things are only worthwhile if they lead to changes.

This question may be too big to answer, but, as a result of the evaluation, what were the main concerns about how things had been done and, where there were specific criticisms, what corrective actions did you take to ensure that projects were brought back on track?

Mr Colgan: 
We divided the various evaluation processes into different types.

Technical evaluations, in the form of internal audits and assessments, were carried out on the financial probity and management of the programme. Those evaluations included various technical recommendations to do with processes, procedures and the way in which we do things. We have no choice other than to take those findings on board because they relate to the adherence to regulations, governance, best practice, and so on.

Mid-term and updated mid-term evaluations, which take a more comprehensive and global view of the programme, were also carried out. Those evaluations considered the capacity of the programme to meet its objectives and made recommendations in relation to that.

In 2004 — and timing issues are relevant — it emerged that it was necessary for us to put more energy into ensuring that expenditure targets were met. Those measures were taken on board. It was also necessary for us to consider more closely issues concerning complexity, inclusivity, access and bureaucracy. Those lessons were taken on board.

Specific, commissioned evaluations were conducted to consider individual issues raised by the working group on monitoring and evaluation, which is part of the monitoring committee. Issues that the working group picked up on — and I have mentioned some of them in the report — were subjected to in-depth evaluation, and, again, lessons were taken on board.

All of the lessons learned from the evaluation processes were used as starting points and built on when defining the ethos and philosophy of the new programmes for 2007-13.

Ms Purvis: 
The background paper that you submitted to the Committee states that the INTERREG IIIA programme funds are fully committed and that 68% of those funds have been spent to date, compared with 85% of the funds in Peace II. Is there any reason for that?

Mr Colgan: 
It is important to distinguish between commitment and expenditure. Both programmes are 100% committed, which means that letters of offer covering the total value of the programmes have been issued. Expenditure levels differ between programmes. Although 85% has been expended in the Peace II programme, we are confident that the remaining 15% will be spent. I have already mentioned points relating to rebalanced money. The figure of 65% for INTERREG IIIA is due to the different nature of expenditure that is involved — whether it is more capital- or infrastructure-based. That is something that we monitor carefully on a monthly basis, and we are happy that there will not be any slippage. Also, the INTERREG programme began later than Peace II.

Ms Purvis: 
You mentioned how the programme is audited, and it seems as though both programmes have been audited to death. Although any programmes that use public money should be audited to a high level, I get the impression that these programmes, perhaps due to their nature, have been over-audited. I am concerned about the internal and external costs of that auditing process and whether those costs, and the same standards, are passed on to the projects that apply for funding.

Mr Colgan: 
That is a subject close to my heart. In a previous life, I was responsible for an evaluation of the efficiency of the implementation of structural funds across the whole of Europe. We closely examined auditing and evaluation practices and made recommendations to the Commission and to member states about simplifying them; however, they decided to stick with the rigid and strict systems that were in place. Ultimately, the European Court of Auditors is accountable for these moneys, and it insists on a cascade of assurances throughout.

Therefore, there are individual audits for each of the different funds — ERDF, ESF, EAGGF, and FIFG. Each of those funds has a Directorates General who is responsible for carrying out audits. Articles 4, 10, 13, and 15 of the regulations make provision for separate audits. It is a process of cumulative and cascading reassurance that eventually goes to the European Court of Auditors, which then checks that everything has been done correctly. It goes right to the bottom at article 4, which states that every penny of expenditure has to be 100% accounted for, verified and certified.

That is the nature of EU money — it is hard work, and expensive to manage and monitor. However, the member states and the Council of Ministers decided on those procedures. Many recommendations have been made on how matters could be dealt with differently, but the way in which EU moneys are managed is a culture. That makes access and management difficult, because a great deal of capacity and competence are needed if those are to be handled correctly.

Ms Purvis: 
I am concerned that the cost of auditing may be paid for from project funds.

Mr Colgan: 
Money to pay for auditing is made available in the programme under the heading of technical assistance. In the new programmes that sum will be about 5% or 6% of the total cost of programmes; in the current programme, it is up to 5%; and in the peace programme, the cost of inclusiveness — which I described earlier — meant that the total technical assistance available was higher. The actual cost of auditing is a small percentage of those funds.

Ms Purvis: 
The cost could act as a deterrent.

Mr Colgan: 
It adds complexity, and it deters small groups and communities from getting involved in the programme. The SEUPB has considered lifting the level of accountability for the new programmes in order that smaller groups can participate without needing the competency capacity. The accountability is placed at local-authority and lead-partner level and is therefore more strategic in focus. The SEUPB will hold accountable and audit to death those organisations that are at the higher accountability level, which are, essentially, public bodies that are well used to dealing with public standards in accounting for money. Those organisations will verify what the small projects are doing within their strategic plan.

The Deputy Chairperson: 
Does the money to pay for auditing come out of the implementing bodies’ or the managing authorities’ technical assistance? Those are different funds. Does the SEUPB pay for all the audits?

Mr Colgan: 
No.

The Deputy Chairperson: 
The Audit Committee in the Assembly’s first mandate recommended changes to the procedures specifically regarding audits. Were all those implemented? There were some changes to application forms — such as a reduction in size — but they are still cumbersome to fill in.

Mr Colgan: 
Sixty recommendations emerged, all of which were implemented. We constantly strive to simplify application forms; they are a lot better than they were, but they could always be improved.

The Deputy Chairperson: 
Therefore, there are 300 pages instead of 500.

Ms J McCann: 
I want to ask about the position of the cross-border groups in INTERREG IV programme. In the first draft operational programme, a “closed call” was issued to groups to bid for funding for projects. In the final draft that was sent to the Commission, the groups were described as having only an important role. It is as though the designated role for cross-border groups is not as important. That does not reflect the agreement that was reached by the North/South Ministerial Council of 2001, or the mid-term evaluation for INTERREG III. Will you clarify that point?

Mr Colgan: 
We have had ongoing and detailed discussions and debates with the partnerships, public representatives, Ministers and departmental officials on both sides of the border about this issue. I am satisfied and happy that we have reached a good understanding with the partnerships about their role in the programme.

Our first idea was to have a closed call for the partnerships. We put that draft operational programme out for consultation, and had comments from statutory agencies and local authority representatives in Scotland, Ireland and Northern Ireland — right across the board — that closed calls were not good for transparency, openness and access. We had to take those views on board, so we made a strong statement in the operational programme that the cross-border partnerships have had, and will continue to have, a key role in implementing and delivering the INTERREG IV programme, and that we are working actively with them on the preparation of multi-annual strategic plans for their areas. They will submit bids for those moneys.

That changes the relationship between the partnerships and the programme to the extent that they are telling us what they would like to do in their areas — perhaps over the next three years — and stating the amount of money that they need. Through the steering committee of the monitoring committee, we allocate that money to the partnership and they distribute it in line with the plan that they put to us. We do not need to engage with each of the detailed subsets of that programme. It frees up the partnerships to be more proactive and developmental in their own areas. It gives them freedom to manage the money. We will audit that partnership and hold it to account according to the programme. I am confident that they will come up with good plans and will access moneys at least of the order of where we are in the current programme. We have built a good understanding with the partnerships on that.

Ms J McCann: 
So there is still a significant role for them to play?

Mr Colgan: 
Yes, we need them.

Ms J McCann: 
Out of a budget of €192 million, €18·8 million has been set aside for the collaboration between public bodies. Is there any room to reprioritise some of those moneys?

Mr Colgan: 
The partnerships will be free to bid across all sectors of the programme. I do not see them being confined just to that part of priority 2, which is the part you referred to. They can bid right across the programme. Money is reallocated within the programme through the monitoring committee. We analyse how take-up is proceeding and measure the activity levels of the projects, after which we make recommendations to the monitoring committee about the need to reallocate or reprioritise moneys throughout the life of the programme. That is the normal way in which programmes are managed.

Ms J McCann: 
So there will be room for reprioritisation?

Mr Colgan: 
There is a possibility, yes. However, it requires the agreement of the monitoring committee. In some cases the Commission’s agreement is also required, depending on what the partnership wants to do.

Mr McQuillan: 
One of the Peace II objectives is social inclusion. Whenever I think about social inclusion, I think about rural areas, because they are just as excluded as the big estates in other areas. Almost 69,000 people have participated in that programme. How many of those people came from rural areas? Are there figures for each of the 26 district council areas?

Mr Colgan: 
I do not have those figures with me, but I should be happy to get them for you. I am sure that we could do that. Your question is about the number of rural participants in the programme.

Mr McQuillan: 
Exactly.

The Deputy Chairperson: 
The Committee has had a full session this morning. Would you be happy to have any other questions submitted to you at a later date?

Mr Colgan: 
I would be very happy.

Mr Beggs: 
As other Members have said, there was a significant community imbalance in the applications for, and funding of, Peace I. Following proactive work, there was a better community balance in Peace II, but still a degree of imbalance. Some of the criteria for the new funding, particularly the emphasis on cross-border activity, tend to make that more difficult. There are fewer community connections in the east of the Province than in the west.

How will you ensure balance between the communities in the funding applications and subsequent funding?

One of the new elements in the INTERREG funding will involve the west of Scotland. That is a new range of activity. Has there been significant, proactive work done on the ground to ensure that there are sufficient quality applications for that type of funding?

Mr Colgan: 
In relation to your first question, I have already described our approach to the cross-border-participation dimension in the programme. Our target applies across the whole programme, not to individual projects or geographical areas. We are sensitive to those issues, and we recognise that there are some difficulties. In other words, we will need to make interventions in the Peace III programme, which may not be cross-border in nature and may be specific to an individual region, area, community, location or sector. The programme makes provision for that.

The work that we have done on the ground and the feedback that we received suggest that there will be no shortage of potential bidders or applicants from all over Northern Ireland, including the east. Interesting cross-border links are beginning to emerge already. We are working actively with those groups, local authorities and other interested parties to ensure that they have access to those things.

Mr Beggs: 
In the new structure, you will be the managing authority, certifying authority, audit authority and joint technical secretariat. Is there a potential conflict of interest in having such a diversity of roles? When you mention 16 auditors, do you mean that they will all be European auditors, or will the Northern Ireland Audit Office be involved? How much local input will there be?

Mr Colgan: 
You also asked about Scottish participation, and I would like to answer that. We are actively engaged with the Scottish Executive. A person has been appointed as a contact in Scotland. Active project pipeline development has already taken place. Far from there being a lack of interest, the Scottish people could spend every penny available in the programme if we let them. The level of interest there is exciting.

As to your question about SEUPB taking on board all those roles, I have worked on European programmes for many years, and in all the member states. I have examined and evaluated programmes. This is a classic structure for EU programme management. There is nothing unique or different about it.

The managing authority generally has under it a technical secretariat that deals with all the technical bureaucratic issues to do with programme implementation and programme delivery. It is just that we have never done it like that here before. We have done it to a certain extent in the INTERREG programme, so there is a precedent.

In relation to the certifying authority, we have fulfilled that role already for the INTERREG programme, and it is merely a natural extension of that, for efficiency’s sake, that we should fill it for the Peace programme as well. We do so in close co-operation with the two Departments of Finance. Ms McIntyre has a unit within SEUPB which is ring-fenced; it has responsibility just for that role.

EU regulations require us to make the audit authority available to the programme. That will be filled by the internal audit division of the Department of Finance and Personnel in Northern Ireland. It can audit the programme both north and south of the border as audit authority on our behalf. Technically, that comes under SEUPB, because it will do that under a service-level agreement with us. However, it is totally independent in how it does it. There will be no crossover of personnel or decision-making. These are various directorate structures, and the directorates work independently. It is commonplace in European programmes to work that way.

As to the number of audits, all of the audits that we do are required by EC regulation or by national governance structures. That applies to, for example, our internal audit, the annual audit, the Northern Ireland Audit Office, the Comptroller and Auditor General’s audit, and so on. Those kinds of audit are there for us.

With respect to inputs from the local level, the two member states are responsible for overseeing their interests in the programme, and they have their audit input into that.

Mr Beggs: 
I would like a list of all the auditors, to have a record of that.

Mr Colgan: 
I can provide that.

Mr O’Loan: 
Community uptake is very important. I welcome the manner in which comments have been made today — that has not always characterised this debate. As Roy Beggs quite rightly pointed out, the improvement from Peace I to Peace II is important. Any noticeable disparity at Peace II stage is not huge, and I welcome the openness of SEUPB to scrutiny in relation to that. The independent evaluations have shown that the essential reasoning is, in respect of areas of deprivation, that the Catholic community is more greatly represented than it is in the overall population. It is a fact that the rate of application from the Catholic community is greater, and any rational reader of the situation would accept that.

However, I commend the SEUPB for the affirmative action that it has taken. There are real problems around the rate of application from the Protestant community, so it is good that affirmative action is taken in that regard, and I fully support that. That is my reading of the situation. You may wish to come back on that, or I am happy to leave it as a comment.

I have a question about commitment and spend. The SEUPB is fully committed on Peace II and INTERREG III, but the spend figures are not there yet — you are at 85% and 65%. Money could be lost, which would go back to the EU. What is your risk assessment that you would receive 100% spend at this stage?

Mr Colgan: 
Our risk assessment in relation to EU moneys is that there is no real risk. We are quite sure that we will spend all of the EU money. There will be some challenges in 2008; there are some areas of the programmes into which we will have to put some energy to ensure that they happen. We do not sit back on these matters; they are managed very closely. We have a great deal of multilateral and bilateral meetings during which the temperature around the table often rises. We monitor things closely, so I am quite confident that we will not let anything slip in relation to the EU money. I have already outlined our position on the rebalanced moneys, which we are managing proactively.

EU money that is decommitted does not go back to the EU. That matter does not arise. That is a technical issue.

Dr Farry: 
I want to pick up on the issue of community take-up. I expressed some reservations about the approach that has been taken. I am uncomfortable with trying to measure how much has been taken up either by Protestants or by Catholics, because that risks entrenching division in the sense that one is trying to assess what slice of the cake different sections of the community are getting. One of the overarching aims and objectives of the Peace funding is to promote reconciliation, so there is a major contradiction.

I also have a major reservation about the methodology that has been adopted, in that you seem to have taken census figures and used a stark Protestant-versus-Catholic approach to measurement. As we well know, matters are not that simple any more. There are large numbers of migrant workers and people from ethnic minorities who do not label themselves as either Protestant or Catholic. There is also a danger of ignoring projects that are operating in mixed communities in Northern Ireland, not all of which are middle class, and some of which are in very deprived areas. They may not take up the money at the same rate as other areas. The approach that the SEUPB is taking to measuring funding has the potential to miss that aspect, and as a result, may not actually be that accurate.

Mr Colgan: 
I welcome your comments. They reflect considerations that we give constantly to this issue. We are very sensitive to the complexities of what we are trying to do. The methodology that is used is based on the statistical analysis methodology, which is put forward to us as best practice. It has been peer reviewed and has been refined from one study to the next. It is refined based on the level of detailed information that is emerging in the available data sets.

Dr Farry: 
Is it coming from NISRA?

Mr Colgan: 
It is coming from the Trutz Haase analysis studies, which is an academically sound piece of statistical research that has to stand up to certain standards. Does it answer all the questions accurately? As Dr Farry rightly says, the issues that we are trying to measure are very complex, and he himself recognises that in his reports. You also asked if we should be trying to measure this anyway. Well, we have been asked the question.

Dr Farry: 
We will leave it at that for now.

I also want to ask about Peace III and the local authorities that will manage that programme. Is there a case for seeking a delay in the establishment of the partnerships between local authorities until after the shape of the review of public administration has become clear from the Executive working group — hopefully by some time in December. There is a real danger that partnerships might emerge in the short term that may not reflect the eventual shape of the new local authorities. That could result in changes having to be made halfway through the process or shortly after it begins, or leaving an anomalous situation in place for several years.

Mr Colgan: 
That is a fair point. We have not been prescriptive about the shape of the clusters, and we have gone through a detailed consultation process with them to see what they want to do themselves. We have not finalised the shape of any clusters. That is a dynamic matter. After we leave the Committee, I will go to Banbridge to meet 13 chief executives of councils to talk about those kinds of issues. We do not have fixed ideas about it.

We are also trying to ensure that we take on board what is happening in the Department of Agriculture and Rural Development (DARD) by way of rural development and some of the other issues that involve clusters as well. We are sensitive to them. While we need to act to take account of events that arise and to build competence in the area of co-operation between councils, we also know that, by 2009 or 2010, we will have to reassess, re-evaluate and adapt to whatever changes may come. I am aware that we are likely to hear an announcement fairly soon that might change our thinking in that regard.

The Deputy Chairperson: 
The Lisbon agenda obviously dominates Peace III, which is a major departure from Peace I and Peace II. Are you confident that the plan that has been set out will enable us to get sustainable and beneficial projects that will complement the Lisbon agenda and the economic benefits and outputs? I ask that because one of the major criticisms of the spend of European money on Peace I and Peace II was that there was a lot of froth and a lot of money spent on things that did not produce tangible outcomes and benefits for Northern Ireland PLC.

Mr Colgan: 
We have had a lot of discussion on this matter with the European Commission and with representatives of other member states who have been looking at what we are doing and asking how the Peace programmes fit with the Lisbon agenda, which is a competitiveness agenda. We have had some very interesting discussions with them, most recently at a conference that was organised by the Department of Finance in Louvain. Over 200 participants from quite a wide range of member states considered that and their opinion was that there is a need to create the kind of social conditions that are necessary for wealth and competitiveness to emerge and that the Peace programme, and the approach taken by it, is an excellent contribution to that process.

In the case of the new programmes, we see INTERREG and Peace as being mutually complementary. They are two sides of the same coin, and both of them make a contribution to the Lisbon agenda. However, we are very aware of this dimension for the new programmes, although technically, under the regulations, the new programmes, the territorial co-operation programmes, do not have to meet the same standards as the mainstream Objective 2 programme for the Lisbon agenda. However, it has certainly been part of our thinking. The key thing is complementarity between the Peace and INTERREG programmes, and between those two programmes and what is happening with competitiveness and employment in the programmes that are being run by the Department of Enterprise, Trade and Investment and the Department for Employment and Learning.

The Deputy Chairperson: 
Thank you, Pat, for attending the Committee meeting and for bringing your colleagues, Adrian and Gina, with you. The Committee wishes you well for the future. If you have any suggestions to make to the Committee, or to the Assembly, as to how we can develop a nine-year work programme, we would be quite happy to accept your advice. Thank you for the presentation.

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