European Social Fund (EUC Report)

Baroness Howarth of Breckland Excerpts

Wednesday 3rd November 2010 Lords Chamber

Moved By

[Baroness Howarth of Breckland]

To move that this House takes note of the Report of the European Union Committee on Making it work: the European Social Fund (9th Report, Session 2009–10, HL Paper 92).

[Baroness Howarth of Breckland]

My Lords, I present this report as chair of the Social Policies and Consumer Protection Sub-Committee at the time when the inquiry was conducted and the evidence heard. I am grateful to my noble friend Lady Young of Hornsey, the present chair, for graciously allowing me to make this introductory speech. But then, she has inherited one of the best jobs in the House of Lords. During my time with Sub-Committee G, the staff, Kate Meanwell and Alistair Dillon, were always engaged and informative. I thank them both for that service, along with Talitha Rowland, the present Clerk to the committee. We were aided in the inquiry by our specialist adviser, John Bell, who helped to guide us through a mountain of information and complexity. I am grateful to them all.

The European Social Fund is one of the EU’s main structural funds and aims to improve employment opportunities for workers in the Union. Key to this role is the concept of developing individuals’ employability, above all through targeting the hardest to reach and the low skilled. The fund is worth €4.5 billion to the UK in the current programme, which runs from 2007 to 2013. This inquiry was conducted by the Social Policies and Consumer Protection Sub-Committee against the backdrop of the financial crisis and rising levels of unemployment, and the report was published in March. The committee undertook the inquiry with three aims: to assess the effectiveness of the fund both in terms of meeting its objectives and in responding to the financial crisis; to review its policy priorities in the context of the economic recovery and the imminent introduction of the Europe 2020 strategy; and to make recommendations on the long-term role and functioning of the fund.

The Committee heard evidence from a wide range of stakeholders, in addition to visiting ESF-funded projects. At the end of all of that, we were left in little doubt as to the worth of the ESF, which has particular benefits in terms of introducing new ideas, social inclusion and economic development. However, we concluded that there are a number of ways in which the ESF could be made more effective. Chief among these were that greater effort needs to be made to target the hardest to reach and that the achievement of soft outcomes, which help move participants towards work if not into full employment, need to be given greater value. We also drew attention to the need for flexibility, both mid-programme and regionally, to be assured. On the longer term functioning and role of the ESF, the committee considered that there should be closer alignment between the ESF and the European Regional Development Fund on the one hand and national job creation programmes on the other. This is vital to ensure that there are sufficient jobs for those helped by the ESF to take up. The committee also felt strongly that the ESF should continue to be available throughout the EU and should not be withdrawn from wealthier member states, because some of them may not remain wealthy. That was our main point of disagreement with the previous Government because there are pockets of deprivation in all countries.

We were pleased to note that the coalition Government, in their response to the report, agreed with the committee that the ESF should be focused on supporting the hardest to reach. These are the individuals who are furthest from the labour market and possess the fewest characteristics needed for participation in that market. They are also likely to be difficult to engage. There was broad agreement among our witnesses that the ESF was well placed to target these groups. We consider this to be particularly valuable work and have recommended that priority be given to safeguarding this aspect of the ESF’s role.

The committee had the opportunity to observe at first hand the hardest to help support provision when it visited a charity, Tomorrow’s People Trust, which works in the East End of London helping to tackle the cycle of unemployment. Its target groups include the over-fifties, those with disabilities or health problems, ex-offenders and the long-term unemployed. We welcome the Government’s agreement that work with the most disadvantaged and the least skilled should be the focus of the ESF, and we look forward to learning how this will be ensured in the next tendering rounds. The committee felt that the third sector is often particularly well placed to target these groups and we therefore also welcome the commitment in the Government’s response to encourage smaller voluntary organisations to participate in the programme and deliver contracts. Again, I would welcome further details as to how this will work in practice. Many small voluntary organisations felt that they had to pull out because they could not engage in the present arrangements.

The committee recognised that in many cases helping the hardest to reach will not necessarily lead to a tangible outcome such as employment during the life of the programme. Instead, there is a multitude of what I mentioned before—soft outcomes, which, although harder to measure quantitatively, are no less significant. These can include developing participants’ confidence, improving their ability to work with others—anger management was one example—and improving their timekeeping. My noble friend Lady Young talked of the young man who was just managing to get up in the mornings. These benefits were highlighted in a visit to Step Up, an ESF-funded project in Elephant and Castle which is targeted at 14 to 18 year-olds. These soft outcomes are important interim steps on an individual’s difficult journey towards employability. The committee was concerned that this should be sufficiently recognised in measuring effectiveness and that payment should not be withheld from providers unless they are successful in securing jobs for participants. This runs the danger of encouraging organisations to cherry pick participants who are closer to the labour market and easier to deal with. The committee felt that this danger could be overcome by improved measuring of soft outcomes and by placing a requirement on providers to collect such data in addition to hard outcomes.

The committee was particularly impressed with the potential of longitudinal cohort surveys to measure soft outcomes and, although the Government do not propose to make these compulsory, we were pleased to note in the Commission’s response that it intends to explore the potential of these surveys further. The Government also stated in their response to the report that soft outcomes are included in contracts “where appropriate”, with providers required to record them. Can the Minister tell us when such inclusion might be deemed appropriate and how such outcomes will be valued for the purpose of paying providers? Payment by results is a strong phrase these days, but we need to know what the results look like.

We also emphasised the need for the ESF to be sufficiently flexible in order to be able to respond to external factors such as the recent recession and to the different economic profiles of regions. The committee was pleased to note that the Government broadly accept its points, but I reiterate its recommendation that the reason for delay in the disbursement of extra funds resulting from the revaluation of the euro should be fully reviewed in order that lessons can be learnt.

I turn now to the future of the ESF. We were pleased to note that the committee, the Government and the Commission are all agreed that the ESF and other structural funds have a crucial role to play in making the Europe 2020 strategy a reality. Sustainable development is an important aspect of this, and the report places emphasis on green jobs and skills being recognised and given sufficient support. The committee’s report also recommends that job creation programmes, whether EU or member state funded, should be more closely aligned. In this context, we noted with interest the revised welfare to work programme which formed part of the coalition agreement. We would be interested to hear from the Government regarding the link between this programme and the ESF. We are particularly concerned that any uncertainty over the future work programme should not jeopardise ESF provision.

The report also recommended that the ESF and the European Regional Development Fund, the ERDF, should be strategically aligned. The Commission’s recent paper reviewing options for the EU’s post-2013 budget suggested the adoption of a common strategic framework encompassing the actions covered currently by the Cohesion Fund, the ERDF, the ESF, the European Fisheries Fund and the Rural Development Fund. Such a framework would, the Commission suggests, provide greater coordination and could,

“identify linkages and coordination mechanisms with other EU instruments such as programmes for research, innovation, lifelong learning, and networks”.

We would be interested to learn the Government’s position on this.

The committee remains convinced that the ESF has worth for all member states. Unemployment does not respect national boundaries and, as such, we believe that the ESF should continue across the EU wherever there is need. This was a point where the majority of our witnesses were in agreement, including the Welsh Assembly Government. Many of our witnesses also made the point that EU-funded projects provided a degree of security, with funding over a seven-year period, which was not available at member state level due to the unpredictability of politics and national priorities. We welcome the Government’s policy to maintain ESF provision in the UK over the next financial perspective but we are extremely concerned about their policy of advocating withdrawal of the fund from wealthier member states over time.

Our concerns here are twofold. First, we are in agreement with the Commission that the ESF is a valuable and concrete expression of solidarity among Europe’s citizens. Indeed, the committee recommended that awareness and visibility of the ESF should be improved. Secondly, it is not clear what would replace the ESF if funding were reduced or withdrawn. This is particularly vital given that ESF provision is, by definition, additional to existing national programmes. The previous Government were unable to give the committee any indication of this when questioned during the course of the inquiry and it is not covered in the coalition Government’s response to the report. I hope the Minister will be able to respond to that point today as well as providing clarity on the Government’s present position with regard to the future of the ERDF and the ESF in the UK budget review.

I look forward to hearing from other noble Lords and from the Minister how the ESF can be strengthened and improved and how the vital work it accomplishes with those who would otherwise be outside normal society can be assured for the future.

--- Later in debate ---

[Baroness Howarth of Breckland]

My Lords, I thank the Minister for that reply and all noble Lords who have taken part in the debate. I intend to be brief as, like the Minister, I am not sure that debating additionality at this time of night is what I prefer to be doing. However, as I am no longer responsible for this area of work, I want to speak for a couple of minutes and indulge myself on behalf of the noble Baroness, Lady Young, who will, I hope, get a further reply from the Minister on the issue.

The most difficult aspect of this rich debate is its complexity. If it is complex for us, it is even more difficult for all those organisations on the ground such as probation officers and others in local authorities and the voluntary sector—the noble Lord, Lord Liddle, mentioned those—to comprehend and to determine how the projects to which they are committed on behalf of some of the most needy people in our communities will continue. While we debate conceptual ideas of frameworks, longitudinal surveys and cohorts, which many of us have worked on and understand, it is crucial that those wonderful, ordinary folk—we met some of them—delivering programmes are helped to see how they can continue to do the work that they are doing. That is probably the most essential point.

I love the fact that the noble Lord, Lord Knight, has done a U-turn. I never thought that he was really convinced about this issue, so that is not a surprise. However, if a belief is growing that this ESF funding will not continue in the long term—and funds are very difficult for local authority organisations—it is crucial that we have some understanding of what will replace it if it comes to an end. If not, the projects will come to an end.

One of the other interesting moments we are in is that, because we do not have any picture of the welfare to work programme, or how the new employment frameworks will fit together, we cannot see into that future, just as all the people on the ground cannot. The sooner those things are in place, the sooner great anxiety among those ordinary folks will be relieved. At the moment, people in projects are asking me whether they will have to make their staff redundant—to issue redundancy programmes—in the next few weeks, because they do not know if they will receive grants and they do not know about their future. Those sorts of anxieties need to be removed when people are dealing with aggressive, mentally ill, depressed and deprived clients. It is enough to deal with that without the worries that we add to them.

I do not want to say more in terms of the intellectual debate we might have on additionality. I think it is far more important that we concentrate on the delivery to the folk who need it through the folk who are delivering.

Motion agreed.