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DRAFT RURAL DEVELOPMENT REGULATION
ANALYSIS OF RESPONSES TO CONSULTATION

CHAPTER 8 - RESPONSES TO FINANCIAL MANAGEMENT (articles 67-99)

Support for Technical Assistance

The Commission has proposed that up to 0.30% of the total Fund can be used annually to finance the preparatory, monitoring, administrative support, evaluation and control measures at the Commission's initiative, or on its behalf.

It was also proposed that Member States can use up to 4% of programme funding for technical assistance in the implementation of the programme. This could include financing of national networks (which is a new requirement for Member States to establish) to support the implementation of rural development measures and, in particular, local action groups. Technical assistance funding of this type has been available under past Structural Funds programmes. A European Network of the new National Networks is also proposed.

• How could this support be used to ensure that LEADER works well in rural Scotland?

• What sort of national networks would be relevant and beneficial to the rural development of Scotland?

• How might these operate?

This chapter attracted the least number of responses, but those that were received were still interesting, even if there was no common theme. Scottish Natural Heritage argued that EAFRD should be implemented in such a way that takes account of the widely varying environmental needs and opportunities across the country. Arrangements should draw on the growing experience of community planning, local and national rural partnerships and regional forestry forums. This was largely echoed by Tyne and Esk LAG who called for a wider and more integrated approach tying in with the developing community planning process. The Council for Scottish Archaeology would like to see the development of a network of Archaeological Advisers across Scotland, while Historic Scotland made a similar request for national networks to be established covering historic environment interests. The British horse Society would be happy with measures being supported through organisations with a national membership, regional and supportive resources, while the Scottish Agricultural Organisation Society put itself forward to be considered as a relevant rural development network, eligible to receive technical assistance funding. They said this would be in line with the Commission's own views about the need to fund support for co-op management. Finally Highlands and Islands Council argued for the need for a separate Highlands and Islands Network to be set up as soon as possible to facilitate the implementation of the Highlands and Islands programme. It believed there was a role in this for those involved in the current Structural Funds programme, i.e. HIPP.

Fund Contribution

The draft Regulation set out that €88.75 billion (at 2004 prices) will be available under EAFRD for the period 2007 to 2013. Of this at least €31.3 billion will be concentrated in regions, which under the proposed Structural Funds proposals, would be eligible for Convergence Objective funding (regions with less than 75% of EU25 GDP).

It was proposed that rural development funds will be divided between Member States after deducting the amounts referred to in Paragraphs 20 and 21 of Section 4, based on objective criteria and taking in to account:

• the amounts reserved for regions eligible for the Convergence Objective;

• past performance; and

• particular situations and needs.

It was also suggested in the draft regulation that the rate of EAFRD contribution to rural development programming should be set in relation to public expenditure in the Member States and take account of:

• the priority for land management and environment;

• the situations in the regions covered by the Convergence Objective;

• the priority given to the LEADER approach; and

• the outermost regions and specific islands.

Amounts generated from modulation would be in addition to the amount outlined above.

4. The Commission has also proposed that the EAGGF Guidance element of the EAFRD, along with funds from ESF, ERDF and FIFG should not exceed 4% of each Member States' GDP.

• Are the criteria set out in paragraph 2 appropriate for allocating funding between Member States? If not, which criteria would be better?

There was broad agreement from those who responded that past performance should not be taken into account, as this was where Scotland had missed out badly in the past. Alternative suggestions were however varied. Highland Council believed rural development funds should take into account the amounts reserved for the Convergence Objective and particular situations and needs, such as peripherality. The Southern Uplands Partnership suggested more emphasis on funding areas whose local strategies best encourage nature conservation and small scale rural development. COSLA, Argyll and Bute and Midlothian Councils all put forward the same suggestion;

• National Strategies fit to EU Strategy

• Degree of innovation (Compared to previous programmes)

• Loss of status for other funding streams e.g. EU Regional Policy

• Dependence on agriculture employment/GDP/CAP transfers

• Population stability/democratic factors

• Loss of other CAP/Rural Development support measures e.g. large scale reductions of LFA coverage

Scottish Natural Heritage felt that unless the Commission could be persuaded to carry out further research, they was inclined to support the Defra proposal that allocations should be based largely on agricultural use. They also sought clarity on the terminology of Article 71(6) which required that any operation is only funded under one priority axis.

Co-financing

The Commission has proposed that EU co-financing rates will be set at axis level, with a maximum of 50% of total public expenditure (75% in Convergence regions) for axes I and III. For axis 2 and the LEADER 'axis' the maximum rate will be 55% (80% in Convergence regions). The minimum level of co-financing for all axes will be 20%.

The Council for Scottish Archaeology, while welcoming the commitment to conserve and enhance the rural heritage, suggested several drafting changes to reflect cultural, heritage, historic and environment concerns.

Management Control and Information

The draft regulation proposed that for each rural development programme there must be a managing authority, paying agency and certifying body. The managing authority can be a public or private, national, regional or local body designated by the Member State.

Monitoring Evaluation and Reserve

The Commission has proposed more detailed and structured monitoring and evaluation rules than currently apply - each programme must be subject to suitable monitoring, watched over by a Monitoring Committee on the basis of a common monitoring and evaluation framework. The creation of a Monitoring Committee was an option under the current regulation to be used "where appropriate", but is now a requirement.

The requirement for the production of an annual progress report have been made stronger, with the proposal that the Commission will examine and comment on it after it has been submitted to them. In addition, it is proposed that expenditure on the Convergence Objective should be identified separately.

The proposed system for evaluation is similar to the existing Rural Development Regulation, with requirements for ex-ante, mid-term and ex-post evaluations. However, an additional requirement is proposed for ongoing evaluation. This would involve the submission of an annual report of evaluation results to the Commission along with the annual progress report.

• Do the proposals for monitoring and evaluation help to reduce bureaucracy?

• What alternatives might there be?

There were various views on this, but the majority view was that the proposals did not help to reduce bureaucracy. Quality Meat Scotland were robust in their view that the current RDR was already too bureaucratic and was concerned that the Commission envisaged even more detailed monitoring and evaluation rules. Scottish Estates Business Group, although appreciating the need to ensure value for money, was concerned that the prospect of on-going evaluation, in addition to the existing ex-ante, mid-term and ex-post evaluations, would just add another layer of bureaucracy and ran counter to the aim of simplifying and streamlining the way in which support is made available to rural businesses. Historic Scotland also felt that, as set out, the current proposals added to bureaucracy rather than reducing it. They would want reassurance that the new RDR would focus on outputs as well as compliance.

Scottish Natural Heritage took the view that while the proposals were more onerous than what was in the current RDR, the new framework was more concerned with analysing the programme rather than just auditing the expenditure as at present. They were concerned that the new regulation should assess the environmental changes arising from the decoupling of support payments, and expressed support for the proposed monitoring committee arrangements. The Council for Scottish Archaeology would welcome more effective monitoring of the Pillar 2 measures, arguing that resources are better spent in encouraging more emphasis on outputs rather than compliance with scheme regulations.

Southern Uplands Partnership felt that the burden of monitoring must not put a project at risk, and suggested a facility whereby projects could be looked at by external assessors in order to disseminate best practice ideas. They had a concern that results from monitoring usually came too late to influence policy development and suggested some form of reward scheme for good projects. Finally Highland Council felt that further debate was needed to ensure that simplification would actually happen. They asserted that much of the bureaucracy came from the Member State itself, and argued that the Highlands and Islands would be better served by having their own Monitoring Committee to implement and administer its own rural development scheme.

State Aid

The draft regulation proposed that rural development measures should be eligible for Member State support without Community co-financing, and be approved by the Commission as part of the programming approvals outlined in the draft regulation.

Only three responses were received in connection with State Aid. Scottish Natural Heritage believed the proposals were largely the same as in the current regulation, but welcomed Article 93(4) which allowed for additional amounts above the limit specified in annex 1 to be paid for agri-environment undertakings. The Council for Scottish Archaeology, concerned at a perceived lack of provision of sufficient safeguards for historic landscapes and traditional farm buildings, wanted clarification under Article 93(4) on the circumstances where "additional aid" and "exceptional circumstances" would apply. Historic Scotland had similar concerns that the proposals could lead to damage or destruction of the historic environment, and suggested some redrafting.

Transitional and Final Provisions

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