Examination of Witnesses (Questions 136-139)
MR MANFRED BESCHEL AND MR PHILIP OWEN
MONDAY 28 JANUARY 2002
136. I do not know if I should be welcoming you to your own fiefdom, so to speak, but it is very good of you to come and answer some questions we have as the Welsh Select Committee on the opportunities of Objective 1. I wonder if you could start by introducing yourselves and giving a brief description of your role?
(Mr Beschel) Thank you, Chairman. First let me thank you from our side for the opportunity to be able to speak to you about structural funds in a region, and I am not just saying that out of politeness. We have found that a political follow up of our activities gives them a different sort of visibility and a different status towards the citizens compared to other regions and, therefore, we gladly seize the opportunity of speaking to you. I might have preempted your question number 13 already, because this is one of the elements that distinguishes EU devolved regions from others. We are truly glad to be able to speak to you about what we are doing and how we are doing it and to answer your questions. I am Manfred Beschel. I am a lawyer by profession. I have been in the Commission since 1975. I started in the legal service, I worked on a number of cases, 40 cases, two of which I lost. I then worked in the Cabinet of the Commissioners with Pfeiffer and Schmidhuber on financial affairs and regional policy. In 1989 I took over a horizontal department in regional policy analysis and regional development plans, and since 1990 or 1991 I have been doing operational work in regional policy, first for Portugal, then for Spain and now, as you know, for the United Kingdom and Ireland.
(Mr Owen) My name is Philip Owen and I am the Deputy Head of Unit for the United Kingdom and Ireland for the European Regional Development Fund. This is a job that I have done for some two years. Previously to that I spent eight years doing competition policy, both state aid and cross-border merger control in the EU. Prior to that I worked for KPMG in various countries, having qualified as a chartered accountant in 1981. My specific responsibilities, as well as doing many things, are to look after the Welsh Objective 1 and Objective 2 programmes.
137. Thank you very much indeed. Perhaps you could describe how you relate with the various levels of government, with an assembly, with the United Kingdom Government, and so on, in both your respective positions?
(Mr Beschel) The relationship is both formal and informal. We deal with the member state, in other words with the DTI and DTLR, for issues of general importance, concerning, mostly, the entirety of the United Kingdom eligible areas. The permanent representation is there as the go between. With the Wales European Funding Office we are talking about the practical issues of implementation. With the National Assembly it is more the policy aspect of the implementation that is being discussed. The formal element of the contacts are usually the monitoring committees that take place twice a year. Our concept of working with the region is being at the service of the region every day, the two monitoring committees that we hold twice a year, and the frequent contacts that Philip would have with his colleagues on the implementing side, with the partners, to see how the programmes are running. It is a mixture of formal contacts, mostly in monitoring committees, and informal day-to-day exchange of information. There is, of course, the annual review meeting, which is a more formalised occasionwhich took place for Wales in December last yearwhere we go through the series of implementation issues, starting from the strategic framework, down to the implementation issues concerning certain partners. This is how it works.
138. Do you have anything to add, Mr Owen?
(Mr Owen) If I can just add to that, on the day-to-day contacts the actual work is with the Welsh European Funding Office, it is e-mail, it is phone contact, it is visits, one to the other, both ways round. That is how the programme is actively managed by ourselves and that is how we help the Member state and advise the regions. Quite clearly other relationships are built with the United Kingdom representation and also with the Whitehall departments, the DTI and the DTLR, for various matters which may concern the United Kingdom as a whole or matters which require, through the regulation, the involvement of the member state. We have certainly two or three levels of involvement, but the day-to-day work is with the Welsh European Funding Office.
139. Can I ask a question about how progress is measured during an Objective 1 programme? A lot of debate in Wales has focussed on rate of commitment and rate of spend as being the way that we assess progress, how important to the Commission are rates of commitment and rates of spend?
(Mr Beschel) They are the financial indicators related to the programme, they are just the financial indicators, they do not tell you if the programme is having the impact that it wants or is having the output that it wishes to produce, in other words, getting to the targets that are set in the programme. The financial indicators are not the measure for us, the financial indicators are the measure for, does the money roll out? There we have had a change in the new regulatory system. In the old days we would have a commitment and spending control on the ground but now the whole commitment part has fallen off. What the Commission is interested in right now for financial purposes, in other words for managing its own budget, is the actual spending, that is the financial indication for which the Commission is decisive. Decisive, why? Because the actual spending will trigger the payments that follow the advance payment that is automatically given once a programme has been approved. There are a number of rules that put in a certain discipline regarding the financial execution simply because the Commission has to run a budget and they have to have some kind of reference point as to how the budget is being executed. The rule says, within 18 months after the approval of the programme the first payment request has to come in otherwise the entirety or part of the advance payment can be recovered. It also means that the first commitment on the Commission's side, when it is open in the books of the Commission, has to be spent at the latest two years after the year when this commitment was being opened by the Commission and spent, meaning spent on the ground. For the Commission the criteria in financial terms is the actual spending on the ground. If you ask me how reliable an indicator that is as to the overall performance of a programme I must give you a very nuanced answer, because the financial management sometimes follow other criteria and then with the actual execution you might have a major piece of infrastructure almost finished, you might have almost paid everything but you have the famous five per cent you only pay after you have received confirmation that the work has been well done, and then all of a sudden you have a big spending element while the actual execution has already been in place for a couple of months. It is an indicator in terms of what has been paid for the execution, beyond that it does not mean anything about the quality performance of a programme. We consider that financial performance is a due diligence, you have to organise yourself in such a way that you are able to follow the requirements in terms of spending. The monitoring on the ground with the people, with WEFO, with the other actors involved will tell you if the targets that we have set in terms of job creation, assisted SMEs, training of the young jobless, has that been done and has it had the desired effect.