European Social Fund (EUC Report)

Lord Knight of Weymouth Excerpts

Wednesday 3rd November 2010 Lords Chamber

[Lord Knight of Weymouth]

My Lords, it is a real pleasure to be able to speak in this debate about this useful and interesting report from your Lordships’ European Union Committee on the excellent work done by the European Social Fund. I join others in paying tribute to the work of the members of the sub-committee, led so ably by the noble Baroness, Lady Howarth of Breckland, who summarised her report so well earlier in the debate.

I confess to your Lordships that I find myself yet again in a slightly odd position in leading for the Opposition on a report that scrutinises my work when in government; indeed, I was the Minister who gave evidence to the committee back in February and approved the evidence given to the committee by the Government. In the circumstances, it is tempting to oppose by adopting what some would unkindly term the Liberal Democrat principle, by which I mean a graceful three-point turn under the excuse that the outcome of the election has changed everything. However, I have reread the evidence that I gave in the light of the committee’s conclusions, and was pleased to find that not only does it appear that at the time I might have understood these issues but I mostly agree with what I said back in February.

For the interest of the noble Baroness, Lady Young of Hornsey, I say that the area where I am most likely to reassess my position is around soft outcomes. As I have reflected back on my time as Schools Minister, I have also been taking more interest in assessment—what it is possible to assess and measure. I am now more persuaded that it is possible to assess some of these soft outcomes in a more objective way and show the progression that people are taking to get closer to the labour market, which is clearly an area of additionality that the European Social Fund is addressing. I also find myself in agreement with the Government’s response to the committee’s report. I am pleased that the transfer of functions from the Learning and Skills Council to the Skills Funding Agency, which was one of my main worries, seems to be working well.

On that basis, I could just sit down and leave it all to the Minister, but reading it all through again raised a series of questions about how the European Social Fund will operate alongside the changes that the Government are taking through. I gave the Minister advance sight of my speech this morning to give him time to assemble some pithy answers to my questions. These fall broadly into three areas: additionality under the work programme; how regional priorities will be set; and the integration of employment and skills programmes.

As the Minister knows, I support the principle behind the work programme. I hope that some of the work that I did as a Minister is helping him as he tries to implement it against a very tight timeframe in a difficult labour market, but I will not dwell on those concerns now. I would be fascinated, though, to hear his response to the worries of the noble Lord, Lord Cotter, around delays to the work programme. If he could clarify for the sake of all those who are concerned about the programme whether there is a delay, that would be exceptionally helpful.

What is relevant to this debate is that the European Social Fund funds must be additional to government spending plans. How will that work under the work programme? As I understand it, the work programme will be a single programme for all who can work. It will be designed so that contractors have significant incentives not to park customers who are particularly difficult or cream off profit by just focusing on those who are easier to help into work—the committee used the word “cherrypick”. If that were to happen, the programme would not be a success.

Those are the very issues that the committee asked me about in the context of ESF. Is my understanding of the work programme correct? If so, how will the Minister achieve additionality with the continuation of ESF under the work programme? If the work programme is to be for every sort of claimant, be they on jobseeker’s allowance or employment support allowance, and the contractor is paid on outcomes not inputs, how can the ESF work be additional? How does the Minister respond to the committee concerns around soft skills in the context of black box contracting?

I also noted the ending of the working neighbourhoods fund in the comprehensive spending review. As the Minister’s noble friend Lord Shipley said in Monday’s debate, this was not an easy cut to spot. He went on to say:

“The fund has been used across the country to tackle worklessness by investing in voluntary sector partnerships, thus securing additional leverage and ERDF matched funding. It has helped to address community health and community safety issues. It has tackled economic deprivation and has targeted resources to those young people not in education, employment or training. The fund, worth £0.5 billion, has vanished”.—[Official Report, 1/11/10; col. 1541.]

Like him, I too must declare that I am a vice-president of the Local Government Association. Given that the fund has “vanished”, how will the Minister deal with the likelihood that the ESF will be used to fund the same sort of work that was funded by the working neighbourhood fund? Will he not be highly vulnerable to the charge that the Government have cut this spending knowing that they can backfill with ESF programmes? Is that not counter to the additionality rules?

The second issue is about regional priority-setting. As the Minister knows, ESF is currently subject to regional priorities set in England by regional committees made up of the Skills Funding Agency, the regional development agencies, trade unions, government departments, local authorities and third sector representatives, and chaired by the government office of the region. As I made clear in my evidence to the committee, I think that this could be rationalised by merging it with the regional employment and skills boards, if the Commission were to agree that this met its audit requirements, which it may not. What I had not envisaged was a rationalisation as a result of the abolition of the RDAs, subject to the Public Bodies Bill going through—a dreadful piece of legislation that we will be debating fairly soon in this House—and the abolition of the government offices themselves. How, therefore, does the Minister see the regional priorities being set in the future? Who will sit on the regional committees? Does he agree with the LGA in its briefing for this debate when, as my noble friend Lord Liddle, mentioned, it says:

“Councils, groups of councils or Local Enterprise Partnerships should set ESF’s strategic direction to ensure it delivers outcomes relevant to local need”.

In its recent report, EU Funds and Place-based Budgets, the LGA argues that, first, the delivery of the main EU funds—the ESF, the European Regional Development Fund and the Rural Development Programme for England—should be joined up into a set of single programmes at the subnational level; and, secondly, within this framework, we should offer local partners the opportunity to manage local packages of EU funds, should they want to. Does the Minister agree? If so, again, how will it be additional to the previous working neighbourhood fund work carried out by local authorities but now cancelled? My argument for a long-term future without the ESF—which was trashed by the committee—centred on regional structures being in place. It is necessary to be close enough to the ground to identify pockets of need, but with enough of an aerial view to join up programmes strategically.

In the new Government’s response to the committee, they say:

“Over time, wealthier Member States should be phased out of the Structural Funds and funding focused on the poorest, enabling them to catch up with the average”.

We note the opposition to that position of the committee and everyone else who has spoken in this debate. In the absence of regional policy from the government office and the RDA, I cannot see how this renewal of the policy that I had to justify to the committee works. What are the Minister’s justifications for this long-term policy?

I want to ask about employment and skills integration. The Minister cannot be criticised for a lack of ambition or a drive to join things up. If he manages to pull off the work programme and the universal credit, it will be as a result of the most monumental effort and ambition. Is employment and skills integration also on his radar? Of course, the ESF does both. Can he see a way of commissioning them together from contractors in this programme and more widely as part of the work programme? Is that not vital in giving the contractors the tools that they really need to do the job?

This was a useful and authoritative report by the committee. It has allowed us to focus on the European Social Fund, which has done much to help those in our country who most need help from an active Government. The debate has also allowed us to ask the Government questions about its future, and I look forward to the Minister's considered response.