Local Development Initiatives: Value for Money Report.

Acting Chairman

As all witnesses are present we are in public session. The item under examination is the report on value for money examination on the local development initiatives. The following are represented: the Department of Tourism, Sport and Recreation, accompanied by ADM Limited and PLANET, the network of area based partnerships; the Department of Enterprise, Trade and Employment, accompanied by the Association of Chief Executives of County Enterprise Boards; the Department of Agriculture, Food and Rural Development, accompanied by Comhar Leader na hÉireann, the network of Leader groups.

I must make all witnesses aware that they do not enjoy absolute privilege. Members and witnesses' attention is drawn to the fact that as and from 2 August 1998, section 10 of the Committees of the Houses of the Oireachtas (Compellability, Privileges and Immunities of Witnesses) Act, 1997, grants certain rights to persons who are identified in the course of the committee's proceedings. The rights have been notified to Members and are listed here. We ask people to be aware of that. Notwithstanding this provision in the legislation, I remind Members of the long standing parliamentary practice to the effect that Members should not comment on, criticise or make charges against a person outside of the House, or an official, either by name or in such a way as to make him or her identifiable.

Mr. J. Purcell (Comptroller and Auditor General) called and examined.

Mr. P. Haran (Secretary General of the Department of Enterprise, Trade and Employment), Ms M. Hayes (Secretary General of the Department of Tourism, Sport and Recreation), Mr. J. Malone (Secretary General of the Department of Agriculture, Food and Rural Development),Dr. T. Crooks (Chief Executive, ADM Limited), Mr. P. Leogue (Chairman, PLANET), Mr. E. Kelly (CEO, Association of Chief Executives of County Enterprise Boards), and Mr. A. Ó Sé (Cathaoirleach, Comhar Leader na hÉireann) called and examined.

Acting Chairman

Mr. Haran will you introduce your officials?

Mr. Haran

Accompanying me are Mr. Michael McKenna, Assistant Secretary General responsible for the overall industrial policy area, and Mr. Seán Murray, the Department's expert on county enterprise boards who was responsible for the area for a number of years. Mr. Murray has recently left the area but I brought him along today because he has the knowledge to answer specific questions on individual county enterprise boards.

Acting Chairman

Ms Hayes, please introduce your officials.

Ms Hayes

I am accompanied by Mr. Joe Timbs, principal officer of the Department's EU co-funding division - LURD, the Local Urban Rural Development Programme, forms part of his responsibilities. Ms Mary Jackson, who was his assistant principal in that division until recently, is also present. I thought Ms Jackson would probably be the most informed officer at that level.

Acting Chairman

Mr. Malone, please introduce your officials.

Mr. Malone

I am accompanied by Mr. John Fox, Assistant Secretary General in the Department with responsibility for rural development, Mr. Liam Fitzgerald, principal officer of the rural development division, and Ms Alison McCulloch from the Department's financial control division.

Acting Chairman

Also present are Dr. Tony Crooks, chief executive of ADM Limited, Mr. Pat Leogue, Chairman of PLANET, Mr. Eamonn Kelly, chief executive officer of the Associations of Chief Executives of County Enterprise Boards, and Antaine Ó Sé, Cathaoirleach of Comhar Leader na hÉireann, the Leader groups. You are all welcome.

Opening statements have been supplied by each Department. Due to the number of witness, these will be taken as read and I will ask each Secretary General to make a brief opening statement. I call Mr. Purcell to introduce the report.

Mr. Purcell

As the Chairman stated, this value for money study examined the operation of local development initiatives delivered through county enterprise boards, area based partnership companies and Leader groups. All three initiatives are co-financed by the EU and have secured funding for the next five or six years for programme activities broadly along the same lines as heretofore. However, in the case of Leader the organisational structure has changed somewhat.

Concerns had been expressed by the committee about the proliferation of local bodies, with the attendant risk of duplication and overlap of activities. Members were also concerned that unnecessary layers of bureaucracy were being created. The report before the committee this morning tries to address these issues but finds it difficult to give a definite global conclusion in this regard. What can be said is that we found abundant evidence of commitment, energy and expertise across all groups. The question as to whether this has been channelled in the most effective way remains unanswered.

That said, it should be recognised that the situation is evolving and that the methods by which local development objectives can be attained are subject to continuous refinement in the light of experience and the many evaluations that have been carried out at national and EU level. For example, the recommendations of the task force on the integration of local government and local development systems, which were geared towards improving the effectiveness and interaction of the local development effort, are being implemented. This involves new county or city development boards which have a function in overseeing the development work at local level. I would expect the new boards to clearly outline the ways in which potential duplication of services can be avoided while at the same time not detracting from the strengths of the existing networking arrangements, because there are many.

The study found evidence that each of the three initiatives had a positive impact in terms of their objectives. I refer here to things like setting up small businesses, jobs created and even the less tangible aim of getting people more involved in solving development problems in their areas. However, assessing the quantum of what has been achieved as a direct consequence of their involvement has not been easy for evaluators - as stated earlier, there have been a number of evaluations in the various areas - and this is partly due to the lack of integrated data. It is fair to say that even had that been available it would still be difficult to assess attributability. For example, would the growth and strength of the economy have produced the extra jobs and new businesses in any event, without the existence of these bodies? The answer probably is yes, to a certain extent. However, we cannot quantify that extent with any degree of assurance.

The report contains quantitative information on the estimated extent of dead-weight. By that I mean where the promoter would undertake the particular business project without the benefit of assistance from the local development bodies. The report records that three surveys of the extent of dead-weight suggested a rate of 40% or so, but that figure must be treated with caution because of the inherent uncertainties associated with the type of survey carried out. The report identifies possible ways of minimising dead-weight. These include targeting financial assistance on projects where the cost of entry to the business are high relative to the resources available to the promoter and providing assistance by means of repayable grants, loans or equity rather than by non-repayable cash grants.

The report also addresses the issue of displacement. That is where the assisted project takes away part or all of the business of an existing trader. In such cases there may be no net additional employment and that is apart altogether from some equity considerations that would come into play. Again, it can be difficult to estimate displacement but an analysis in 1996 put the figure in the range of 19% to 64%, which is a wide range, but they both used different methodologies. The report suggests ways in which displacement might be minimised, most notably by counselling promoters towards export markets or domestic sectors supplied predominantly by imports.

The report also contains an analysis of administration expenditure by each entity - this is contained in the appendices to the report - for each of the three years 1995, 1996 and 1997. Again it was difficult to make valid comparisons because often it would not be a case of comparing like with like. However, the study did establish that overall administration costs, as a percentage of total expenditure, had fallen from 28% to around 22% in that three year period. This suggests that after understandably high start-up expenditure, the cost of administration has settled down to a reasonable level. I believe that is enough to be going on with at present.

Acting Chairman

As I said earlier, we have received statements from the three Departments. We do not have an opening statement from ADM or PLANET and I do not know if they wish to contribute. I call on Ms Hayes, the Secretary General of the Department, to provide a synopsis of the information we have received.

Ms Hayes

We see this report, on what the Comptroller and Auditor General correctly describes as an evolving, experimental process, as a very fair and balanced commentary on the progress achieved to date. It confirms previous indications that, because of the wide diversity of activities covered by these three groups of bodies, the extent to which one can make cross-comparisons of administrative efficiency is limited. We also accept that further investment in improved information systems can only contribute to an improved performance by the bodies.

Since we assumed lead responsibility for the operational programme under which the CEBs and the partnerships come, we have been acutely aware of the information needs and we have encouraged and supported ADM in its efforts to upgrade and extend its information gathering systems and its analytical and monitoring systems within the database it is creating. We have also encouraged a review of the original targets set and a revision and review of the baseline which was taken in establishing those targets. As a result, as the value for money report indicates, new and upwardly revised targets have been set. There have been quite significant revisions in the targets. We are also pleased to say that the realism of those new targets has been borne out by the fact that we are well on target for achieving them.

From January next, ADM will be in a position to receive the monitoring performance data from each partnership on an on-line basis as a result of its investment in computerisation throughout the country. It will be able to provide more information in an aggregate form which will allow it to improve its monitoring exercises. At national level, the community support framework and the national development plan will now have a nationwide computerised data gathering programme linking the systems of all agencies and Departments, including the partnerships and ADM, so that cross-programme analysis can be made under the new national development plan.

We acknowledge that, as the Comptroller and Auditor General's report indicates, expenditure in the early years of the programme was slow. This was particularly the case in respect of partnerships. However, that was to be expected, given that these represented a new approach and it took a long period to bed them down, etc. We can state with quite a high degree of certainty that all the original expenditure set aside for the partnerships will be spent in advance of the deadline for such expenditure set by the EU.

As regards the strategic lessons for the long-term that we have drawn from the Comptroller and Auditor General's report, we have taken his general conclusions on board, particularly in the context of the work of the task force on the integration of local government and local development systems. The Minister of State at our Department is the vice-chairman of that task force which also includes representation at a senior level from the Department. The task force is chaired by the Department of the Environment and Local Government. The outcome of the task force's work was the creation of new entities called "county development boards", which will be representative of local government, local development bodies, State agencies and the social partners. They will work with the various local development and social inclusion strategies to ensure integration at local level. The provision of such a strong co-ordinating mechanism is absolutely critical to future integration and we expect that many of the concerns expressed by the Comptroller and Auditor-General about horizontal integration will be met through this new mechanism.

A sub-group of that task force looked specifically at the social inclusion measures of the NDP and it made recommendations to ensure co-ordination and to avoid duplication at local level. That has been taken on board by the new city and county development boards. Within the boards there will be social inclusion working groups led by the director of community and enterprise in each county. The working groups will be representative of all relevant agencies operating locally. They are being set up in each county to ensure a co-ordinated approach to tackling social inclusion at local level and identifying and filling gaps in the provision of services.

Partnership companies will draw up their own social inclusion action plans but they will be examined in the context of the wider county area plans being developed by the city and county development boards and will be integrated at the planning and design level. This will go a long way towards ensuring co-ordination at local level to avoid the risk of duplication of effort and waste of resources identified by the Comptroller and Auditor General.

Mr. Crooks

We did not submit an official opening statement but I welcome the report. In particular, we welcome the reference to the very substantial voluntary input by board members who work without remuneration and make an enormous commitment to partnerships and other local development initiatives. We also welcome the reference to the high qualifications and energy of the staff involved in all these initiatives and the reference to the unique innovative role of local development initiatives.

We accept fully the need for better co-ordination. That has been put in place through county development boards and, as the Secretary General has said, partnerships are represented on them and are playing a full part to ensure they work satisfactorily. The focus of partnerships managed through ADM is slightly different from the other local development initiatives. They are in place to combat unemployment and social inclusion and target the long-term unemployed and lone parents. While the references in the report to dead-weight and displacement apply to one section of partnerships' activities, they have a much wider role which the report takes into account.

Mr. Leogue

I will ask Hilary Curley, our co-ordinator, to make two or three points. To take up Tony Crooks's point about the voluntary commitment, we also have with us two voluntary members of our boards. Gerry Mullaney is chairperson of Sligo Leader partnership and Tom O'Donnell, who is well known to members, is chairperson of PAUL partnership and that is an indication that there is life after politics in voluntary activity throughout the country. I will ask Hilary to make two or three points.

Ms Curley

I am conscious of time so I will be brief. As was referred to by the Department, events have been caught up on to some degree in the report in regard to co-ordination. I will not go into that because Tony also referred to that. The members who accompanied me wanted me to stress the issue of voluntary input. That not only relates to the two board members on partnerships but also to subcommittee and working group members who engage people in the community, particularly in the most excluded communities.

Tony also referred to the wider brief of partnerships. In terms of administration, as the report points out, partnerships are not as much grant giving as perhaps county enterprise boards or Leader and that is because their particular focus on engaging the most marginalised is not as easy as saying "Here's a grant". However, it is about undertaking one to one contact with communities and marginalised individuals, trying to bring them back slowly and building their capacity and the entire issue around empowerment with them, which takes a long time.

One of the things I welcome in the report is the accurate picture of the evaluation issue. The report focuses very much on economic activity but, as Tony said, social activity is important as well and we welcome the call from Mr. Purcell to examine the establishment evaluation mechanisms that are more qualitative in nature and can capture both the throughput, the numbers and the spending as well as the process and intensive nature of social inclusion work.

Mr. Haran

I will take it that members have read our opening statement. Duplication is one of the issues mentioned in the VFM report. I wish "God speed" to your colleague, Acting Chairman, who is recuperating well in hospital. People on our side would like to see his recovery as speedy as possible and I congratulate him on all his good work.

The report is excellent and it clearly touches the key bases, the issues of information capture, duplication and overlapping of activities between the various entities in the field, dead-weight and displacement. They are all important issues and we must work to try to give guidance to help overcome the down sides where failures occur in the process. I put a lot of store in the fact that strong boards run the county enterprise boards. We have got very dedicated officials in small lean teams, usually comprising four or five people. There is a mixture of local public representatives working together and they are usually well supported by people in the local communities such as accountants and bank managers on evaluation committees.

We put a lot of store on their professional capacity and drive to try to minimise some of the problems of dead-weight and displacement. Perhaps the greatest protection against local displacement is the local public representatives who do not want to damage other members of the community who are also involved in business. They do want to support company A which will undermine company B in the same area.

The issue of dead-weight is much more complex and it bedevils all levels of public policy. If a grant is given to a first-time house buyer, how many of them would have bought a house anyway? How much of this is dead-weight? To a certain extent public policy is also there to support business people in doing their work trying to grow businesses in local communities. I do not know if the problem of dead-weight can ever be fully solved. However, to help minimise dead-weight we try to put the emphasis on the quality of the executives within the country enterprise boards and the structures of the boards involving both local and nationally based groupings.

Our movement to repayability is an issue which the Comptroller and Auditor-General correctly raises as one of the proper mechanisms that can be used to minimise dead-weight. It is probably a very important activity. County enterprise boards are trying to help firms move up the value chain and moving away from pure grants towards supports for business people, such as e-awareness and other campaigns to try to grow the calibre and capacity of local entrepreneurs. These are the types of mechanisms that can be used to minimise dead-weight. As long as there is a grant structure in public policy, we will not be capable of eradicating dead-weight completely. Neither do we have adequate mechanisms to fully measure dead-weight. Clearly, a business person looking for a grant, if asked, will answer that they need the grant to make something happen. An ex ante survey will give very limited information. Many business people because they did well, will say that they did not need the money to make it happen, so they will give a different type of survey response. There will be other business people who will say that they might come back to the trough again so they will give another type of answer to a survey. We will always have problems in trying to identify this.

We in the Department feel our job is to try to minimise the occurrence of it and try to use the very good report of the Comptroller and Auditor General and his value for money people but also other reports we are doing to analyse it and to try to constantly refine our policy to help fix the problem. The most important element of our protection against this is the strong boards both at official level and at board level.

Acting Chairman

Would Mr. Kelly of the chief executive officers group like to add to that?

Mr. Kelly

Thank you, Chairman. My association welcomes the report and commits itself to ensuring that the improvements relating to administration and operational efficiency suggested are fully implemented by the boards. To deal with some of the issues that the Comptroller and Auditor General has raised in the report, he refers to the inadequacy of the performance monitoring system. A committee of the association has written a requirements report regarding upgrading in that report. The requirements report is before IT specialists and we hope, in implementing a revised system, to incorporate the requirements of the BIS reporting system as recommended by the Comptroller and Auditor General.

In relation to duplication, we welcome the comments of the Comptroller and Auditor General, especially relative to the task force report. As county enterprise boards, we feel that the core recommendation of the report, which is that the micro enterprise support and development function be based in one single agency, which is the county enterprise board, should be implemented. We feel that that will remove a large amount of the duplication and doubt that has existed in the case of punters in the programme between 1994 and 1999.

In relation to displacement, we would say that we have attempted to eliminate, where possible, displacement. We have done this in a number of ways. We have excluded areas such as distributive trades, retailers, construction, transportation and personal professional services from our grants remit and we hope that contributes in some way to reducing the level of displacement.

I share the Secretary General's views in relation to dead-weight. It is a very difficult area. We have adopted a pragmatic approach to it. I suppose we are attempting to minimise it by giving our customers a mixture of grant, equity and soft support in dealing with that general area.

Acting Chairman

Mr. Malone is the Secretary General of the Department of Agriculture, Food and Rural Development and he will make a contribution. His statement has been circulated to members.

Mr. Malone

Thank you, Chairman. I have just a few brief comments. We think the report is very useful and it is also very timely in that we are entering a new phase of Leader. We will be entering into what is called Leader+. As members will probably know, we have completed Leader I and Leader II. It is important in the context of Leader to understand that this programme has to be seen in the context of rural development. We have had to revise our thinking considerably on rural development in recent years in the sense that agriculture alone will no longer secure the future of rural Ireland and we have to take a much broader view. The second point to realise in relation to Leader is that it is an EU initiative and that the rules, by and large, are established by the European Commission.

I empathise with the points that have been made about the voluntary input and, certainly in relation to Leader, it has untapped a remarkable degree of local initiative and voluntary input. It is not just the enthusiasm of the voluntary input, it is also the quality of it that has been particularly noticeable. At a general level, Leader would be seen by both my Department and the European Commission as a success. There have been difficulties but, if it is examined in the round, it has been seen very much as a successful initiative.

Points have been highlighted in the value for money exercise. It is important to note that this is the second value for money report completed on Leader. One was conducted a number of years ago and we learned lessons from that particular exercise and we took the points on board. There are lessons to be learned from this particular report. The issues that have been raised are fair comment. The solutions lie in a number of the points that have already been conveyed. For example, improved structures can avoid a lot of the duplication. There is a case for better management of data and of information systems and we have to take that on board in the new phase of Leader. Subsidy shopping can be avoided by better co-ordination and linkages between the different groups. We have that as a requirement for Leader groups in that they must indicate how they intend to co-operate and co-ordinate with the other groups, bearing in mind the linkage which has already been explained through the county and city development boards.

Dead-weight is a difficulty and an issue. In the conditions we have drafted we will require that the concept and problem of dead-weight be taken into account. One way we would suggest of avoiding dead-weight is to have very good project evaluation. If individual projects are evaluated clinically and in a way that factors in a possibility of dead-weight, I accept that it will not be eliminated entirely but it could be reduced fairly substantially.

Job creation has been raised as an issue and it is fair comment as to whether the jobs would have been created in a booming economy. There is the point that sustainable job creation in rural Ireland is a difficult exercise. The Leader initiative has to be seen in a broader sense than job creation. It has to be seen in the context of capacity building and encouraging local initiative. The attitudinal change which has come about throughout the life of Leader is very important. We would judge Leader in the context of what legacy it leaves in rural Ireland. The legacy has to be a bigger legacy than just job creation.

I emphasise again that we will factor into our thinking and into our approach to the new programmes the points that have been highlighted in the value for money report. We have a system, in any event, of continual evaluation of Leader. It is an evolving process and the only way to deal with that is to have continual evaluation.

Acting Chairman

Thank you, Mr. Malone. Mr. Ó Sé is cathaoirleach of Comhar Leader na hÉireann. Does he wish to add anything?

Mr. Ó Sé

Cuirim fáilte roimh an tuairisc. Tá sé úsáideach agus tá sé in am tráthúil. I agree with the speakers so far in that I welcome it, it is useful and we intend to take it on board. Comhar Leader is a network of 37 Leader groups operating within a legal co-operative framework underpinned by a co-operative philosophy. The network is driven by three basic objectives to encourage model local rural development initiatives, to support innovative and transferable measures which can illustrate the new direction that rural development can take, and to promote exchanges of experience and strategies both within and outside the network.

Throughout the lifespan of the Leader programme in Ireland the network has played an important role in articulating the collective concerns and needs of its member groups to the Department of Agriculture, Food and Rural Development, to the European Commission and to the relevant third parties, specifically Comhar Leader na hÉireann scheduled monthly meetings and seminars for its member groups to share knowledge and information on both operational and strategic issues relating to the Leader programme. In addition, the network has also established several issue-based working groups which serve to inform the network on specific issues relating to rural development and to assist in the compilation and publication of reports and documents. The network also proactively promotes the achievement of the Leader programme at local, national and international level and seeks to ensure that third parties are fully aware of the valued input the Leader programme has had and continues to have in rural Ireland.

Overall Comhar Leader na hÉireann, through its structures, aims to provide an open network in which 37 member groups, the Department of Agriculture, Food and Rural Development and other third parties involved in rural development may work together for the benefit of the Leader programme.

Comhar Leader has an important role to play in ensuring the successful implementation of both these programmes. We feel that the terms of reference used by the Comptroller and Auditor General in compiling the value for money report, though I welcomed it, placed too much emphasis on economic criteria. We should remember that what is needed in rural Ireland are the economic, social, cultural and environmental aspects. One cannot have pure economics isolated from other aspects of local development. However, the Leader experience was never meant to be purely a job creation scheme, but envisaged a much broader definition of rural development. The media understand and highlight some apparent weakness in the programme, but the public should be informed of many good things. The report indicated very good points and positive aspects of what Leader was about. The terms of reference should be extended to the voluntary labour engaged in by Leader committees which can never be economically measured. The investment by the public was more than doubled by the EU and the State together, while the production and promotion of cultural activities was never considered as generating economic activity. However, to those in rural Ireland it does generate economic activity and brings income into a locality. The impact on local communities of being given a certain amount of control over their future - how is that to be measured? The immeasurable effects on rural life are as important as the pure economic benefit to any community. Criticism was made of assistance given, say, to a golf course. However, take the golf marketing organisation Swing, which reported that for every £1 spent on green fees £15 was generated in the local economy, so that is generating economic activity.

It is very hard to measure the mobilisation of communities. This is the light at the end of the tunnel. It is the first European programme which organised us and brought people together - how can that be measured? It should be remembered that we are integrating on the ground, but what is happening at the layers above? Are the Departments integrating themselves? That is a good question. Maybe that downstream effect will hit us, but we believe we are integrating on the ground. The amount of money also leverages locally; that is not sufficiently acknowledged in the sense that we have brought on a lot of other programmes. Leader was a basis - a kick start - and some of the individual groups might have 15 or 16 other programmes, but that would never have happened only for Leader. Leader should get credit in the Comptroller's report.

We wish to commend the small, overworked staff and inspectors of the Department of Agriculture, Food and Rural Development, who have gained an insight into community perspectives and rural development and have adopted a positive attitude towards it vis-à-vis the bureaucratic attitude hitherto adopted. We all agree that proper monitoring and accountability is indispensable to public funds, but let it not be at the expense of innovation, initiative and reform of the traditional method of solving your problems. The secretary of the Department said already that there is a change of attitude, but we need more of that. I hope we have learned a lot from this. Go raibh maith agat.

Acting Chairman

Go raibh maith agat. This report is a value for money analysis and it is critically important to me and others, in the context of future investment and development, that we analyse this and come up with recommendation in order to continue the good work. Without a critical examination everything would be hearsay. I compliment the Comptroller and Auditor General on doing his usual intensive examination Comments are more than welcome and all of us working in the voluntary sector need to be aware that we can go to Governments of the future and say this was analysed and is good work - this is where we are going.

Perhaps we could start where Mr. Ó Sé finished. We must be careful in this Committee in defining value for money. Is it solely a matter of financial terms? We could have a day long debate about social and other benefits from such activities and we might be able to wear that hat on other occasions, but we are not obliged to do so here. We must wear a different hat here. My interpretation of my role today is that we must stick to value for money, though other Members might have different ideas.

The Comptroller was unable to come to any definite conclusion, according to his report. He gave 100% for effort but seemed to raise a doubt as to whether that is channelled into the proper end result. The jury seems to be out on that and some questions might enlighten us. I note that of a budget of £208 million between one fifth and one quarter goes on administration costs and I would like to tease that out, though even here administrators out-number Members by three or four to one. If one fifth or one quarter of the cost goes on administration, why is it 11% in one part of Dublin while in a part of the chairman's county it is 31%? We might get a better handle on that. The report states that is reducing but I am only going by the figures - the cost for four and two years seems to duplicate the two years into four. Several speakers, including Mr. Harnan, referred to the voluntary input and we all acknowledge that, but perhaps the time has now arrived, with so much business conducted on websites and so on, for a different type of board member. Maybe we should look at the type of person on city and county enterprise boards, as different expertise may now be needed. The common sense approach was needed four to six years ago. Perhaps a different type of expertise is now needed. I am speaking about the board members - perhaps we should look at how board members are appointed.

There appears to be about 35 city and county enterprise boards, 34 Leader groups and 38 partnership company and community groups. That is about 107 - an average of about four in every county. This is where I come to the issue of duplication. If one adds up Government Departments and agencies, county councils, corporations, urban councils, town commissioners, Údarás na Gaeltachta and several other sub-bodies, is there not a serious duplication of many people's efforts to achieve the one end? A sum of £208 million is major expenditure and there is a belief in some quarters that there is duplication between that effort and the efforts, for example, of local authorities where, at least, members now have to be directly elected every five years according to legislation. How much duplication is there in the efforts of all those trying to achieve the one end?

From page 1 of the report I note that the administration of local government in Ireland is different to other EU countries in that new local government administration structures were devised independent of existing local government structures. That is not the case in other EU countries. Is there an advantage or disadvantage to the fact that we have taken a different line with structures which are independent of local government structures?

Acting Chairman

There are about three questions there. Mr. Haran would you like to have a shot at answering them?

Mr. Haran

I will do my best, Chairman. On the issue of administration, there is always going to be a dynamic between whether central government tries to dictate to each local entity what the correct balances are or whether we try to reflect at central level, and evolve to the local level, a degree of autonomy so they can use and analyse the challenges they face within their own area and authority and use their resources to achieve the outcomes for that local area. One could decide and dictate that there would only be a fixed quantum but that would be going very far from the continental model that advocates trying to empower local people so we do not have a situation where Dublin is telling all the other local authorities how to operate. One has to find some sort of balance.

There is a difference in that in the early days we were trying to build up the capacity of the county enterprise boards so one would, by nature, have a higher administration charge but, over time, that has settled down. However, it differs within counties. Cork North Enterprise Board would have the highest rate of administration and people ask if that is good or bad. I cannot say it is good or bad because the Cork North Enterprise Board has decided that it is the appropriate level of administration for the work it does and the challenges its community faces. It is involved a lot more in the administration and trying to encourage and self-support firms whereas one might find some of the Dublin boards feel there is a lot of start up occurring and use much more of their moneys as a direct form of grant support. Over time I think more of the enterprise boards might move towards the Cork model than some of the other models as we move towards a higher level of self-support and try to grow the capacity of firms rather than just trying to make them start up.

As regards board members, there are many locals but also a lot of professional people operating on the boards or the evaluation committees. Where the officials are representing their current functions, they are constantly being upgraded in their own expertise. I totally accept the Deputy's comment on the e-world and how important it is. County enterprise boards are now involved in a very strong initiative to grow e-commerce - it is called the e-empower process and there is a £3 million fund to help grow this activity.

The Deputy is right about the problem of duplication and the Comptroller and Auditor General also raised it as an issue. We have to try to ensure that the remit of the board is such that it minimises the level of duplication which occurs. It is important that we try to manage that. In the new operational programme county enterprise boards will have the enterprise function so, hopefully, it will not be and I do not believe it will be duplicating the work that is going to take place in the Leader and area partnership programmes.

The Deputy's last question relates to the administration question concerning local government. Clearly Ireland has been a very centralised society. These are reflections of movements to try to move more power back to local area involvement. It is quite different that this is being done as a centrally planned process, in other words, that a Department based in Dublin encourages the creation of many enterprise boards whereas in other parts of Europe they might come organically out of the local government move. Other people have to respond to the policy questions involved but the goal is to try to provide a more empowered local community. Speaking from the county enterprise board point of view there was a very deliberate attempt to involve the local authority political representatives as well as administrative representatives to try to ensure it is strongly located within that type of sphere of local government.

One would also have other aspects such as in each local authority one has the enterprise official designated on how to manage it. We also have county development strategy teams who will work to try to minimise the duplication.

Acting Chairman

I will ask the other Secretaries General for comment.

Ms Hayes

On administrative costs, as the report indicated the administrative costs tend to be high at start up because one is involved in setting up new structures and much intensive effort has to go into building capacity and engaging people. There is a clear indication of a downward fall in average administrative costs in the case of the partnerships. It is now down to about 26% and still falling. However, we do not expect it to fall much below that level because, in the case of partnerships, the target groups on which they focus such as the long-term unemployed, lone parents, drug users and so on, require a considerably higher degree of non-financial support in terms of human support, shall I say, in drafting business plans and putting in book-keeping systems and providing human mentoring. That will always keep the administrative overhead slightly higher in the case of the partnerships than, for example, in the case of the enterprise boards where there is a higher level of financial support going out to the counties. We monitor administrative overheads all the time of which ADM and the partnerships are acutely aware. We are nearly at what will probably emerge as the normal balance for the work of the partnerships. It has taken some time but I think we are almost there.

We are acutely sensitive to the issue of duplication. One of the main strategies for avoiding duplication is to ensure that all the local entities have clear and distinct focus on distinctive target groups. Again in the case of the partnerships it is clearly on the long-term unemployed, for whatever reason. In the case of enterprise boards it is on small enterprises and in the case of Leader it is on rural groups. By keeping the various bodies clearly focused on their target groups we can go a long way towards avoiding any pitfalls and duplication. The provision of a strong local co-ordinating and linking agency such as the county and city development boards and the common thrust towards integrated plans on a county basis will further move us towards that objective of avoiding duplication.

I wish to make a general comment on local authorities and their role vis-à-vis the evolving local development structure. I fully agree with Mr. Haran’s general description of the unique nature of public administration in Ireland, the high degree of centralisation up to recently and the need to devolve and broaden involvement. The local development structures now in place go a long way towards engaging and bringing on board not just voluntary effort from a broad range of people at local level but also engaging a wider population base in the work of local development. The new development structures have managed to achieve this, probably faster than the local authority structures could have. As in the case of the county enterprise boards, the partnership companies have full representation from the local authorities and the closer integration with local government through the city and county development boards will bring a more cohesive approach to local development involving both local authority structures and the local development system.

Mr. Malone

Thank you, Chairman. It is first important to emphasise that Leader is an EU initiative, as I explained in my opening statement, with the rules being largely prescribed by the EU Commission. The original Leader initiative predated a number of the other initiatives. The issue which now arises is how the effort and exercise can be better co-ordinated.

In relation to administration costs, it is evident that as a proportion of the total spend the administration costs are higher in the initial phases. That is explained by the fact that it takes time to get Leader groups up and running and for payments and the various moneys to be spent. The result is that the percentages can look a bit high in the initial phases, but I would argue that overall the administration costs for Leader are reasonable. It is obvious that a core of professional and competent people which acts as a focus for the local voluntary effort is necessary and that is recognised in the report.

The second theme which has come through and which cuts across everything is the sheer number of local groups and boards. The difficulty with Leader is that the EU requires a bottom up approach as part of a deliberate experiment. There was an element of spontaneity about the exercise and we invite groups to come forward and make proposals and submissions to be recognised as Leader groups. Rather than imposing the structure from the top down the structure emanates from the bottom up. We have attempted to have a mix of voluntary, business and local administration in the structure and in that way we get the three different pillars coming together.

The previous speakers have outlined the new structures being put in place which I think will avoid much of the duplication. It is important that whatever group exists it operates with the local focus and in particular fits into the local development plan. Regardless of the number of groups, the critical issue is that they are all working in the same direction with the one focus and are not at cross-purposes. There is an added difficulty in relation to Leader, namely that the rules allow for Leader structures which do not fit into the local administration structures. Therefore, the way the Leader process has evolved in Ireland has meant it has not exactly fitted into the local administration process. That was deliberate at the time, and while I admit it has caused a certain amount of confusion from time to time, it has not overall been a bad thing. I return to the point that Leader has untapped local initiative. We see it as a very important vehicle for delivering our rural development policy.

Acting Chairman

I ask that questions be more focused.

One response will do me for this question. What figures are available to establish the additional jobs which have been created in the period 1994-8? I am not speaking about jobs in the administration of the schemes.

Mr. Haran

I will give the jobs by year. The figure for 1994 on a full-time basis is 1,957; for 1995 it is 3,174; for 1996 it is 3,588; for 1997 it is 3,317; for 1998 it is 3,487; and for 1999 it is 4,520. That is taking the part-time jobs and dividing them by two - I will pass the table to the committee for circulation. We have not counted job losses in those figures.

Are those additional jobs as distinct from replacement jobs?

Mr. Haran

I cannot guarantee that there is no case for displacement of any of the jobs. In other words, if somebody started creating one type of enterprise we do not know if they necessarily displaced another enterprise. Secondly, a study is being undertaken by Goodbodys which is examining some of these issues and trying to find out the sustained jobs created.

I welcome the delegation and with gratitude I take the opportunity to acknowledge the work of all of you in the three different initiatives which you represent. I am equally delighted that the Comptroller and Auditor General, while doing an analysis in one context, recognises the special importance of the input of talent, energy and commitment. It is equally proper to acknowledge that these bodies are quite new. It is timely for us to now review the situation.

The committee is responsible for the requests which went to the Comptroller and Auditor General to have such an analysis carried out. In the light of experience there are matters which must be addressed and teased out. One of the questions which comes to mind is that in the main the public is confused about which body dispenses what. It is fine for us to have it set out in a clearly definitive form, which is understood. It might on occasion be difficult to understand the difference between Deputies and constituencies and some people might do the rounds of all three in a three seater - there is a description for them - but it is a bit much to be asked to do that or to feel one has to do that. I have experienced it. Equally, I have come across feasibility studies being expected in another situation, for example, on leaving Leader another feasibility study had to be prepared. The Leader programme was used to carry out the restoration and development works on the inside of a particular building which was of some heritage importance. The county enterprise board was the only body which could do the work on the outside. This is difficult to understand and these matters need to be addressed. Someone might comment on these issues later.

Was it not an essential prerequisite of the success of these initiatives that a proper database would be developed in the first instance, given that this is now taking shape? Is it an essential and most desirable feature that a database, common to all, understood by all and shared by all should be available to help eliminate the confusion, wasted energy and indeed the cost? Can anyone give me a reason this has not been done?

Mr. Haran

It seems the reason there is not a common database across all the groups we represent here is that primarily the client groups, the county enterprise boards, Leader programmes and dairy partnerships are inherently different and becoming more different. New procedures are being put in place to ensure we minimise duplication. There is great concern about the lack of common sharing of data between the county enterprise boards supporting micro enterprises and the two national enterprise agencies, Enterprise Ireland and IDA, including Shannon's input, addressing the enterprise for larger types of firms; the Comptroller and Auditor General raised this issue. The reason this did not happen is that a start-up was occurring in the early stages. There were four executives in each county enterprise board. They were given relatively low levels of assistance and the information requirements for the county enterprise boards appeared at that stage to be somewhat less onerous on the clients than an IDA company asking Intel, for example, for information.

We have managed to create an integrated database between the national agencies. At this stage the databases the county enterprise boards are currently managing, in conjunction with the Department, will now be integrated into this co-ordinated database. From my point of view, it makes more sense to try to integrate the enterprise databases than to try to create one big national database which might not be of the same utility.

Acting Chairman

Deputy Doherty raised a critical issue about the common database. Does anyone from the other Departments wish to comment on this matter?

With respect, Chairman, our purpose here is to put questions and get answers. If I am not satisfied with the answers I will ask the Chairman's permission to address someone else. However, given the numbers present, I do not want a continuity of responses because this would not be helpful. Mr. Haran is an experienced public servant and I understand what he has indicated to me. I may not agree with everything he has said but that is a matter for other areas of policy change.

In relation to common management of some boards and initiatives, this has been acknowledged in the report. When taken with what has been said regarding data, there seems to be a contradiction. Is common management a workable option? Does it work and how successfully has it worked?

Ms Hayes

There are nine instances. Perhaps Mr. Crooks will give an indication of his experience of that common management which involves Leader and local partnerships.

Mr. Crooks

I would like to be able to give a definitive answer. However, I do not think there is a definitive answer to the Deputy's question. Of the 18 rural partnerships, in nine instances the board is also responsible for the Leader programme. The advantage is that this cuts down on administration costs and makes cross-referencing easier. These are obvious advantages but, in practice, once one goes beyond the range of activities in which a partnership and Leader group is engaged, these then diverge. Therefore, the education type activities, the focus of the enterprise type activities and the capacity building activities of a partnership will be relatively different from a Leader group. One is then asking one board and one management structure to cope with two programmes which are meant to be different from each other. That has disadvantages or involves additional time and input in order to be able to manage it successfully. There are examples where this works very satisfactorily. There are other examples also where we would consider that the board may be focused more on the Leader side or more on the partnership and social inclusion side, therefore, the balance is less satisfactory.

I was impressed by the content of Mr. O'Shea's presentation, not least by his eloquence. How does he define social inclusion in the context of the work done in the Leader initiative?

To me it is complementary if the goodwill exists on the ground. We are operating both the Leader and partnership programmes in some of the groups. I find it rather strange than anyone would find this difficult. I know you are focusing more on the target groups on the ADM side and perhaps more on the economic side. In rural Ireland one cannot separate one from the other. We have a comprehensive system and it is not just those two programmes, it is other programmes. We are developing agencies and if one is addressing the needs, one cannot predetermine when going out to any parish or individual that they must do this and this alone. When one goes out one must listen. Leader has worked well and is very complementary. As I already said, we are integrating at the base, perhaps not at the top layer. This is not a big problem for us, but different Departments have different criteria for reporting. Perhaps if that were integrated - for example, I believe there should be a common application form for everything we require which would include the basic 12 questions. It does not help a project if one has 19 or 20 pages to fill up. This frightens most rural people - I do not know about others. Some farmers who come in to us shiver with fear in case they may make a mistake. A cartoon in the Farmers Journal read “If the State bodies make a little mistake, it is an error, but if the farmer makes one, it is a crime.”. We might laugh and joke here but how does one solve that problem? I believe there should be a simple application form for all State agencies. It would be better to keep matters simple and more people would go along with us. We have rules and regulations from Brussells. Some are not easy for us but, to be fair to the Department, they are interpreting them to suit us so that we have no problem on the ground. I regard the different programmes as complementary. There is more co-operation and understanding. As John said, it takes a little change of attitude and I believe Leader is doing that.

Níl a fhios agam ar fhreagair mé i gceart nó arbh shin an freagra a bhí ón dTeachta. B'fhéidir gurb é agus b'fhéidir nach é.

Partnership boards deal with youth projects and socially important projects in disadvantaged areas as designated by the Government. I presume this refers to economic disadvantage which brings social disadvantage as a consequence. They cannot be separated. Has partnership engaged in looking at the socially disadvantaged because of unemployment, alcohol and drug abuse, bad housing and so on? If the Government and society do not address these matters we will pay a higher price than the cost of the little deficiencies in the bodies present today. What is being done in a focused way in the areas of family support and services as they come within the remit of the partnerships?

Ms Hayes

The general category of disadvantage which is the focus for the partnerships breaks down into a number of sub-categories, for example the catch-all long-term unemployed. There are also other groups such as lone parents, drug users, socially and economically disadvantaged women, young people at risk, the homeless, people with disabilities, ex-prisoners, Travellers and ethnic minorities. They work up individual programmes and initiatives geared to meet the particular needs of each group. The suite of initiatives which the partnerships run are geared to meeting the needs of this full range of people. It is not a standardised set of programmes. They try to respond as imaginatively as they can to each need as it presents within the area. In defining the area of disadvantage, indicators include unemployment levels, the proportion of persons in small farming, age dependency levels, percentage of persons leaving school under 15 years, percentage of persons with third level education, proportion of home ownership, home size, average number of rooms, percentage of lone parents and car ownership. Indicators are looked at which track the levels of deprivation in those categories.

That is an important point. How much of the partnership budget is spent on that type of social area?

Ms Hayes

At the end we will probably have a better breakdown. One could say all of it because the focus is very tightly on the disadvantaged and the list of categories I have given is comprehensive. Using the indicators which are used to define the catchment areas it would be difficult to see how the money would go beyond those groups.

Is there a conflict of interest in county managers, who are the planning officers, being chief executives of enterprise boards? For example, a grant may be approved in one situation but planning permission refused in another.

Mr. Kelly

I can only speak for the Clare experience. We have used the planning officer on a consultative basis prior to dealing with the application.

That is the county manager.

Mr. Kelly

It is the chief planning officer. The county manager is the signatory.

I am talking about the person who signs the order approving planning permission. Are we talking about the same?

Mr. Kelly

The county manager has allowed us the use of the chief planning officer.

I am talking about a county manager who is the chief executive of an enterprise board.

Mr. Kelly

Who is the chairman.

The chairman, and also the person who decides the planning application. Can there be a conflict? I have illustrated one.

Mr. Kelly

I have not seen one because we use the consultative process to try to ensure it does not happen.

A victim would see it. I was not a victim. A separation of powers is necessary. By having the county manager in the role of chairman, with all the authority of the local authority and the executive powers associated with him, a board can be influenced in one way or another and can be disadvantaged, as happened in the case to which I referred.

Mr. Kelly

I accept that, Chairman.

This is something which should be looked at. The quality of these bodies lies in their being autonomous to the greatest possible degree, that they work within the regulations and have power at local level. It is better that the imaginative creativity be expressed in the context of the body to which they belong without the heavyweight superimposition of the chief executive of the local authority which brings with it other strengths which might bury the initiative. This needs to be addressed and I raise it in the context of the value for money analysis. Over the years local authorities have forgotten that they are also development authorities. To give the strength and authority of a development role to a county manager who has excluded such a role from his local authority function mesmerises me.

Mr. Kelly

Each of the boards has an evaluation committee which appraises each of the projects and makes a positive or negative recommendation to the board itself. That recommendation is generally accepted by the board. In many cases boards no longer have the chairmen who were appointed in 1994 and have elected private sector chairmen.

That is a good move.

ActingChairman

A second report remains to be dealt with. I ask Members to be conscious of time.

I compliment Mr. O'Shea on his vigour and intensity and his commitment to the job in hand. It struck me that he is in very good time for next Saturday's match. He was certainly well prepared for this match.

The Comptroller and Auditor General has not come to a definitive decision as to the effectiveness of the various groupings. We have approximately 70,000 unemployed, of whom 25,000 are long-term unemployed. Is a refocusing of these groups not called for? The popular current term is sustainable development. Rather than have sustainable development throughout the country, will some of these groups become self-sustaining? I know that extremely valuable work is being done but in the current economic climate we should seriously examine the future role for the various groups.

Mr. Haran

Deputy O'Keeffe is correct. In a vibrant economic climate the role of and relationship with the support group has to change. Repayability is an important element of the question. Over time we would like to see county enterprise boards move towards repayability. It would generate income for the county enterprise board as it moves downstream. Hopefully in the future there would be proportionately less by way of direct aid from the vote to the county enterprise board and more money coming from its own resources to support it. However, it will not all be down to self-funding. There will be a need not just to help create jobs but to grow their sustainability. In this area, country enterprise boards will be giving more by means of soft support to local enterprises to help them move up what we call the value chain. I know it is easier said than done but we want to get local businesses much more involved in e-commerce and in their self-growth as managers. We want them to use the transfer of knowledge within the local community to help them become more sustainable so we would see less emphasis on just creating jobs and a greater emphasis on repayability and making jobs more sustainable.

Ms Hayes, as regards partnerships and dealing with deprived areas, various schemes and groups have been set up, for example, Youthreach, YMCA, FÁS, all of which work in that area and focus on disadvantage. Have you good reason to believe that these are properly co-ordinated and that resources are being directed at where they are most needed? Take the number of young people going into third level education from that segment of society. The initiative we introduced is not working. The quota is not being filled. That reflects badly on the investment and impact we are making in that area. We are not attracting people into third level education in order to regenerate those areas because these people have a focus in terms of a professional qualification.

Ms Hayes

As Paul Haran said, when the economy is vibrant one of the downsides in terms of third level education is that there is an attractive option at the age of 18. There is a selection of jobs and more and more employers are offering upskilling, the promise of education and opportunities for 18 and 19 year olds if they go into employment. They can use that vehicle to improve themselves. That may be part of the reason we have heard educational establishments say this year they have not been able to fill their places. In the area of tourism, part of the feedback CERT is getting is that hoteliers are now offering training packages as an integral part of job placement and it is under pressure to fill training places. I would not be surprised if that applies across the RTIs.

The fact that employment is increasing does not give us any comfort as regards the hard core intransigent problems we are dealing with in disadvantaged areas. However, it offers an opportunity to people such as the partnerships to work much more intensively with the smaller but nevertheless consistent number of disadvantaged problem families and groups and, hopefully, if the economy continues to grow and the intensive work of the partnerships continues to show results, we may be looking at a shrinking of the partnership structure in the medium to long-term. At present, however, the evidence is that this is a process well worth investing in and giving it time to see what, if it is left with the resources, it can do with the more intransigent level of disadvantage.

Are you satisfied that it is properly co-ordinated?

Ms Hayes

There is always room for improvement. I place a lot of hope in the work of the task force on integration of local government and local development. It is not just integrating the two systems but encouraging elements within the systems to work closer together. There is much comfort to be taken from the work of the task force. You can never say everything is totally integrated and co-ordinated but there are pressures in the system that are forcing people to work together and not only at local level. I assure Mr. Ó Sé that Departments are coming closer together at the highest departmental level to facilitate the kind of integration we are encouraging at local level.

As regards the criteria used by county enterprise boards and Leader, my experience is that country enterprise boards are far more stringent in terms of assessment and difficulties relating to displacement. Perhaps the Comptroller and Auditor General will comment on this. From your analysis is displacement higher in the Leader area than in the county enterprise area?

Mr. Purcell

It is difficult to establish the data and if you do not have that it is difficult to draw conclusions. This was the problem going through the report and the study but in particular in regard to displacement. As I said, I quoted two figures. You can use different assumptions and they can vary between 19% and 64% of employment created. We are talking about work done by the partnerships. We did not do any specific work in the Leader area because no data were available in the Leader and county enterprise board areas. We are aware, and it is recorded in the report, that all three groupings are instructed not to support projects that would displace business in other enterprises. The one exception is in the partnership areas where for social rather than economic reasons you might try to give somebody a hand up. That is justifiable in that context. However, you would need more data at local level. What is displacement? Does it mean in the same town? Leader might not regard it as displacement in its area of activity but it might be displacing something in a contiguous area.

While appreciating the bottom up approach of Leader and the partnerships there is always the danger of tunnel vision. That is why these new boards and arrangements integrating local government and local development bodies might help in this respect. It is a matter of trying to minimise it.

Acting Chairman

We will have Deputy McCormack and then Deputies Lenihan and Cooper-Flynn.

Just a moment, Chairman.

Acting Chairman

I am sorry. Deputy Durkan.

I not sure whether Deputy McCormack or myself will be most affected. A propos some of the questions raised by other people, I have a long standing association with many of the ADMs, county enterprise boards and strategy groups. I compliment them on much of the work carried out. While the economic situation has improved there are still peaks and valleys and valleys in between the economic surge that need to be dealt with. I am concerned about the multiplicity of organisations which seem to overlap each other. The Comptroller and Auditor General has referred to this in his report. On page 25 of that report there are at least three-quarters of a dozen various interlinking groups and thought processes that have to be interlinked to get an overall view of what is happening. Therein lies a danger. That is not a criticism. It is a matter for us, the policymakers, to look at how best to advise change in the future because change is necessary. The reason I say change is necessary is this. I attended the annual general meeting of a local development group in my constituency recently which produced an exemplary report. The report was clear and was produced at minimal cost. It was comprehensive and all embracing. The group achieved the objective at minimal cost and fulfilled all its obligations. Other people would have similar experiences.

I have attended other such gatherings where extremely expensive paraphernalia was used to produce a simple end of year report. That is not necessary and is a waste of public money. It may give printers a job but that is about all. That is something we need to look at and encourage others to take the first route which is good value for money. It meets the requirements and enables us do our job more effectively.

Given the surge of the Celtic tiger there are those who say there should be no deprivation, no poor and nobody unemployed and that this should apply to urban and rural areas. I read an article recently which said that to combat rural poverty there should be a moratorium on development in rural areas. I have heard it all by now. There is ample evidence in almost every town and city of serious deprivation of a social and economic nature. One has only to travel around the capital city to see this deprivation for which legislators, politicians, officeholders, etc., are blamed. It exists and it needs to be addressed. This is in the midst of a surging Celtic tiger. It is difficult to explain to those who live in such an environment why they should be the victims in this progressive society. We need to look at that deprivation carefully and to address it. I ask the various groups involved to focus on that area in the future. It applies to the capital city and to all cities and towns throughout the country.

In respect of rural areas it is not impossible to focus on the degree of deprivation and economic and social need that exists. Most of the groups are already aware of it. To address it means getting into the minds and hearts of those directly affected not by somebody writing about them from a distance but rather by somebody writing with them from within. If that can be done any of the criticisms that have emerged in relation to the programmes we have been discussing can be set aside. That is the focus that is needed urgently.

I have three specific questions, the first is directed at Mr. Leogue, the second at Mr. Haran and the third at Ms Hayes. Generally speaking, I agree with my colleague. I plead with the partnership bodies to please stop producing glossy brochures, we are sick of receiving them. The high spec quality content is a waste of money. It is as vulgar as Mr. Maxwell going out to help the starving Ethiopians and having a huge feast in Addis Ababa. It is not worthwhile and only damages your cause. It is fashionable to dismiss the partnership boards as being unnecessary given that we are in a period of high employment. I am not inclined to that view. There needs to be a greater focus. My question to Mr. Leogue deals with the issue of deadweight which the Comptroller and Auditor General has clearly indicated in his report is a source of huge concern. I am looking for reassurance because there is certainly anecdotal evidence to suggest a pals and relations factor in relation to grants from some of these boards. The level of deadweight is a factor. There are projects that could have survived without grant support. I found anecdotal evidence at constituency level of a network all of its own associated with the partnerships that may be lending or grant assisting each other. I would like some reassurance on that point.

My second question relates to page 46 of the Comptroller and Auditor General's report which refers to qualitative assessments. I am interested to hear about social evaluation in Mr. Haran's Department. The officials from the Department of Finance will refer to economic evaluation but if the partnership model is to be sustained in a period of low unemployment there needs to be a strong social evaluation factor to the work of the Department and the various boards in terms of the social objectives and achievements of these projects. From what I have heard that is not a strong factor in your Department. I understand the unit which is involved in the qualitative social evaluation of these projects is small. There are plenty of international examples. The EU and the Commission run a strong social evaluation unit. That may be a weakness and, if so, what will the Department do to address it?

The other broader issue is a policy issue and you may be reluctant to answer it. Usually you are quite generous when you are before this committee. When will we see the hard proposals from your Department in relation to defining the social economy? The Comptroller and Auditor General did not address it in his report because it was not within his mandate. When will we get the hard definitions needed in this area to define the social economy where we separate the genuine enterprise commercial activity from the social economy initiative which requires a public subsidy and deserves to be subsidised and does not need to be profitable? In fact it needs to be unprofitable because that is the definition of a social economy.

My third question is directed at Ms Hayes. In terms of the local authority involvement with partnership, Deputy Doherty takes the different view that these bodies should be autonomous, but I am inclined to the view that they should be brought under the supervision of the local authorities. All of these schemes are directed at getting people back to work be it the back to work scheme or the local area allowance scheme. One of the most disappointing features of the back to work scheme for an individual is that eight or nine months down the road they find the local authority has upped their rent. This erodes the benefits of the scheme. I have come across good examples of people who entered these schemes in good faith and were told informally by the Department of Social, Community and Family Affairs or whoever that their secondary benefits would not be affected. They were then confronted with a situation nine months down the line, having taken the leap of faith into this particular scheme, that their rents had been retrospectively reviewed upwards to the extent that it totally eliminated the validity of them signing on for the scheme in the first place. They would have been better off not doing that. I am interested in the view on that.

Mr. Leogue

As a fellow constituent of Deputy Durkan, I would agree that the materials should be appropriate. He certainly was not referring to ourselves in that case.

In relation to dissemination of information, it must be remembered that partnership companies in particular have explored new ways of disseminating information, particularly in an age where literacy and disability are issues which partnerships are attempting to address in an innovative way.

In responding in general it is important to remember where partnership companies have come from and the development of social partnership in 1991, and that the nature of the work of partnerships has changed significantly as the long-term unemployment figure has changed. The fabric of society has changed along the way and while the numbers of long-term unemployed have reduced, other social issues have changed. We have an increased number of lone parents. Substance misusers are now one of the target groups. That is an issue that the drugs task forces, which work closely with the partnerships in the city areas, are addressing. There is also the question of people coming into the country and becoming one of the target groups for the programme as well. The whole nature of work is changing and it does not diminish the need for a programme of this nature.

The second point concerns the nature of work. One of the other reasons partnerships were established in 1991 was that the work of the State and statutory bodies in a local capacity were to be co-ordinated and the funding that was available for our national agencies, coming together with the local community, would better focus that work. Hopefully, that has been achieved and much of the work the partnerships do is on the question of levering the funding of national bodies and improving the way it occurs. As the Deputy pointed out, the issues which arise around people returning to work and their secondary benefits, etc., are of an ongoing nature between partnerships and ADM and the relevant Departments, and obviously involving the health boards at a local level as well.

We certainly would welcome more ring-fencing of budgets and policy decisions which would improve the way in which local delivery of programmes can be achieved. In our view the question of displacement and deadweight among the long-term unemployed establishing their own enterprises in our view is outweighed by the social value that is provided, both in providing people with an opportunity to establish their own enterprise around their own inherent skills and providing, especially in rural areas, meaningful services which totally outweigh the issue of displacement.

Acting Chairman

There were three questions.

I am trying to be helpful, Chairman.

Acting Chairman

The second question was directed to Mr. Haran.

There was one supplementary question which was not answered, the friends and relations aspect. That is the only——

Acting Chairman

There are two more people who have to take questions from you.

I am sure Mr. Leogue could answer it very quickly now, and then you could move to Mr. Haran. We will wait another hour.

Acting Chairman

You will not wait another hour because two more people want to ask questions and we have another item on the agenda. Three questions were directed to three people. Mr. Haran, the second question was directed at you.

Mr. Haran

On the social evaluation issue, the county enterprise boards' analysis, as it has evolved, would have a very strong economic evaluation and that would be the core driver office. However, within the Department there would be a strong social evaluation process. We are the national authority for the European Social Fund and we have research units in the Department that examine social expenditure and would take a very strong social interpretation of it. Also, in all of our labour market programmes as well, social evaluation would be a key concern. However, in CEBs it is different. It is more of an enterprise and economic driver.

On the issue of social economy, I can go into some of the policy issues but as the committee will know, the Tánaiste launched a programme recently. Social economy is that area where the social aspects of community employment, along with the economic and enterprise aspects of other forms of assistance, come together. We would have a lot of learning to do and we cannot be too prescriptive in saying where the exact boundaries exist but procedures have been put in place and I can talk to the committee on a bilateral basis if it wishes. I did not prepare myself on social economy for the committee today but I can discuss issues.

Ms Hayes

Within the partnership area we have been deepening our own monitoring analysis and supplementing the quantitative basis on which we have been looking at the programmes with case studies to deepen the quality analysis, and we have found that very useful. The external evaluator has carried out already two interesting individual case studies based on the experience of individual partnerships and how their work contributed to addressing, for example, the achievement of job creation targets and their impact on long-term unemployment in their local area. That will probably deepen the database and the next time the programmes are looked at there will be more depth available as a result of this addition of case studies.

On the question of local authority involvement, as I mentioned the last time I came before the Committee of Public Accounts, a policy decision had been made that local authority representatives would be co-opted onto the boards of all the partnerships. That has now happened. In addition, as a result of the task force work the county and city development boards have been established and among the representatives on each of those boards are representatives from the local partnerships. They would be involved on that board with representatives from all the other local development agencies and local authority representatives.

The future action plans that will be determined and designed by the partnership companies will now be vetted by the county and city development boards and by the director of community enterprise who will have their input into those action plans before decisions are made about the funding of them by ADM. That will all contribute to closer integration of the work and will give a stronger area based focus to all the initiatives under the local development umbrella.

On the particular issue regarding supplementary benefits and the link of the work with partnership and the impact of it at the level of the individual and what it means to other sources of income, I might ask Tony Crooks to elaborate on such cases and his awareness of them.

Mr. Crooks

All I can say by way of answer to the Deputy is that it is meant to work in such a way that a person who is long-term unemployed and who is part of the area allowance scheme does not lose their secondary benefits or their other entitlements. If there are individual cases the Deputy is aware of where that has happened, my understanding is that they should be looked at and remedied.

You mean looked at for rent assessment——

Mr. Crooks

Yes.

——being different from a secondary benefit in that sense?

Mr. Crooks

Yes.

Acting Chairman

I would like to get back to Mr. Leogue. Deputy Lenihan asked a specific question about preferential treatment for some people within the scheme, whether contracts were being awarded to friends.

The general perception is that these networks have their own internal networks. The dead-weight factor identified by the Comptroller and Auditor General would add substance to that argument, if one was suspiciously minded.

Mr. Leogue

There is a special allowance for that work, which is recommended, through an evaluation process within the partnerships, to the Department of Social, Community and Family Affairs who administer the programme. Over the past two years in particular a model of good practice has developed around that. I have copies outlining it, which Members might like. That model is one to which I am sure all partnerships would subscribe at this stage. I trust that answers the question.

Like my colleagues, I acknowledge the important impact partnerships, enterprise boards and Leader boards have had, particularly on rural areas. I must take issue with one of the points made by Deputy Durkan and taken up by Deputy Lenihan about the Celtic tiger, in that areas of disadvantage now seem to stick out like a sore thumb. At a time when unemployment throughout the country is at 4%, the unemployment rate in certain rural areas is still at completely unacceptable levels. We must ask whether some of these boards could be further streamlined to focus on areas of real disadvantage, even those in counties like Mayo where some of them operate in better economic circumstances than others. I would like that question addressed.

With regard to the value of boards such as these, if they were wiped out in the morning and one had to argue a case for their re-establishment, one would be in a weak position without information to hand on proper comparisons, statistical information and monitoring of their work. That is why it is so important this level of comparison exists.

Page 12 of the report focuses on data collection. It states that the computerised information systems were designed by consultants under the aegis of the Departments and ADM. It further states that they are not user-friendly and were perceived as not being fully suited to local management needs. If they were designed specifically for the purpose for which they were intended and now they are not suited for that specific need, that raises a question about them, which I will put to Dr. Crooks in a moment.

While I recognise that many people contribute greatly on a voluntary basis to the work of these boards, in this age of openness and transparency it is important that there would be as full an attendance as possible at these board meetings to ensure that the different interests are represented with regard to the projects they evaluate so that people can genuinely feel the work of such boards is open and transparent. That draws on the point raised by Deputy Lenihan.

I am specifically interested in Leader groups. Will Mr. Ó Sé indicate what systems are in place to ensure the work of Leader groups is open and transparent? Are guidelines in place regarding conflict of interest of board members? Do board members have to make a declaration of their interests when appointed to the board and, if so, how fully is that examined? That is probably one of the greatest criticisms of such boards which one would hear locally. It is important any conflict of interest of board members is stamped out to ensure these boards are effective, as they play a very important role.

Mr. Malone mentioned that the rules of the Leader schemes come from the EU. In terms of different Leader groups, even within one county, certain projects may get funding in one area but not in another. What say do local groups have in choosing certain projects to be funded in one area over another? That is something about which there is a good deal of conflict in my county, that one person can get funding for a particular project but another person 20 miles down the road is refused funding for a similar project. I would like to be able to explain the reason for such decisions to the people concerned.

Will Ms Hayes explain some of the charts at the back of the book. At a glance they show extraordinary statistics, particularly in relation to administration. A15 and A16 show the difference in administration costs between the year 1995 and 1996. One does not like to see high costs of administration in groups such as this, as that means the money is not being spent for the purpose for which it was originally intended. If some of those statistics were known to the public they would give rise to concern, although I may not be reading them correctly and that is why I would like them explained properly.

Acting Chairman

I ask the witnesses to respond to the Deputy's questions in the order in which she put them.

I will respond to the Deputy's first two questions, her first on the focus of these initiatives in areas of most disadvantage and her second on the monitoring system. All partnerships work in areas designated by the Government as disadvantaged. Within those areas, it is clear that some parts are more disadvantaged than others, for instance, Erris as opposed to other parts of Mayo. We make data available to all partnerships based on the CSO statistics which identify the most disadvantaged parts of an area. We require the activities of the partnerships to be focused on those parts of their already disadvantaged areas.

As well as focusing on places, the programme also focuses on a number of target groups. The focus of the programme used to be on the long-term unemployed. In the current climate its focus has widened from the long-term unemployed people, who still remain an important part of its focus, to other socially excluded groups, including the Travelling population, people with disabilities, lone parents, young people at risk, etc. Each activity undertaken by a partnership should be focused on areas most in need and at target groups identified in the programme and the monitoring system picks up those.

We accept that the first monitoring system in 1997 was put in place to try to balance a combination of different needs, including information required by people on the ground, at partnership level, by monitoring committees for reporting, by the EU and by external evaluators.

The report correctly states that throughput data was collected, which means we know the number of people concerned etc., and whether they are long-term unemployed. The system was less than satisfactory on how it could also be used as a management tool at local level. The new programme is going into operation at present. The monitoring system has been revised and for most of this year we had a task group which involved all the users as well as ourselves working to revamp the system to take account of aspects that were less than perfect in 1997-99 system and to evolve something that will give faster answers, information that is more user friendly at local level and provides management information at local level as well as the necessary reporting upwards requirements.

Mr. Ó Sé

There are strict lines of operations and guidelines with regard to what has been stated. Our decisions must be formally recorded in the minutes of the board meeting. If there is a conflict of interest regarding some board members being members of subcommittees, advisory groups or others associated with projects, they have to declare their interest and absent themselves from the assessment procedure and discussing a project at a board meeting. These facts must be recorded for the purpose of implementing the rules. The directors concerned would not receive any relevant papers on the application for grant aid, the evaluation of the proposal or if any of the board were awarded grant aid.

The register of interests of directors must be compiled by the group and submitted to the Department and any revision must be notified to the Department. The Department's inspector will take account of that register in monitoring the group's activities and seeing that the operating rules are strictly adhered to. Decisions to grant aid projects in which group members have an interest of any kind must be notified to the Department.

With regard to the second question you asked, they must also sign a bond with reference to the activities of the Leader group. You asked about the difference of support between groups. All member boards are responsible for whatever happens; they take responsibility if there is a case or anything against them.

Is that a financial responsibility?

Mr. Ó Sé

Yes. Each member——

Do they take it personally?

Mr. Ó Sé

Yes. So we are taking on a lot of responsibility that is not taken into account.

There is no financial limit?

Mr. Ó Sé

The amount of the bond.

Is that fully explained to each board member before they take it on?

Mr. Ó Sé

Yes, it is explained to them before they sign the certificate of the bond.

With regard to the difference of support between groups, each group has the autonomy and flexibility to address the needs of that group. Remember that we are limited in the amount of capital; we are not nationwide. I can give an example. We stick to whatever percentage, whether it is 20% or 50%, that is required by the rules and regulations but some groups impose a cap due to the fact that they only have a certain amount of money. In tourist accommodation provided by some groups the maximum they would receive might be £4,000. In other groups, however, it might be 50% of whatever - it depends on each locality. When the local action groups come together at the beginning they decide the policy or strategy.

The structure is the partnership. We could avoid much of the dead-weight we mentioned earlier and the displacement.

Has there ever been a case where a board member suffered financially or where the bond has been called into play?

Mr. Ó Sé

Not yet.

Mr. Kelly

I am a board member of Leader as well as being chief executive officer in Clare. It is professional indemnity, Deputy, not a personal liability.

It is important to clarify that. I was asked to sign one of them myself but, thankfully, the council disbanded beforehand.

Ms Hayes

The Deputy mentioned tables A1, 4, 5 and 6. They refer to Leader but they reflect the start-up costs and start-up phase where the groups, like the partnerships, are administratively intensive for the first 12 to 18 months before programmes are up and running. Then programme expenditure takes off and the proportion of total budget going into administration falls. In the case of the partnerships it has fallen from 100% in the first few months of 1996, which is the figure referred to in A17; it fell by half from 1996 to 1997. The average for 1998 is about 28% and it is nearing a normal range of about 25%. In the case of the partnerships it will probably continue to be high because there is a lot of hand holding and intensive managerial and executive work with the target group. There is more emphasis on non-financial support as opposed to direct grant aid.

There can be a large difference, even between two Leader groups spending the same amount of money. In one case it might be 45% and only 19% in another. It is a significant difference.

Ms Hayes

Again, it reflects the balance between direct grant assistance and the amount of other non-financial support that the group decides to give to the range of enterprises in the area, such as training and mentoring. A lot of work is done helping people prepare a business plan which is time intensive.

Those figures are scrutinised closely every year?

Ms Hayes

They are. We keep an eye on them and have them tracked from the start of the programme.

I have been a member of the South Dublin County Enterprise Board since its foundation and dealt with a number of the local partnerships and other bodies. They have made a tremendous contribution to the economy generally. That is under-rated and under sold to a great extent. They have made a significant contribution to bringing the unemployment rate down to the 4% level. The continuing programmes that are put in place by these bodies for upskilling and further education are helping to reduce the unemployment rate and providing more skilled and better paid employment for people in their areas.

The issue of displacement and dead-weight was a major one at the time but when one sees the number of sustainable jobs that have been created for a relatively small investment, who is worried about the level of displacement when the unemployment rate is now 4%? Obviously, whoever has been displaced has got another job or business. With regard to dead-weight, there are many people who need a good leg up and help when getting a business going. Whether it was dead-weight or an incentive to get that business going is questionable. I believe that the displacements are overstated.

I am concerned about allocation of resources overall. When I see the various graphs, they appear to have a great equivalence county by county. Tony Crooks compiled some statistics in relation to deprivation indicators and deprivation maps. The Central Statistics Office has the small area population statistics for every district in the country. If each Department got the map for the entire country and overlaid those deprivation indicators - there are educational, occupational, local labour and housing - or the socioeconomic indicators for groups A, B, C and D, one will see where there are definite pockets of deprivation. I have seen it. Dublin South-Central, the constituency I represent, is the most deprived and poor constituency in the country, taking the 1999 Central Statistics Office census of population figures and the deprivation indicators.

The reports says that Dr. Crooks has only done the indicators for the partnership areas and that he will use them to facilitate further attempts to consider the social impacts of the initiatives within those areas. When the 2001 statistics become available, therefore, he will be able to see whether the indicators have improved. It is important that the Departments put this information before their Ministers so that when policy decisions are being taken, it is taken into account not only on a county by county basis but, more importantly, on a needs or deprivation basis. Have you that information to hand at present and, if not, will you get it?

Acting Chairman

To whom is the Deputy directing that question?

Mr. Haran and Ms Hayes. Perhaps Tony Crooks would mention what level it is at.

Mr. Haran

Deputy Ardagh is correct that there are varying needs across the country. The needs reflect the economic behaviour of the area. However, there are also pockets within areas. There are some very wealthy areas juxtaposed beside areas of great need. It is important that we target resources to achieve the right outcomes. The CEBs originally received a block grant which was the same for everybody. We have tried to refine that over time so the grant to the CEB is reflective of the population, the level of unemployment and the development potential of the area.

This is from an enterprise development perspective but, clearly - Deputy Cooper-Flynn raised this issue as well - the Department cannot tell an enterprise board within its area how to identify the areas in which to spend the money and direct resources. However, it can be encouraged to direct those resources at areas of most need. We need then the local enterprise board working with the director of community enterprise at local authority level to co-ordinate that type of activity, combined with the local knowledge because there are local politicians on the enterprise boards, to identify those areas of most need.

On one side the role of the CEBs is enterprise development. Their role is not purely social. It is not their primary social function to develop the societal structures. However, developing enterprise is a key aspect of invigorating deprived areas. It is a very important element of changing the deprivation realities of communities. It has a very important role to play in raising the standard and strengths of these areas. It is important that the enterprise boards themselves, in combination with the local authorities, target their energies towards those areas most in need. It is important for us then at national level to try to ensure that our grant allocations reflect the relative deprivation of different local authorities and that it is directed at those areas most in need.

Ms Hayes

In our Department we have recently completed an exercise in identifying priorities for the new urban initiative. We have used the ADM mapping approach on indicators to try to identify clearly the areas of greatest need under that initiative. As was mentioned, the 2001 data would be critical in fleshing out the ADM approach, but we are constantly working with ADM to try to make more transparent the indicative base on which we prioritise.

Mr. Crooks

The Deputy is kind to say how important this information is. We think it is very important, but we are also aware that the census took place in 1996 but the small area of population statistics did not normally become available until about three years after the census, in 1998 or 1999. The next census will take place in 2001 and on that pattern the small area of population statistics will not be available until 2003. That points to the limitations of the data at national level that is available in a very fast changing environment. Anything that can be done to speed up the availability of this sort of information would be welcomed by everybody involved with this kind of work.

Acting Chairman

On behalf of my colleagues, I compliment everybody involved in these initiatives on driving the whole process. In particular, I compliment and congratulate the voluntary workers who were mentioned previously. On a personal note, I am particularly pleased that Mr. Tom O'Donnell is involved given his wide experience in the political field. His involvement at local level is indicative of the approach that needs to be taken. We must harness the talent that is available and I am glad he is involved. I also assure Mr. Haran that the good wishes of everybody for a speedy recovery will be conveyed to the Chairman, Deputy Mitchell.

Regardless of how the economy performs in terms of the Celtic tiger or recessions, given that it will fluctuate, there will be a need for local initiatives and State support. Some people may be concerned that the report is a critical analysis of their work, but it is a vitally important component in getting future guarantees from the Minister and Government of the day. It will be a critical component of the argument that will be put forward for further funding, support and a continuation of the current operations.

Voluntary work existed long before 1991. For example, Muintir na Tíre and others have been working since Canon Hayes's time. There is a tradition in Ireland of voluntary involvement at local level. It needed support and to be harnessed, but that does not suggest there should not be an examination of the value gained from the expenditure. I welcome this report because it is professional and points out the issues that need to be addressed.

The first item referred to was the administrative costs which range from 20% to 51% of total expenditure. The Secretary General of the Department of Enterprise, Trade and Employment pointed out that it is now at 28% and that this figure will drop. I recognise the fact that the Department will be hand holding and there will be extra costs. The figure was too high but it has been reduced. We need to keep an eye on it because the public would not support any enterprise that was spending 51% of its total expenditure on administration. I welcome the reduction.

The second point was accepted by everybody. Better information systems are required. The third point was that because of the many similarities between the objectives, clients and activities of the three development programmes with regard to business support, there is a risk of overlapping and duplication of effort. If anybody said that was not the case they would be closing their eyes to reality. The idea of setting up the different groups and changing along the way is to avoid duplication.

It can be difficult for somebody who is doing well in business to see another person funded and to have that person put them out of business. It is part of the duplication problem that certain financial institutions appear to fund one competitor against another in areas where there is only room for one of them. Formal interdepartmental agreements should be devised, including written statements, to minimise the risk in that regard. Mr. Ó Sé referred to this earlier and I agree with him that while the bottom up approach for participation is being encouraged, the Departments and groups supplying the money must get their acts together. There must be co-ordination and co-operation. This is being tackled to some extent in the four pilot schemes that are being carried out, three in Dublin and one in my parish of Togher in Cork, under the area initiatives. These are considering the overlaps and how they can be avoided.

Some items raised in the Comptroller and Auditor General's report will be invaluable to the committee in making improvements. Reference was made to displacement and it is a difficulty. An estimation has been made but what happened is not certain. However, if information services were in place, we would be able to deal with it. The Comptroller and Auditor General made the point that policies should be geared towards minimising the incidents of displacement. We all pay lip service to that. We deal with our own projects and we may not look beyond it.

Reference was made to tunnel vision, but my place is the most important thing to me. I am the gardener of that patch and everybody else works outside it. However, this also happens in a group or an organisation. The Comptroller and Auditor General is correct. He does not have any axe to grind. He and his professional staff analysed what is happening and he made recommendations. In fairness, nobody could quibble with them.

The committee will note the report at this stage. We accept it and we will not look for further recommendations because the Secretaries General of the three Departments and the other groups involved will have consciously and carefully taken it on board. The report is a useful tool for each of them. It is not a critical exercise. One of a number of initiatives taken by the Comptroller and Auditor General is analysis reports and value for money examinations. We should all be open to scrutiny, although we might not come through it unscathed.

I thank you for your attendance. You all have a role to play and everyone has shown commitment. You will be open to criticism if we do not understand fully what you do. We look forward to working with you in the future. Is it agreed to note the report? Agreed.

The witnesses withdrew.

Sitting suspended at 12.50 p.m. and resumed at 12.55 p.m.